I am very strong believer in one person being responsible for PM decision for a couple of reasons.
I believe portfolios require active management and monitoring. Groups can’t do that, individuals can.
I also believe group decisions create conflict. Not in the deciding but in the evaluation of who deserves credit/blame for the outcome. Worked out great it was my idea. Not so much then it’s on you.
I believe in what Jocko willink calls extreme ownership. I lead. I take all the blame when we are wrong and I give you more credit than you deserve when we are right. That’s not everyone’s definition of ownership. But that’s mine.

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More from @pmje73

8 Apr
So you want to be an emerging manager? (Warning this is long)
Why should you care about what I have to say? I worked at a h/f that specializes in developing portfolio managers. I was there as the fund 10x and started 2 new strategies.
4 and soon to be 5 of my former analysts have their own funds. I have worked with a few emerging managers not from my old firm one of whom has improved performance materially and tripled aum since we started working together and one who has risen to over a bn of aum.
Read 25 tweets
24 Mar
Investing in controversial stocks is a bit like being a lawyer. Knowing whether you are the prosecutor and have to prove something or the defense who can sit back and see if the prosecution fails to make its case.
Intel just flipped its narrative. If you are bearish you now have to prove Gelsinger’s plan won’t work. Will be a long while before you’d have to prove that it actually will work.
These moments usually cause major sentiment shift in a stock.
Read 5 tweets
21 Mar
A lot of observations out there about how difficult YTD has been for l/s funds. That’s because 2020 was a historic year for dispersion between winners and losers both quantitatively and qualitatively.
L/s spread can’t be created. It has to be captured. Sometimes the fish jump in the boat like 20. The spread available to l/s managers was more abundant in their preferred style than they could ever imagine and all they had to do was sit tight and let the fish jump in the boat.
Spread opportunity is mean reverting. Meaning over time even if great businesses outperform crappy ones, they may not for long periods of time and not likely after a massive period of positive dispersion.
Read 9 tweets
20 Mar
Here is my concern the message “just buy 5 stocks and own them forever” sends to emerging investors as a reason not to master portfolio management.
How is an investor supposed to know ex ante they are sitting on 5 stocks they want to own for 15-20 years?
Are we to believe all investors that sit on 5 stocks forever took 5 swings in their life and were 5 for 5? Is that really the message?
Read 10 tweets
17 Mar
Ok so what’s an alpha curve?

An alpha curve measures when you generate alpha during the holding period of a stock you own.
Almost everyone I know measures alpha from inception to date. I don’t. I measure alpha along a continuum of the hold period.  I know precisely when it’s o/p and u/p and I try to understand how much of that is luck, mkt, #s, factors ...
For ex some people bottom feed and own a stock that u/p’s from inception for a few months.  Some chase and u/p for same reason. Some know how to catch the mo and o/p right away. Some know just when to get in off the bottom.

Why is this important?
Read 12 tweets
12 Mar
The l/s model works because leverage on longs is a force multiplier. L/s funds that don’t run greater than 100pct gross long are doing it wrong. So 100 long and 40 short for 60 net and 140 gross is the zero bound always imo.
How high you go above 140 is a function of the quality of your shorts and the size of your aum. Your entire risk model is based on having low gross at periods of negative spread and high gross during periods of positive spread
This is why in the l/s model you have to work your capital and constantly be adjusting real time to always avoid negative spread. Always always always. That doesn’t mean always grossing up and down. It means flexing up and down top 10 longs and shorts.
Read 10 tweets

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