Jump to content

Capitulation? Emrys Partners Hedge Fund Shuts Down


JEast
 Share

Recommended Posts

Is this a sign that folks are capitulating and going all in for the equity markets as the only game in town?

 

"making investment decisions by looking solely at the fundamentals of individual companies is no longer a viable investment philosophy."
[ftp=ftp://online.wsj.com/articles/emrys-partners-hedge-fund-shuts-down-1404413851]http://online.wsj.com/articles/emrys-partners-hedge-fund-shuts-down-1404413851[/ftp]

 

 

Cheers

JEast

Link to comment
Share on other sites

I remember a quote from Paul Tudor Jones - "Fundamentals might be good for the first third or first 50 or 60 percent of a move, but the last third of a great bull market is typically a blow-off, whereas the mania runs wild and prices go parabolic." We are most likely in the second half - how much more do we have left, I am as clueless as anybody else.

 

The current bull market is supported by the thesis that the central bankers will always come to the rescue whenever there is trouble in the market. The market needs to lose faith in the central bankers' ability before this new house of cards will come down. Will it happen before escape velocity is achieved or when it will happen? I think betting against overvaluation is a foolish game to play before we have clear evidence from market reactions e.g. sustained bearish reactions to otherwise bullish ECB or Fed statements.

Link to comment
Share on other sites

I don't understand all the commentary about market timing/bull markets/ whatever.

 

From what I know, Eisman ran a  financials focused long/short fund and appears to have not gained traction or put up great returns, so he is shutting down.

 

Is there anything more to it than that? Doesn't this happen everyday?

 

The quote about company fundamentals not being the only thing they care about sounds like a standard statement of philosophy. It makes much more sense when you read the article. He's just saying he thinks the health of the system matters.

 

In a May regulatory filing, the firm wrote it believed that "making investment decisions by looking solely at the fundamentals of individual companies is no longer a viable investment philosophy."

Instead, Emrys echoed what many stockpickers have said in recent years about larger factors affecting their ability to invest as they had historically. "While individual company analysis will always be important," it said, "the health, or the change in the health, of the financial system is the starting point of all analysis."

Link to comment
Share on other sites

Guest wellmont

i actually think he was constructive on US based financials...if anything it's reminiscent to what happened in late 90s when value oriented funds lost assets and were shunned, and momentum driven strategies gained them. then lost them. KRE took a beating over the first half of 2014.

Link to comment
Share on other sites

Yes, the late '90s were horrible for value investments as many company's earnings increased every quarter but the stock prices seemed to drop nearly every week.  Two-to-Three years of pain then the best of times (comparatively).  This was, in part, in the back of my mind and the reason I posted the thread as fundemental value folks may be getting pushed out.

 

Prepare for more pain??

 

Cheers

JEast

Link to comment
Share on other sites

Makes me wonder how many value investing LPs Steve Eisman really has.  It's amazing that a fund can go out of biz with 2 years of single digit returns.  However, this might have to do with Steve Eisman's personality as he was quite a character a couple years ago speaking at the Columbia Conference. 

 

 

Link to comment
Share on other sites

He had a lot of exposure to the Ocwen/Altisource complex that had a terrible 12 months, plus exposure to homebuilders that underperformed. In addition, he betted too early against a downturn in the Canadian housing market.

 

Ironically, I think that most of those positions are actually very attractive now in terms of valuation.

Link to comment
Share on other sites

Makes me wonder how many value investing LPs Steve Eisman really has.  It's amazing that a fund can go out of biz with 2 years of single digit returns.  However, this might have to do with Steve Eisman's personality as he was quite a character a couple years ago speaking at the Columbia Conference.

 

Apparently he was down in 2014, setting him up for 3 years of under performance.

 

Since he was a star in the meltdown, investors' expectations might have been (unrealistically) high.

;)

Link to comment
Share on other sites

Since he was a star in the meltdown, investors' expectations might have been (unrealistically) high.

;)

I have similar thoughts.

My thesis on this would be that he attracted a lot of money from people who primarily knew him from his housing bet and thought he was some kind of a wizard who would always make them money. Even though the struggle to actually get that big payoff in the end was described very well in "The Big Short", those people are likely to lack the patience required to invest in a value fund. Investors might have complained and judging by Eisman's personality he is rather shuttung the whole thing down than changing his style.

 

 

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...