| By Dr. Steve Sjuggerud |
Eight hundred thirty six percent.
That's how much you'd be up if you'd invested with hedge-fund manager Dan Loeb from the start of his fund in late 1996.
For comparison, the S&P 500 is only up 4.5% a year since then.
That's how much you'd be up if you'd invested with hedge-fund manager Dan Loeb from the start of his fund in late 1996.
For comparison, the S&P 500 is only up 4.5% a year since then.
Even better, Dan earned those returns with less risk – less volatility – than the stock market.
He has only underperformed the S&P 500 twice since inception. Importantly, he didn't lose money in either of those two years. His average gain was 11%.
His track record continues this year… He's up by double digits (percentagewise), in a flat stock market.
What's his secret for 2010? What's his big theme?
He's trading Obama…
Earlier this month, in a letter to his hedge-fund shareholders, Dan complained, "the rules are continually changed, and the goalposts repeatedly moved. The Administration appears unable, or unwilling, to let free-market capitalism resume."
He says it's not health care or financial reform that's caused stress in the markets. It's the "continued politicizing of the regulatory process."
Loeb says the Obama Administration doesn't understand that its "regulatory volatility" is killing confidence. "Main Street is not independent of Wall Street," Loeb wrote. "We are each part of an intricate ecosystem and the failure to lay out clear rules of the road in intellectually honest tones is beginning to show signs of sabotaging the overall recovery."
Loeb gave examples of cheap stocks he's avoided thanks to regulatory volatility. Dan sold banks and health care companies because of this. He said: "We have come to the realization that from a risk management perspective, the anti-business, short-term politically motivated activities we're seeing in Washington make investments in certain industries simply impossible to evaluate."
He has only underperformed the S&P 500 twice since inception. Importantly, he didn't lose money in either of those two years. His average gain was 11%.
His track record continues this year… He's up by double digits (percentagewise), in a flat stock market.
What's his secret for 2010? What's his big theme?
He's trading Obama…
Earlier this month, in a letter to his hedge-fund shareholders, Dan complained, "the rules are continually changed, and the goalposts repeatedly moved. The Administration appears unable, or unwilling, to let free-market capitalism resume."
He says it's not health care or financial reform that's caused stress in the markets. It's the "continued politicizing of the regulatory process."
Loeb says the Obama Administration doesn't understand that its "regulatory volatility" is killing confidence. "Main Street is not independent of Wall Street," Loeb wrote. "We are each part of an intricate ecosystem and the failure to lay out clear rules of the road in intellectually honest tones is beginning to show signs of sabotaging the overall recovery."
Loeb gave examples of cheap stocks he's avoided thanks to regulatory volatility. Dan sold banks and health care companies because of this. He said: "We have come to the realization that from a risk management perspective, the anti-business, short-term politically motivated activities we're seeing in Washington make investments in certain industries simply impossible to evaluate."
Where to from here? Is there any good news?
Loeb says "the good news is that the bad news seems to be out in the sunshine: we all know that Europe has 'issues'; China may or may not be slowing down or turn out to be a bubble (we think not); the government hates Wall Street; taxes are going up; there has been a catastrophic oil spill in the Gulf of Mexico; Japan's economic situation is not sustainable; and so on."
Loeb thinks stocks are cheap.
"…we remain optimistic that we can continue to put up solid returns. We have not seen equity valuations this cheap in ages, with the S&P trading at 12.5x 2010 forecast earnings."
I agree with him. The bad news is out in the sunshine, and blue chips are cheap.
Dan Loeb's track record is fantastic. I want to know what the best-performing investors like Dan are thinking. So I like to read their letters to shareholders.
A great place to find hedge-fund manager letters, for free, is www.hedgefundletters.com.
Good investing,
Steve
Loeb says "the good news is that the bad news seems to be out in the sunshine: we all know that Europe has 'issues'; China may or may not be slowing down or turn out to be a bubble (we think not); the government hates Wall Street; taxes are going up; there has been a catastrophic oil spill in the Gulf of Mexico; Japan's economic situation is not sustainable; and so on."
Loeb thinks stocks are cheap.
"…we remain optimistic that we can continue to put up solid returns. We have not seen equity valuations this cheap in ages, with the S&P trading at 12.5x 2010 forecast earnings."
I agree with him. The bad news is out in the sunshine, and blue chips are cheap.
Dan Loeb's track record is fantastic. I want to know what the best-performing investors like Dan are thinking. So I like to read their letters to shareholders.
A great place to find hedge-fund manager letters, for free, is www.hedgefundletters.com.
Good investing,
Steve
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