For the most part, 2013 was not kind to Steve Cohen. The Feds put his balls in a jar and put that jar on Preet Bharara’s desk. One of his ex-employees went to trial for (and was later found guilty of) masterminding the “most lucrative insider trading scheme ever.” Other former traders helped bring the number of SAC alums indicted on securities fraud charges to nine. His genius idea to give out free hot dogs on the front lawn of SAC HQ failed to prevent a number of departures. He lost his biggest fan. For a lot of hedge fund managers, all of this would add up to moping around the office and turning in less than stellar work. For Steve Cohen, it meant turning up the Styx and getting down to business. Read more »
Fashion Meets Finance
“As is tradition at Glenview when things are going well for our investors, I have worn the same brown suede shoes since January 2nd, and John McMonagle, our Industrials Sector Head, continues to wear the same pair of khaki pants that are holding up better than my shoes.” [AR]
2012 Glenview Performance Means Larry Robbins Has Enough Cash On Hand To Retrofit Backyard Rink With A Row Of Seats For B-D List Celebrities And Pay Surly Neighbors To Rip TicketsBy Bess Levin
Whether they want to accept the olive branch or not is their choice. Read more »
This past December, hedge fund Glenview Capital turned ten years old. To celebrate the anniversary (which, if you haven’t acknowledge yet, you’d best get on), founder Larry Robbins sat down with his quill to write an extra special letter to investors. Typical Glenview letters will include analogies about how being a steward of capital is like driving a bus, going bowling and trying to squeeze tooth paste out of the bottom of the tube and to be sure, the latest has got some of those but this time around, Larry included some lessons not only about investing but life, all of which you can take to the bank. Herewith, some pearls of wisdom from Uncle Larry:
* Short people DO have a reason to live: I’m 5 feet 10 inches tall. I always wanted to be 6 feet tall, and at 41 years old I realize this isn’t going to happen for me. There’s nothing wrong with 5’ 10” – it is just human nature to wish for a little bit more.
* Shampoo bottles come with directions: wash, rinse, repeat. I do not know who purchases shampoo but doesn’t know how to use it, and I do not know anyone who washes their hair twice, although I can understand why the shampoo company would like you to.
* Drugs: Drug distribution is a good business. Read more »
2010 performance. Read more »
As we’ve discussed at length, the hedge fund quarterly letter to investors is an art form. In down months and in up, it’s become increasingly difficult to come up with an original way to say you got your ‘nads ripped off and shoved down your throat “but it’s okay! because this had nothing to do with our analysis and everything to do with the market’s ridiculous mispricing of equity” or write that you’ve been doing chest bumps with IR all morning on account of “making the market our bitch” without sounding like you’re getting too cocky. Regardless of performance, managers tasking themselves with the responsibility of dazzling clients are faced with the challenge of how to do so in a fresh way that sets them apart from the pack. And few if any get the job done like Glenview chief Larry Robbins.
If Lar were teaching a Learning Annex class on the subject, he’d write one word on the chalkboard and underline it twice: analogies. In his Q2 2010 letter to investors, for example, Robbins likened being a steward of capital to being a bus driver, which included a story about driving his kids to school and debting the merits of taking the GWB versus the Harlem River. Impressive, yes, but the Maestro was just getting started. For for his latest piece, the Q3 note, Lawrence pulled out all the stops. They involved:
* Football fields and sprinklers:
In other words, if you look at the total investing landscape and assume that it is a football field of 100 yards, we think that many different asset classes – Treasuries, investment grade bonds, non-investment grade bonds, CMBS, actual real assets, real estate, gold, etc. – have gone from potentially and then wildly undervalued to now being at least fairly valued, or, in some cases, overvalued. Certainly on the debt side, if you are an absolute return investor, things are quite sparse there. So where’s the only place for the liquidity to go? The only place left for the liquidity to go, which can absorb that liquidity, is high quality US equities. That is where the undervaluation is. If you think of the market as a giant football field, then if 80% of the field is saturated but the liquidity sprinklers are still on all around the field, then that means that 5x as much water is going to find the remaining 20% which is still dry.
* Ornery tubes of toothpaste: Read more »