The 400% Man!

[Shooter MacGavin]

 

I take particular umbrage specifically with funds that are underperforming the market on an unlevered basis, risking investor's capital with high levels of margin (and I make a distinction between margin and leverage overall), throwing up good numbers and receiving the accolades from outside investors who aren't paying attention to this "parlor trick". And it happens ALL the time.

 

I'm curious what funds do this. I know you don't want to name names, but presumably this info is in their letters and out there.

 

I don't mean it to sound like the funds/ IM's are being deceptive or anything like that by using margin and they should be "called out".  I'm saying when we are trying to evaluate their performance, it's not strictly about how much the fund is up overall.  It's easy to forget this point.  The question of how much risk was taken is very important too.  Unfortunately, the latter isn't as easily discernible to the average investor. 

 

I don't really want to discuss names, because I don't have access to statements, total holdings,hedges and so forth and I haven't gone over these things with a fine-toothed comb so I could easily be wrong (nor do I have any interest in doing that), but it seems to me that some funds with large out-performances are generally only doing so because of sizeable margin.

 

It also doesn't mean that there's not funds with large outperformances who are using margin that are also highly skilled.

 

[oddballstocks]

I was on a series of emails when the accusations were flying.  Yes, numbers didn't seem to add up from what we could see.

 

NOW...he has ZERO responsibility to the public to show he isn't a fraud.  I know people wanted a public declaration and proof.

 

What I know from my emails is that he provided details and information to his investors to show them that he wasn't a fraud.  I believe this was details on each trade, plus information on accounts.  That's a proper response.

 

Hiding letters?  My guess is performance is down.  I get letters all the time, having a consistent flow of them is rare.  They are flooding in during good years, and suddenly top secret in bad years.

 

The manager who exposes their returns and thoughts both good and bad years has a lot of integrity.  I would trust them over someone who goes silent when things are bad, but is shouting from the rooftop when things are good.

[racemize]

I believe the results were fine for 2017.  Not outperformance, but not bad either.

[Guest]

I said it before (but will again). If Allan will let me in, I'll be happy to take the place of an investor that wants out (if he'll let my poor self in under the minimum). ;)

 

As for Sanj, he's a solid investor and super reputable but Allan has insane returns. The fund was even up in 2008. Incredible.

[AdjustedEarnings]

It is now mid March... has any one seen the 2018 letter yet? I don't think 2017 was ever found. Some suspected it was because of poor performance. Others thought it was because of the scam allegations that they kept them private. 2018 performance has to have been horrid given what they owned. 2019 looks like it's off to a bad start too. Maybe its true what they say... 10-year manager of the year type performances tend to go down the tubes later. Berkowitz certainly did, as did Miller. Let's hope Mecham does not join that team.

[Dynamic]

I did a search and various people on Reddit were asking about the 2017 letter and now the 2018 letter too.

 

I suspect that with only 6 investors, IIRC, and having closed to new investors, they have strongly asked that all investors do not share the letter, and they could even have made all 6 copies different enough to identify anyone who does share. So now, it's only the SEC disclosures that would give clues to the portfolio

[flesh]

They were -18% in 18' and around 21% in 17. They have more than 6 investors, much more. I'm sure this year it's not good.

 

Allan is definitely dealing with his first serious dose of under performance.

 

IMO, it's simply an effect of large AUM. I can't imagine the finagling required to move 1.2 b around versus 100m or less, which is where most of the out performance came from.

[AzCactus]

IMO, it's simply an effect of large AUM. I can't imagine the finagling required to move 1.2 b around versus 100m or less, which is where most of the out performance came from.

 

I probably sound a tad ignorant here but relative to other peers such as Ackman and Klarman managing 1.2/1.3 billion isn't crazy and saying that's the reason he was down ~17% or so last year doesn't make a ton of sense.  I just think some of his picks are taking longer to pan out then he would have hoped and that happens sometimes.  Another case is CMPR which has fallen from around 130ish down to the high 70s.

 

 

[GregS]

IMO it has nothing to do with AUM.  He was investing in large caps even when small and his strategy scales well.  I think it is just a period of underperformance for a concentrated value investor and he should be judged over the cycle.  In the meantime, he needs to manage his LPs which won't be easy.

[frog03]

He may even reopen the fund!

[WneverLOSE]

How do you get the performance number ?

