Gotham’s Joel Greenblatt on Choosing an Active Manager Mon, 10 Oct 2016 via Morningstart
Find someone who has a good process and then sticks to it, says the Gotham Asset Management founder.
Partial transcript full transcript here
Stone House Capital Partners returned 4.1% for September, bringing its year-to-date return to 72% net. The S&P 500 is up 14.3% for the first nine months of the year. Q3 2021 hedge fund letters, conferences and more Stone House follows a value-based, long-long term and concentrated investment approach focusing on companies rather than the market Read More
Charlson: So, let me ask you, a number of your funds use long and short components to the strategies. What is the value to an investor of a long-short strategy in a mutual fund, and how should they think about using it?
Greenblatt: Sure. We have a number of different ways to take advantage of valuing businesses. When you value a business, sometimes the stock price is low, and you want to take advantage of that disparity. Sometimes the stock price is high, much higher than the valuation, you want to take advantage of that. So it’s really utilizing both sides of our valuation coin. We have different ways of expressing that. We have neutral funds that just pick our favorites and short our least favorites. We have absolute return funds that are 60% long and then we have a 60 by 60 long-short overlay where we are taking advantage of just our stock-picking, the long and short disparity. And then we have 100% long that actually goes 100% long in one bucket, but then we have another bucket for our all caps that is 70 long and 70 short, trying to take advantage of both the long and short components. So there is a place for doing that in your portfolio to take advantage the valuations that we are doing. And the alpha generation on both the long and short side is very similar, so we might as well take advantage of it.