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David Abrams -- Abrams Capital


TeddyLampert
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Anyone else see this article today in the WSJ about David Abrams?

 

http://online.wsj.com/articles/hedge-fund-worlds-one-man-cash-machine-1401747769#printMode

 

I thought it was an interesting fund but the article does not talk really talk about investment process.

 

If anyone knows the following, it would be great to hear from you!

 

- Does he actively short

- What's the gross and net long/short exposure

- How does he hedge (if different from the above answer)

- How much is international (and thus, not reported in the 13F, so we are left thinking the fund is more concentrated than it is?)

- What is the process of analyzing an investment idea before it goes into the portfolio

- What is the average holding period

- Average cash holdings in a "normal" environment (today it's a whopping 40%)

 

 

 

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Very interesting, have not heard of him before. He seems to be a protege of Seth Klarman and also wrote in 'Klarman's' 6th Edition of Security Analysis in Part 7 "The Great Illusion of the Stock Market and the Future of Value Investing".

 

My (un) educated guess to your questions is that his style is close to Seth Klarman. However, his 13F sure seems easier to understand...

- don't think he shorts, otherwise he would not have been down 40% in 2008

- his 'hedges' are probably special situations

- don't know where the majority of his assets are invested. His 13F shows 1.3b. WJS says he manages 8b, of which 40% cash, leaving 4.8b invested of which only 1/3 or 1.3b appears on the 13F (see the similarities to Klarman  ;) )

- he was on a panel with Seth Klarman and Howard Marks, so an allocation to distressed debt seems like worth a guess

- as for international: probably not so much directly with only 3 analysts

 

Anyone with real info please chime in.

 

 

:)

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I stumbled upon him through an investment in EGL which was a classical Greenblatt spinoff situation – a nicely profitable business, which was hidden behind a huge one time goodwill impairment charge.

 

At the time, he seemed to be the only hedge fund investing in it – and he bought 10% of the company. He bought better than me and sold better than me (he made 100% within 12 months). Since then, I follow his 13-Fs. :D

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He's good. Probably classify him as investing in undervalued long term growth stories for the most part. There will generally be a 2nd level story to his investments, so worth looking into what he is buying.

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Very interesting, have not heard of him before. He seems to be a protege of Seth Klarman and also wrote in 'Klarman's' 6th Edition of Security Analysis in Part 7 "The Great Illusion of the Stock Market and the Future of Value Investing".

 

My (un) educated guess to your questions is that his style is close to Seth Klarman. However, his 13F sure seems easier to understand...

- don't think he shorts, otherwise he would not have been down 40% in 2008

- his 'hedges' are probably special situations

- don't know where the majority of his assets are invested. His 13F shows 1.3b. WJS says he manages 8b, of which 40% cash, leaving 4.8b invested of which only 1/3 or 1.3b appears on the 13F (see the similarities to Klarman  ;) )

- he was on a panel with Seth Klarman and Howard Marks, so an allocation to distressed debt seems like worth a guess

- as for international: probably not so much directly with only 3 analysts

 

Anyone with real info please chime in.

 

 

:)

 

He has 3 funds. Is it possible that you only found the 13F for one fund? Or is it aggregated?

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I don't mean to be harsh, but his fund went up nearly 4x in the first 7 years (a great time for value investors) and not even 1x in the the last seven years.  It seems like performance is waning as the fund has grown.  Why is money flooding in?

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I don't mean to be harsh, but his fund went up nearly 4x in the first 7 years (a great time for value investors) and not even 1x in the the last seven years.  It seems like performance is waning as the fund has grown.  Why is money flooding in?

 

1x in the last seven years is trouncing all benchmarks by an insane margin - I don't know many over $1b funds that don't short that did better.

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I don't mean to be harsh, but his fund went up nearly 4x in the first 7 years (a great time for value investors) and not even 1x in the the last seven years.  It seems like performance is waning as the fund has grown.  Why is money flooding in?

 

1x in the last seven years is trouncing all benchmarks by an insane margin - I don't know many over $1b funds that don't short that did better.

