Fund or
affiliation
- Independent
short-seller.
Methodology
- Short-selling and
busting mediocre concept stocks that get wildly
puffed up by hungry stockbrokers.
Research Techniques
Employed
- Spends two-third of
a day on the phone, and one-third of it reading
business magazines and telephone messages taken
by his secretary. Goes out a lot at night with
stock market friends.
- He virtually never
visits companies or assesses their management
firsthand. Did go to WEMA (Western Electronics
Manufacturer’s Association) conference every
year.
- Buy companies that
are doing something new and different, or doing
it in a different way. Buy technology companies
that could go up ten times in five to seven
years.
- Don’t try to
anticipate how fast competition will undercut an
established company.
Trading/ Valuation
Techniques Employed
- He likes to short
into strength in a stock, not when it’s
already on the way down.
- Points out that only
in US market can one take short positions that
can be kept in place month after month.
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Philosophy
and beliefs
- Insists on stocks in
which there is a major risk, because such a stock
is likely to go way up. "Unless there is
fear in a stock, it probably doesn’t have a
great capital gains potential."
- Bets on the stock
image that he thinks will excite the public in a
few months or a year. You get a better move
"playing the surprises".
History and other
facts
- Worked for First
Boston, General American Investors, a closed-end
fund, and A.G. Becker & Co. Set up his own
hedge fund in 1968, gets 20% of any
outperformance over S&P 400.
- An important patron
of New York Metropolitan Opera and Whitney
Museum.
- Quotes Bernard
Berenson: "In order to be comfortable, one
should have a little more money and a little less
time than one needs."
- "Living well is
the best revenge."
- Following J.P.
Morgan’s dictum "I can do a year’s
work in nine months, but not in twelve."
Examples
- Lost $10M shorting
Resorts International, which is likely to be
remembered as the most catastrophic short play in
modern times.
Performance Record
- >34% over 20
years: "In 1958 he received an initial stake
of $15,000 from his father and has multiplied his
assets into the tens of millions... in spite of
fearful setback in 1978", J.Train, MM, 1980
pp. 189
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