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Posted

I thought this was a great piece. Sometimes it pays to sit on your A$$ and just think about what's going on in the world. It's very similar to Baupost's letter earlier this year about the excesses in valuation and undemanding capital in Uber, Netflix and even Tesla.

 

Guest cherzeca
Posted

I thought this was a great piece. Sometimes it pays to sit on your A$$ and just think about what's going on in the world. It's very similar to Baupost's letter earlier this year about the excesses in valuation and undemanding capital in Uber, Netflix and even Tesla.

 

I used to have a rule...never watch the evening news.  yes, this dates me.  now, with twitter, etc, you are bombarded with "what's going on in the world".  and I am not even talking about finance...

Posted

I thought this was a great piece. Sometimes it pays to sit on your A$$ and just think about what's going on in the world. It's very similar to Baupost's letter earlier this year about the excesses in valuation and undemanding capital in Uber, Netflix and even Tesla.

 

I used to have a rule...never watch the evening news.  yes, this dates me.  now, with twitter, etc, you are bombarded with "what's going on in the world".  and I am not even talking about finance...

 

Everything new is old, everything old is new - as they say:

 

You're right that news is bombarding both on TV and online - which means they need tons of news stories, every second of every day.

 

Now, good journalists don't grow on trees. So they have junior people, freelancers, even artificial intelligence (and trust me, the intelligence is surely artificial) writing these "news articles".

 

And so after reading some for a while, you realize it's just trash, so it becomes really easy to ignore because it's not really journalism, it's just tabloid-ism.

 

You can tell the decent stuff because it's usually published by a reputable source and is relatively long-form. And within the first few paragraphs you can usually figure out if the writer is a twit or not.

Posted

I thought this was a great piece. Sometimes it pays to sit on your A$$ and just think about what's going on in the world. It's very similar to Baupost's letter earlier this year about the excesses in valuation and undemanding capital in Uber, Netflix and even Tesla.

 

Klarman has been bearish for 10 years.

Posted

I thought this was a great piece. Sometimes it pays to sit on your A$$ and just think about what's going on in the world. It's very similar to Baupost's letter earlier this year about the excesses in valuation and undemanding capital in Uber, Netflix and even Tesla.

 

Klarman has been bearish for 10 years.

 

 

You are being way to kind to Seth Klarman

He has been bearish for closer to 20 years and at some point that’s no longer called being early it’s called being wrong

https://valuehunter.files.wordpress.com/2009/03/klarman_cash.pdf

Posted

I thought this was a great piece. Sometimes it pays to sit on your A$$ and just think about what's going on in the world. It's very similar to Baupost's letter earlier this year about the excesses in valuation and undemanding capital in Uber, Netflix and even Tesla.

Klarman has been bearish for 10 years.

You are being way to kind to Seth Klarman

He has been bearish for closer to 20 years and at some point that’s no longer called being early it’s called being wrong

https://valuehunter.files.wordpress.com/2009/03/klarman_cash.pdf

If you follow this line of thinking and do not think this may have a consistency component, you may want to go back 30 years:

https://brianlangis.files.wordpress.com/2016/03/barrons-interview-seth-klarman-1991.pdf

Hat tip to Brian Langis who, i think, is a member here.

i don't want to defend Mr. Klarman and maybe his thought process is contaminated with "top" concerns but from reading him for a long time, i thought that he tended to accumulate cash when he did not find adequately priced opportunities. He has always said that he would underperform in bull markets and an argument could be made that we haven't had a true bear market for at least 40 years.

 

To LC, the opening poster:

Holding Fairfax Financial some years ago inevitably meant crossing Mr. Chanos' path and it is ironic that he comments about fraud.

If you are interested, i recently came across a relevant article (it's a great time to be a crook-type of report). i will not include here as it is too politically charged and people have sometimes difficulty fleshing out the tribal component but the substance is interesting. So, if interested, just ask through a PM.

Posted

I think Klarman's main issue is that he came of age in the 70s - so he anchors to those valuations and feelings. The fact that he was so wrong about index funds (calling them a fad) in his book makes me question his reasoning ability. I mean, the book came out in 1991. It doesn't take a rocket scientist to realize that index funds have to do better than the average fund after fees.  I think he is a jerk for not republishing the book but I'm sure it's good marketing. bn

 

If the market tanks, Klarman will look good. If it keeps going up, he'll look bad. You can say the same thing about Hussman.

 

I do find it odd that Klarman who's been bearish for 10+ years was a buying in March/April. Buffett, who's been bullish for 10+ years was not.