 

Are you sure?  I was being generous with the 1x in 7 years.  The way I read the chart his fund is up about 61% since the end of 2006 and 56% since 2007.  That is worse than the Nasdaq and Russell 2000, the same 7 year return as the DJIA (although better over the last 6 years), and only about 8 percentage points better than the S&P500. 

 

I am probably just jealous that money is pouring in for his fund.  =)

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I think smart people don't judge money managers on short term results. they look at pedigree and family trees. and they also adjust returns for risk. chart shows he has outperformed since 1999 by 7:2 after fees. note the part of the article where they say he does all this with "one hand tied behind his back". I can see being skeptical of the skill of some money managers. But certainly not here.

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Very interesting, have not heard of him before. He seems to be a protege of Seth Klarman and also wrote in 'Klarman's' 6th Edition of Security Analysis in Part 7 "The Great Illusion of the Stock Market and the Future of Value Investing".

 

My (un) educated guess to your questions is that his style is close to Seth Klarman. However, his 13F sure seems easier to understand...

- don't think he shorts, otherwise he would not have been down 40% in 2008

- his 'hedges' are probably special situations

- don't know where the majority of his assets are invested. His 13F shows 1.3b. WJS says he manages 8b, of which 40% cash, leaving 4.8b invested of which only 1/3 or 1.3b appears on the 13F (see the similarities to Klarman  ;) )

- he was on a panel with Seth Klarman and Howard Marks, so an allocation to distressed debt seems like worth a guess

- as for international: probably not so much directly with only 3 analysts

 

Anyone with real info please chime in.

 

 

:)

 

He has 3 funds. Is it possible that you only found the 13F for one fund? Or is it aggregated?

 

There are different entities but I only found a current 13F for 1 entity (Abrams Capital Management, L.P. )

 

Abrams Capital LLC

Abrams Capital Management, L.P. [ formerly Pamet Capital Management, LP ]

Abrams Capital Management, LLC [ formerly Pamet Capital Management LLC ]

Abrams Capital Partners II, L.P.

Abrams David C

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Very interesting, have not heard of him before. He seems to be a protege of Seth Klarman and also wrote in 'Klarman's' 6th Edition of Security Analysis in Part 7 "The Great Illusion of the Stock Market and the Future of Value Investing".

 

My (un) educated guess to your questions is that his style is close to Seth Klarman. However, his 13F sure seems easier to understand...

- don't think he shorts, otherwise he would not have been down 40% in 2008

- his 'hedges' are probably special situations

- don't know where the majority of his assets are invested. His 13F shows 1.3b. WJS says he manages 8b, of which 40% cash, leaving 4.8b invested of which only 1/3 or 1.3b appears on the 13F (see the similarities to Klarman  ;) )

- he was on a panel with Seth Klarman and Howard Marks, so an allocation to distressed debt seems like worth a guess

- as for international: probably not so much directly with only 3 analysts

 

Anyone with real info please chime in.

 

 

:)

 

He has 3 funds. Is it possible that you only found the 13F for one fund? Or is it aggregated?

 

There are different entities but I only found a current 13F for 1 entity (Abrams Capital Management, L.P. )

 

Abrams Capital LLC

Abrams Capital Management, L.P. [ formerly Pamet Capital Management, LP ]

Abrams Capital Management, LLC [ formerly Pamet Capital Management LLC ]

Abrams Capital Partners II, L.P.

Abrams David C

 

http://www.insidermonkey.com/hedge-fund/abrams+capital+management/150/

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I think smart people don't judge money managers on short term results. they look at pedigree and family trees. and they also adjust returns for risk. chart shows he has outperformed since 1999 by 7:2 after fees. note the part of the article where they say he does all this with "one hand tied behind his back". I can see being skeptical of the skill of some money managers. But certainly not here.

