From Whitney Tilsons latest email
1) Michelle Celarier with an in-depth look at Tesla: Elon Musk vs. the Haters, http://www.institutionalinvestor.com/article/3756165/investors-pensions/elon-musk-versus-the-haters.html. It was my worst short ever in 2013-14 (from $35 to $205; thank goodness I was long Netflix, which rose a similar amount during the same time frame). Ever since I covered, I’ve been warning all of my short selling friends that it’s a bad short at any price. To be clear, forced to go long or short Tesla here, I’d go short, but we investors aren’t forced to make any investments. Here are my quotes in the article:
Tesla checks all the red flags short sellers look for, but, he shrugs, so what? “I can do the numbers and see how much the company is losing, but you’re short an incredibly maniacally driven CEO, with manically driven engineers assaulting the world’s largest industry. If they succeed, Tesla could be a $400 billion market cap company.”
Einhorn Tells Investors: Tesla Is Gaming S&P 500 Index Committee
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Tilson has continued to follow the Tesla saga, but has resisted the urge to short it again. “Tesla is a good case study in how the world’s smartest short sellers can get sucked into something that’s just a bad short.”
…“I’d rather short something that’s a scam,” says Tilson. He applauds Tesla’s environmental mission and doesn’t want it to fail. “I don’t want to bet against that in an emotional sense.”
…As Tilson puts it, “I don’t want to be short open-ended situations. The tail risk is just too high.”
2) Good to see my fellow hedgies doing well (though we’re still trailing the market by quite a margin): Hedge Funds Ain’t Dead Yet, www.wsj.com/articles/hedge-funds-aint-dead-yet-1506859200. Excerpt:
Written off less than a year ago as overpriced and underperforming, hedge funds are pulling off an unexpected two-step this year: making money and taking in new cash.
The average hedge fund is up 5.4% through the end of August, while stock-focused hedge funds have gained 8.31%, according to the researcher HFR. Over the same period, the Standard & Poor’s 500 rose 11.9% including dividends, while the traditional 60-40 split of stocks and bonds would have earned 8.9%.
That makes this year the industry’s best relative performance in a rising market since 2010. Investors, particularly in Asia and the Middle East, have begun sending new money hedge funds’ way, attracted by the better returns and a broad lowering of the industry’s famously hefty fees.
For now, at least, the gloom that had beset hedge funds is lifting and even giving way to outright optimism.
“It just feels better,” said Alper Ince, a partner at the hedge-fund investor Pacific Alternative Asset Management Co. Mr. Ince credited an improved environment for stock picking that has fallen in hedge funds’ favor, with popular stocks like Amazon.com Inc. outperforming, and bets against retailers also paying off.
3) I read with interest this article on the front page of today’s NYT business section: Hiking Mountains, Gladly, With a Marine Turned Fund Manager, www.nytimes.com/2017/10/02/business/dealbook/hiking-mountains-gladly-with-a-marine-turned-fund-manager.html. Excerpt:
It was 9 p.m., and about 60 financial executives chattered nervously outside a barrack full of bunk beds at this United States Army training post in central Pennsylvania.
They had come from New York, Toronto, Philadelphia and beyond at the behest of Wesley R. Gray, an investment manager and former Marine Corps officer, to trek 28 miles through the mountains. The truly motivated would lug 30-pound packs.
“We are here to march for the fallen,” Mr. Gray shouted, describing the next day’s hike as a “haze ex,” Marine jargon for a hazing exercise. He distributed dogtags of troops who had died in battle, ordering that they be worn on the march.
In the cult-like world of machine-driven, systematic investing, chasing the latest philosopher king up a mountain counts as just another day at the office.
It caught my eye because I’ve been doing a bunch of things like this as part of my ongoing midlife crisis. It started three years ago with two weekends getting abused by ex-Navy SEALs (see this article: www.businessinsider.com/navy-seal-leadership-under-fire-program-2015-1), then morphed into running the NYC Marathon, climbing mountains in the Alps, and doing obstacle course races (Spartan and Tough Mudder).
Re. the latter, I’m running the Tough Mudder this weekend (Oct. 7-8) in NJ (a bit over an hour from NYC; Raceway Park, 230 Pension Road, Englishtown, NJ), and am looking for folks to join me. It’s my last big workout before I compete next Saturday (10/14) at the Obstacle Course Race World Championships at Blue Mountain (two hours north of Toronto); then, four weeks later in the desert outside Las Vegas, I’m running the season-ending 24-hour World’s Toughest Mudder, defending the 50+ age group title I won last year (see: www.tilsonfunds.com/TilsonWTM.pdf).
On Saturday, I’m running an early fast lap by myself and then a slower lap starting ~10:30am with anyone who wants to join me (you pick the speed – we can walk it if you want; each lap is ~10 miles and ~25 obstacles). Ditto for Sunday (I can give you a ride from NYC if you want).
You can register at: https://toughmudder.com/events/2017-tri-state. The total cost is $139.14 if you use the 30% discount code BRAND222 (at the top of the Register page, click Enter Promotional Code).
I ran this race (among many others) last year both Sat. (with my two older daughters) and Sun. (with my buddy Ben) last year – here are two pics: