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It seems that 2018 is the year when investors have finally grown tired of underperforming while overpaying for that privilege. The redemption requests are coming in hot and heavy. What happens when you have redemptions? You have to sell stuff. This, combined with general de-leveraging is creating mayhem—particularly in sectors that have already underperformed over the past few years. It also creates strange outlier moves—the death spasms of an industry getting liquidated.
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What is going on? You are witnessing a massive culling of the hedge fund industry as hundreds of funds are liquidated and thousands more get sizable redemptions. Many of these funds own the same companies—the outcasts from the indexed world, the cheap, the unloved; the same stocks that many other hedge fund managers own. With the hedge fund industry going in reverse, there is suddenly no natural buyer for what must be sold. As a result, you are seeing waves of forced sell orders and few buyers. It is creating rather insane bargains all around.
Do your self a favor and subscribe to Harris Kupperman’s blog “Adventures In Capitalism”. If you go back and read his previous articles you will note that he gets things right more often than not.
I have made a lot of money investing alongside Harris.
He is also the CEO of Mongolia Growth Group which in my mind is a tremendous value at these levels as it is selling well below book value. I wrote an update on Mongolia and the company a few months ago.
In addition, Harris has been successfully taking idle cash that MGG has laying around and has been buying and selling various public companies and garnering a nice return for shareholders.
I would also note that MGG management is buying back shares of the company as they are cheap. The CEO, Harris Kupperman, has also been buying shares steadily ion the open market.
You can track those purchases at CanadianInsider.com