I thought just by looking at the positions that it might be more like -10%.

[frog03]

No news of the 2018 letter?

[mhdousa]

Arlington is closing due to some possible health issues for Meacham. Current investors are being given the option of an in-kind subadvisor arrangement with Glenn Greenberg of Brave Warrior.

Anyone have any thoughts on Greenberg and his fund?

 

 

[winjitsu]

Arlington is closing due to some possible health issues for Meacham. Current investors are being given the option of an in-kind subadvisor arrangement with Glenn Greenberg of Brave Warrior.

Anyone have any thoughts on Greenberg and his fund?

 

Great investor -- medium / large cap concentrated value. Has been crushing it for a very long time. Use to run Chieftain Capital with another partner, but they split in 2009.

[Poor Charlie]

Anyone have his 2019 or 2018 letter? 

[CorpRaider]

Arlington is closing due to some possible health issues for Meacham. Current investors are being given the option of an in-kind subadvisor arrangement with Glenn Greenberg of Brave Warrior.

Anyone have any thoughts on Greenberg and his fund?

 

He's among the investors covered on dataroma.  Also discussed/interviewed in Tobias Carlisle's book Concentrated Investing.  He mentions Valiant (among Goog and some other stunners) when reeling off some great business, but he's not the only successful investor to get snowed by that one.

[AzCactus]

Does anyone know what the hell happened here?  He's in his 40's I believe and has been decimated this year I would imagine. Website page does appear inactive-http://arlingtonvalue.com/

 

David

 

 

[opihiman2]

Wow, I haven't been keeping up with Arlington, and I just read he blew up his fund.  Can anyone give me the TL;DR of what the hell happened?  I read sometime last year that people were questioning his returns.  Anyways, and what the hell happened to ADS?  Holy hell, that stock just completely blew up over the past few years.  WOW!

 

Investing is a tough tough game. 

[jschembs]

Definitely remember his name, then just checked the 12/31 holdings. 30% in Berkshire?

 

Always surprising to me that no one calls out concentrated BRK positions among fund managers as just another fund of fund.

[mjohn707]

Definitely remember his name, then just checked the 12/31 holdings. 30% in Berkshire?

 

Always surprising to me that no one calls how the concentrated BRK positions among fund managers as just another fund of fund.

 

I bet many investors would have preferred he was 100% BRK at this point

[jschembs]

Definitely remember his name, then just checked the 12/31 holdings. 30% in Berkshire?

 

Always surprising to me that no one calls how the concentrated BRK positions among fund managers as just another fund of fund.

 

I bet many investors would have preferred he was 100% BRK at this point

 

I didn't mean to rag on him specifically - brutal turn of events and obviously he had no way to anticipate in Q4 what would happen - but more generally. I'd be curious to see the number of funds that are at least 15-20% BRK, I think it'd be surprising how many there are.

[mjohn707]

Definitely remember his name, then just checked the 12/31 holdings. 30% in Berkshire?

 

Always surprising to me that no one calls how the concentrated BRK positions among fund managers as just another fund of fund.

 

I bet many investors would have preferred he was 100% BRK at this point

 

I didn't mean to rag on him specifically - brutal turn of events and obviously he had no way to anticipate in Q4 what would happen - but more generally. I'd be curious to see the number of funds that are at least 15-20% BRK, I think it'd be surprising how many there are.

 

No particular argument there.  All I’ll add is if your final investor letter mentions Guerin’s record, it’s not the greatest sign perhaps

[LC]

First and foremost, hopefully his health improves.

 

On his fund, what a turn of events. I presume the drastic swing (from “400% man” to blown up) is due to leverage.

 

Goes to show you that objective #1 is to stay in the game.

[AzCactus]

Not too be cynical but does anyone actually have proof of what's being said here?  I didn't see anything in the news and imagine that there would be some documentation of this if this was all true.  I'm not saying these posts aren't correct, just wondering. 

[mjohn707]

Not too be cynical but does anyone actually have proof of what's being said here?  I didn't see anything in the news and imagine that there would be some documentation of this if this was all true.  I'm not saying these posts aren't correct, just wondering.

 

Those letters are floating out there and he mentions names he owned and what percentages.  And certain of these names have not done great this year, and don’t seem to have recovered as much possibly as the market either.  I haven’t done the math or anything, but it doesn’t seem like it’s been a banner final year