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Denali Investors


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Does anyone know what happened to Denali Investors from Q4 2009 to Q4 2012? 

 

The fund since inception in late 2007 is up 187.9%.  From inception to end of Q4 2009, the fund was up 59%.  2013 was 66% and 6 months ending Q2 2014, the fund was up 33.7%.  If we take out 2010, 2011, and 2012, the gains from 2007 to 2009, and 2013-Q2 2014 should be 252%.  So, from beginning of 2010 and end of 2012, Denali was down 26%.  Down 26% in a three year time period is substantial.  Short term volatility tends to work out in a 3 year period.  Anyone know what happened during that time period?  In the G&D interview, Kevin mentioned that he had a "Come to Jesus" moment in 2011 regarding his strategy.  Can anyone shed any lights on this?

 

http://manualofideas.com/files/content/kevin_byun_denali_investors_letter_2009-q4.pdf   

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Help. Could some brilliant mind please explain the following example that was in this Denali presentation? It's the election merger between Precision Drill and Greywolf. In the presentation, it says to short the target (Grey wolf) and hedge Precision. I couldn't figure out why and now it's become a brain teaser that's bothering me! 

 

http://www.grahamanddoddsville.net/wordpress/Files/SecurityAnalysis/Special%20Situations/kevin_byun_denali_investors_columbia_business_school_2009.pdf

 

Thanks

 

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  • 3 months later...

Does anyone know what happened to Denali Investors from Q4 2009 to Q4 2012? 

 

The fund since inception in late 2007 is up 187.9%.  From inception to end of Q4 2009, the fund was up 59%.  2013 was 66% and 6 months ending Q2 2014, the fund was up 33.7%.  If we take out 2010, 2011, and 2012, the gains from 2007 to 2009, and 2013-Q2 2014 should be 252%.  So, from beginning of 2010 and end of 2012, Denali was down 26%.  Down 26% in a three year time period is substantial.  Short term volatility tends to work out in a 3 year period.  Anyone know what happened during that time period?  In the G&D interview, Kevin mentioned that he had a "Come to Jesus" moment in 2011 regarding his strategy.  Can anyone shed any lights on this?

 

http://manualofideas.com/files/content/kevin_byun_denali_investors_letter_2009-q4.pdf 

 

It was mostly 2011 H2 - Denali performance 2010 +10.3%, 2011 –34.4% , 2012 +15.4% - cant post the full letters but can help you if you contact me

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  • 4 years later...

Help. Could some brilliant mind please explain the following example that was in this Denali presentation? It's the election merger between Precision Drill and Greywolf. In the presentation, it says to short the target (Grey wolf) and hedge Precision. I couldn't figure out why and now it's become a brain teaser that's bothering me! 

 

http://www.grahamanddoddsville.net/wordpress/Files/SecurityAnalysis/Special%20Situations/kevin_byun_denali_investors_columbia_business_school_2009.pdf

 

Thanks

 

I know it's been 4 years since this was asked, but it was never answered. This is my best guess.

 

Merger consideration for GW shareholder was 1) 9.02 in cash per share or 2) .4225 shares of PDS (cash and shares subject to proration ** this is key)

 

after merger announcement, shares in GW fell from $9 to $6 and PDS shares fell even further from $20-25 to $6-7

 

When GW shares were at $6 Denali shorted GW and hedged PDS around $6ish

 

If the offer went through, PDS was able to prorate the offer between PDS shares and $9 in cash. Well .4225 PDS shares at this time were only worth $2.5 (.4225 x $6). So the GW shareholder was actually getting less if the shares converted to PDS. I believe the opportunity was in how likely it was that GW shares would get the $9 cash payment vs. the PDS shares. PDS financial position was not great at the time, so it seemed more likely the offer would have a greater tilt towards PDS shares. So you could short something that had a decent likelihood of being converted into something that was trading for much less.

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FYI:

https://www.sec.gov/litigation/admin/2019/ia-5301.pdf

 

long story short: fund is shut, Byun took ~$70K out of the fund he wasnt supposed to (eventually paid it back with interest)

 

Should not have taken the money out in the first place...for personal use!  That's one of the biggest no-no's.  Mistakes are one thing...this was a calculated decision to use partner capital to cover personal expenses.  Cheers!

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