 

Posted

I thought this was a great piece. Sometimes it pays to sit on your A$$ and just think about what's going on in the world. It's very similar to Baupost's letter earlier this year about the excesses in valuation and undemanding capital in Uber, Netflix and even Tesla.

Klarman has been bearish for 10 years.

You are being way to kind to Seth Klarman

He has been bearish for closer to 20 years and at some point that’s no longer called being early it’s called being wrong

https://valuehunter.files.wordpress.com/2009/03/klarman_cash.pdf

If you follow this line of thinking and do not think this may have a consistency component, you may want to go back 30 years:

https://brianlangis.files.wordpress.com/2016/03/barrons-interview-seth-klarman-1991.pdf

Hat tip to Brian Langis who, i think, is a member here.

i don't want to defend Mr. Klarman and maybe his thought process is contaminated with "top" concerns but from reading him for a long time, i thought that he tended to accumulate cash when he did not find adequately priced opportunities. He has always said that he would underperform in bull markets and an argument could be made that we haven't had a true bear market for at least 40 years.

 

To LC, the opening poster:

Holding Fairfax Financial some years ago inevitably meant crossing Mr. Chanos' path and it is ironic that he comments about fraud.

If you are interested, i recently came across a relevant article (it's a great time to be a crook-type of report). i will not include here as it is too politically charged and people have sometimes difficulty fleshing out the tribal component but the substance is interesting. So, if interested, just ask through a PM.

Well I guess he would know ....  ;D

  • 3 years later...
Posted (edited)
12 hours ago, Spekulatius said:

Chanos and his fund seem to have an Enron moment themselves:

 


that’s not my interpretation.

 

from what I read 


- Colson bought a minority stake in the HF manager (Chanos & Co) in 2020. At the time, AUM was $1.5B, down from a peak of $7B+

 

- Chanos & Co’s AUM has collapsed since; they shut down funds in late ‘23

 

All else equal, I’d expect a minority stake in GP/mgt company to be worthless when AUM collapses. An important nuance is that from what I read, Chanos was removed as GP from the LP that held the minority stake in Chanos and Co, and not the GP of the institutional funds he managed. I have been unable to find the full suit though, so happy to be proven wrong. As Cohodes points out the bar for LP’s removing GP is incredibly high. If I’m fact that LP was not constituted by a diverse group of institutional investors, but instead by 1-2 people who bought a GP/mgt company stake that’s now worthless, it makes more sense that he’d be removed as GP.

 

regarding the loan to Chanos, the repayment or lack thereof, the story is conflicting so not sure what do do with that without more information

 

sale of condo seems kosher if realtor paid market rate and condo got fair value. Bad optics of course, but not clearly wrong to me

 

as with all things Chanos, we’re feeling one part of the elephant and have imperfect information.

Edited by thepupil
Posted (edited)

I read the minority investor's complaint (a bit cumbersome to screenshot, but the juiciest parts are in public domain. it sounds pretty bad. 

 

below is Chanos defense. the biggest point of disagreement seems to be whether the money that Chanos put into the mgt co (Chanos & Co) was a repayment of the loan to him or merely a capital contribution to the mgt company that did not in fact repay the loan. 

 

here's Chanos defense. they allege Chanos & Co's CFO mischaracterized these as capital contributions. CFO says Chanos still had loan on 2022 tax returns and they were not repayments. 

 

a bit of a he said / she said. 

 

As an aside, it's a nice window into tax efficiency. Chanos runs an investment firm. he owns several trophy properties. the investment firm makes a loan to him secured by the properties, nice tax efficient monetization of the company (i assume that's why structured this way). 

 

image.png.3523f88d1328736c6db53d794dc85807.png

 

image.png.340f75f1a2aa0cea131f7a3a48fd4f96.png

 

image.png.2e245771aa148f67a3b4b8182b2b79fb.png

Edited by thepupil
Posted (edited)

Chanos haters will take joy in this amusing e-mail thread regarding the state of the firm's investment strategy as of late 22

 

From a Mike Salem at Kynikos

Quote

Well, we have but one analyst outside of Jim who spends most of his time researching/supporting current thesis. Brian can speak to how ideas were generated in the past when the firm had multiple analysts, but new ideas with our current team come very deliberately. Some may be initiated internally and some may be generated by firm friendly research outside the team. However, once adopted these ideas are not easily set aside even when the price action is unfavorable. We are like a dog with a bone in that if price moves against us, the trade actually becomes more attractive and we are likely to stay with the trade unless data released with earnings etc. directly contradicts the thesis. There are so many things to unpack with regards to the business I don’t know where to begin. Now what you are pointing to below is different. I don’t think this was missed. I don’t want to speak for Jim, but Jim isn’t likely to cover the most popular stocks in the world. These stocks are the market and would be a macro bet for us if anything. Given that we use the market as a hedge, we would simply be doubling down on the same bet twice. Good question though is what sectors are represented in the portfolio. Jim has this info readily available

 

 

From a guy invested in Chanos & Co and angry about it in response.

