A Kevin Douglas Update


Market newsA few commenters have pointed out the extent of the American Superconductor losses, and they are vast: Mr. Douglas has lost somewhere in the neighborhood of $220 million over the past two years in this position.  The loss is real, and absolutely impacts his performance over the past ten years.  That being said, it’s most likely not nearly as bad as the sticker shock number suggests, considering he first purchased the stock in the single digits in 2006, and did sell 20% of his holdings during 2008 and 2009, at prices double what he first paid, before piling back in during 2011.  Have no doubt, I clearly recognize that the man lost a bunch of money on this investment, particularly of late.  Yet still, what is most impressive is that DESPITE the loss in AMSC, his outstanding gains on Monster/Hansen, IMAX and Westport combined are well in excess of his losses in AMSC, and those are just three of his investments.

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Let me further add that I under-calculated his stake in Monster/Hansen in the original post, as the numbers quoted were based on his personal stake, held in his own name, not additional shares purchased for the Douglas Family trusts, and other family members for whom he invests.  The losses in AMSC are reflective of these other beneficial holders as well, and as such, this greater gain helps provide more context to the AMSC loss.  With this new number on MNST, Mr. Douglas’ initial investment in Hansen was closer to $950,000 and total gains were at minimum $120 million, and realistically more like $150 million considering he locked in some profits during the company’s initial surge in 2006.

Further there remain several significant gains that I glanced over for the purposes of this writing.  One substantial gain was his ~14.5% stake in Rural Cellular Corporation, which he accumulated primarily in the single digits, with buys up to $20.  In 2007 the company sold itself to Verizon for $2.67 billion, or $45/share (the deal closed in 2008).  At the very least, he cashed out $387 million on an investment that was no more than $150 million.  I am fairly certain that I am overstating his initial investment in the company, however I cannot track down an old price chart on Rural Cellular in order to more accurately calculate a cost basis.  I only know dates and filings.

Fund Manager Profile: Zhang Hui Of China’s Southern Asset Management

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But I digress.  It is unquestionable that Mr. Douglas has made massive amounts of money on his investments, it’s simply impossible to calculate a) how much capital he was working with; b) what his cost basis was in most investments; c) if he made any investments that did not require SEC filings.  For these reasons, building a composite performance number is in my view, unnecessary to understand the magnitude of Mr. Douglas’ gains and his investment track-record.  Further, let me make explicitly clear that my intentions in writing about Mr. Douglas were two-fold: first, to deliver some accolades to a man who unquestionably has built an outstanding track-record; second, and most importantly to me, to share some of the insights I have gained from my attempt to back into his investment thesis for 10 of his investments, 8 of which were successful, one of which is a failure as of today, and another which in my opinion remains to be seen.  There is much to learn from the process Mr. Douglas undertakes, even when presented with a losing outcome on an individual investment.

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Elliot Turner is a Managing Director at RGA Investment Advisors, LLC and founder of Compounding My Interests. Prior to joining RGA, Mr. Turner was a Principal and Managing Director at AustinWeston Asset Management LLC, a value-driven investment management firm, where he specialized in discovering and analyzing long-term investment opportunities and strategic portfolio management. Mr. Turner’s professional asset management career began as a Proprietary Equities Trader at Chimera Securities, LLC, where he developed his own unique trading strategy integrating both fundamental and technical analysis. Mr. Turner then joined T3 Capital Management, LLC to continue his trading career on T3?s Equities Desk and to develop the T3Live Blog. From T3, Mr. Turner joined the Wall St. Cheat Sheet, a financial media website specializing in news and analysis on events in the investment and entrepreneurship space. As Managing Editor at the Wall St. Cheat Sheet, Mr. Turner authored numerous columns on investment ideas and philosophies, macroeconomic policies, and trends in technology and innovation. His works and opinions have been published on Yahoo! Finance, TheStreet.com, Marketwatch, Business Insider, and Seeking Alpha. While still at the Wall St. Cheat Sheet, Mr. Turner rejoined Chimera Securities, LLC to manage the firm’s first long/short investment portfolio. Mr. Turner holds a Juris Doctor from Brooklyn Law School, and is admitted to practice law in New York State. He also holds a Bachelor of Arts degree from Emory University where he double majored in Political Science and Philosophy.
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