 

I don't think 7 years is short term, but maybe I am not "smart."  =)

 

Statistics don't lie, but our interpretations of them can be quite faulty.  One person sees material historical outperformance while another sees recent average performance.  Both are true.  My point is that there are a number of value managers who looked great from 2000 to 2005 but average since.  Why is it seen by some as wrong to judge on the short term results since but not the short term results previous (2000 to 2005)??  It just seems to me that performance has waned noticeably as the fund grew larger and he was no longer in a very favorable environment for value investing. 

 

   

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Why is it seen by some as wrong to judge on the short term results since but not the short term results previous (2000 to 2005)??   

 

 

My response is not specific to Abrams. But I would say it is wrong to judge on any subset of results when the full set of results is available. I would further say it is a mistake to not evaluate the environments for subsets (or the full set) of results.

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Only shows 1.3b. Question is whether we can find more of the 4.8b (3.2b is in cash) for total of 8b AuM.

 

;)

 

You can see why with Baupost which has $4B out of ~$25B on their 13F. The differences are cash, global holdings, bonds, and private holdings. Baupost does real estate as well but I doubt Abrams does any of that with an investment staff of 4.

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The Insider Monkey blurb was disappointing to read. See the bolded sentence:

 

David Abrams graduated from University of Pennsylvania with a B.A. degree in History. Prior to forming Abrams Capital Management in 1999, Abrams worked at Seth Klarman’s Baupost Group for 10 years. In the nearly 12 years since Abrams started his fund he has achieved an annualized return of around 20 percent (net of fees). David Abrams is a value investor just like Seth Klarman. He invests only a small percentage of his assets in equities. Y

Read more at http://www.insidermonkey.com/hedge-fund/abrams+capital+management/150/#MUPF7rOC4AMdwMap.99

 

The 2nd WSJ article was also enlightening:

 

http://blogs.wsj.com/moneybeat/2014/06/03/in-boston-secretive-hedge-fund-billionaire-stays-in-shadows/

 

He had a stake in an Icelandic bank, so it's clear he has foreign positions not reported in his 13-Fs.

 

Whoever said something about Abrams being a long-term growth kind-of-investor does not seem correct. With positions like Western Union and Crown Castle (during the crisis) and some for-profit education name (Anthem per WSJ) it seems like he's more of a reversion-to-the-mean, crisis situation, buy-out-of-favor kind-of-value investor. 

 

Again, anyone with real insights please let us know. Otherwise we end up feeding the myth of another "superinvestor"  :P

 

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The Insider Monkey blurb was disappointing to read. See the bolded sentence:

 

David Abrams graduated from University of Pennsylvania with a B.A. degree in History. Prior to forming Abrams Capital Management in 1999, Abrams worked at Seth Klarman’s Baupost Group for 10 years. In the nearly 12 years since Abrams started his fund he has achieved an annualized return of around 20 percent (net of fees). David Abrams is a value investor just like Seth Klarman. He invests only a small percentage of his assets in equities. Y

Read more at http://www.insidermonkey.com/hedge-fund/abrams+capital+management/150/#MUPF7rOC4AMdwMap.99

 

The 2nd WSJ article was also enlightening:

 

http://blogs.wsj.com/moneybeat/2014/06/03/in-boston-secretive-hedge-fund-billionaire-stays-in-shadows/

 

He had a stake in an Icelandic bank, so it's clear he has foreign positions not reported in his 13-Fs.

 

Whoever said something about Abrams being a long-term growth kind-of-investor does not seem correct. With positions like Western Union and Crown Castle (during the crisis) and some for-profit education name (Anthem per WSJ) it seems like he's more of a reversion-to-the-mean, crisis situation, buy-out-of-favor kind-of-value investor. 

 

Again, anyone with real insights please let us know. Otherwise we end up feeding the myth of another "superinvestor"  :P

 

Crown Castle was clearly a growth play.  He was in that well before the crisis and was touted by management as a hedge fund who saw the same vision as them.  I'm not sure if he doubled down during the crisis but if he did it was luck not superior insight.  At the bottom of the crisis they were cheering and giving high fives for being able to obtain debt financing at 15%.  If that hadn't come through the company would have folded. 

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