 

Quote

Let's try and address the two fundamental problems:

 

1. Underperforming the market

 

2. Not making any $ at the mgr

 

If the business model is doubling down on every trade that goes against without any evaluation of whether the initial premise was right or wrong in the current information context, well that isn't investing nor is it trading, its gambling and poor gambling at that. In light of the up 91% to up 19% performance on the DC Reits and otherwise not being treated as an owner should be, I think we are past any other conversations other than whether the receivable gets paid or not and, if so, overhaul of the entire business vs winding it up, with the recovery of our and our investors money being our primary concern, Best

 

Edited by thepupil
Posted

Explains why he was always desperately trying to move stocks on Twitter and TV. 
 

But this is WS. He clearly prioritized the “business benefits” of having a unique product, even if it sucked, versus actually just trying to make money. 

Posted

 

i don't really get that, I think the goal of his long/short fund was absolutely to make money (it allegedly made quite a lot for a very long time). the goal of his short only vehicles was to make money (when combined with the long investments of his underlying investors). goal of any GP is to make money off fees in addition to the investment returns. 

 

all sources indicate he's sucked for a while. 

 

 

 

He ran a long/short fund. 

 

- there's a 2017 and 2020 article in media (II and FT) claiming spectacular long term moneymaking performance by said fund. its so good, that as I've noted in the past, I'm skeptical and think it's probably VERY front loaded or erroneously quoted or even somehow mistated. either he WAS an amazing investor or something amiss. 

 

- and in fact using the 2017 /2020 claimed record you can deduce he hasn't done well for a long time 

 

he ran a short only fund 

- there's a track record 1985-2005  floating around on here that you/parsad/et all think is very bad and I'd regard as phenomenal if short only and if true. the type of short return that when combined with long book would compound at high rate (as claimed by the long/short fund)

 

there's some public info on the performance of a European UCITS fund he launched in 2022 and shut down in November 2023. it did poorly. 

https://greenash-partners.com/documents/Chanos/Monthly-Factsheets/Chanos Feb 2023.pdf

https://www.hedgeweek.com/swiss-boutique-green-ash-to-close-chanos-long-short-equity-fund/

 

So putting it all together

- II / FT have reported returns of the l/s fund. they report very very very good moneymaking performance from inception to 2017 and 2020. from the short only fund track record and the description of the l/s strategy (which says they index on long side) this was driven by short alpha / effective short selling.  

 

- all publicly available info, including the words of chanos himself, indicate he's had a rough go of it for a long time, since the mid 2010's and not made money, AUM collapsed (from $7B to "family office"

 

 alpha generative short selling helps a fund compound capital. negative alpha generative short selling destroys capital. some third parties corroborate very very good early returns for chanos. ALL sources of information are consistent on him sucking of late, including him. 

 

 

 

image.thumb.png.94f287037054f41d79bcf6749fcc3f52.png

Posted

At the end of the day, his business went to zero just like Enron did.

I am not a Chanos hater and I think he has scored definitely on some investments especially early on. It some of his late shorts thesis seem sloppy to me (like the one on datacenters etc). 
 

In the meantime, I think Kathy’s ARK still makes money. how can an investment manager even lose money? Must be that expenses are fairly high for the asset base, which probably means he pulled in a high salary while the asset base and business was shrinking.

Posted
14 hours ago, Spekulatius said:

At the end of the day, his business went to zero just like Enron did.

 

I disagree. 100's of managers shut down a year without committing fraud. Him losing AUM and shutting down and the management company being worthless is completely normal. Even highly successful fund managers shut down. I can think of a few who voluntarily returned billions and just quit as well as many more who lost their AUM because they failed from an investment standpoint or failed from a sales standpoint.

 

the vast majority of fund managers have no terminal value beyond the founder's career. 

 

having your management company become worthless is not equivalent to fraud and not equivalent to your investment funds going to zero. 

 

the disagreement re the loan payments is sketchy and deserves scrutiny. my gut is chanos would not commit such blatant fraud, but we'll see. courts will figure out. 

 

 

 

 

 

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