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Sounds like a plan

“Our mandate is to find the 200 best companies in the world and invest in them and find the 200 worst companies in the world and go short on them,” he said. “For my shorts, I look for a bad management team and a wildly overvalued company in an industry that is declining or misunderstood.”

That might also explain why CEOs are paid so much. Because the bad ones have such an effect – as do the good ones.

his fund’s average annual returns of 31.7 per cent between 1980 and 1998.

6 thoughts on “Sounds like a plan”

  1. “I had become convinced that the hedge fund was the way to invest,” Robertson said, because short-selling was “a licence to steal”.

    Quite so. There are always those willing to invest in companies which value virtue above profitability or fall into the hands of the nefarious or the incompetent (nepotism previously being a big part), but I’m surprised it took until the 1980’s to achieve, presumably because “shorting a chaps stock wasn’t the done thing” or something.

  2. “shorting a chaps stock wasn’t the done thing” or something
    Fortunately, nobody ever mentioned that in my presence.
    But shorting was always done within an account settlement period. 2 or 3 weeks depending on which weeks in the year. And one would have to close a position by the last day of trading for that account. Or have to deliver the stock on the next settlement day. One didn’t have to “borrow” the stock to short it. It was a naked short.
    So one could only short over a relatively brief period. To extend. One could bed & breakfast positions between accounting positions. Close for the current account & open for the next. Settle the resultant positive or negative balance on the next settlement day. Otherwise, one did an option trade.

  3. Back in 2014, Balfour Beatty was in difficulties, and my shareholding was well down.

    It was announced that Leo Quinn was going to leave his position as boss of, IIRC, Qinetic, and become boss of BB.

    I checked out the share price movements for that day. The increase in the capital value of BB almost exactly matched the decrease in Qinetiq.

    BB then did pretty well over the next few years, and my shareholding’s now above water.

  4. Our mandate is to find the 200 best companies in the world and invest in them and find the 200 worst companies in the world and go short on them,

    But isn’t the principle indicator* of a ‘good’ company, a rising share price (as a proxy for future profits)? So our cunning plan is to identify companies whose share price will rise and then invest in them. Sounds like an excellent plan, Baldrick, with just one tiny flaw …

    * at least for larger companies, rather than penny shares

  5. I got a pretty good return on equities 1987 – 1999. Everyone’s a genius in a rising market.

    Timing their sale was dead easy too. I have not mastered the art, though, of timing a purchase of equities.

    I have known when not to buy (the Northern Rock queues were a good clue) but not when to buy. Except long ago when there was an attempted coup in the Soviet Union: I reckoned that reports that the tanks were stopping at traffic lights was a buy signal so I paid a visit to a broker. It was profitable but not gor-blimey profitable.

  6. I hope they.do not short any scottish companies like glasgow rangers, irn bru or a scotch whisky accompany.

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