A HEDGE FUND MANAGER, AN ANALYST STARING AT THE WALL, AND INSPIRATION
I will be going over the specifics of each current portfolio position during my year end review to be posted on January 1st. I've made it a habit this year to post my monthly letter to investors as a way of allowing readers further transparency into my process. It has been met with a fair bit of interest and will remain a staple on the site for the foreseeable future.
A few months back I had a meeting with a hedge fund manager and several of his analysts regarding the potential to manage a portion of their funds. During the meeting, I was struck by the fact that one of his analysts insisted on looking upward toward the corner of the wall during the entirety of the meeting. I felt like Ben Stiller in Meet The Parents during that scene when Owen Wilson was describing his ex-girlfriend (who just so happens to be Ben Stiller's fiance) to him while looking off into the distance so intently that Ben Stiller's character has to turn his head to see if there was something on the wall he was focusing on. I found myself wanting to turn around to check several times.
During the meeting, one of the questions that seem to be more pressing than any of the others was how I planned on raising assets from substantial types when I am giving away all my analysis for free on a public forum? I had never thought of that question so my answer probably wasn't as well articulated as I would have liked. I basically said that I gain tremendous insight from my own analysis posted on this site. It assists me in my management process. It allows me to showcase what I feel is a unique hybrid strategy involving both fundamental and technical analysis as it applies to small-cap companies. Plus I get to help a lot of individual investors not only create some capital gains but learn to look at the markets from a different perspective.
What I am doing on this site and many others who post their thoughts, analysis and opinions are doing as well is resurfacing Wall Street. The mindset that demands a type of curtain to conceal the investment decision process is slowly being cut away. 10 years ago I would have never dreamed of a large hedge fund manager making a 2 hour presentation regarding his favorite short position for all the world to analyze and digest. Yet Bill Ackman recently put together the Macy's Thanksgiving Day Parade, with Herbalife as the turkey, for the viewing pleasure of anyone who was interested.
This isn't a fad. It is a new order of operations for market analysis. It is taking professional analysts at Goldman, Morgan and Merrill, putting their backs against the wall and demanding proper research. It is opening a gigantic hole in the Wall Street infrastructure of analysts issuing reports that have more to do with collecting fees than disseminating proper information that can be utilized to create profits.
We're all on the same playing field now. We all have access to means of distribution. We all have access to reams of information. If your analysis is consistently flawed, one sided and essentially useless, there will be an electronic trail of slimy goo following you around the internet. It's all time stamped. And it is all accessible in a few keystrokes.
In the end I left the hedge fund manager's office with a vague recollection of what was said, the persistent image of a 20 something year old analyst worshiping a fly on the wall as I spoke and confidence in the fact that sharing my analysis, thoughts and opinions on this site is not only necessary but a mandatory component of the new Wall Street.
