This is an excerpt from a Reuter’s article today
Activist investor and hedge fund manager Daniel Loeb beat most rivals hands down last year as his flagship fund kept pace with a rallying U.S. stock market and returned 25.2 percent in 2013. Loeb’s $14 billion firm, Third Point, has been one of the industry’s best performers for several years now thanks to bets on Greek bonds, Japan’s economic recovery and blue-chip U.S. stocks. He told investors late on Thursday that his Third Point Offshore fund gained 2.3 percent in December, according to a client who received the performance update. His smaller Third Point Ultra fund, which uses borrowed money to boost returns, fared even better, gaining 3.4 percent last month to end the year up 37.9 percent, the client said.
The figures were above the 6.5 percent global average return of hedge funds in 2013 and were in line with the Standard & Poor’s 500 Index which climbed 29.6 percent, the index’s strongest annual return since 1997. Loeb, who most helped install Marissa Mayer as CEO at Yahoo and is currently trying to overhaul auction house Sotheby’s, did not specify the investments that powered his strong returns. While Loeb often employs a go-anywhere trading strategy, last year the bulk of his bets were on large U.S. stocks. At the end of the third quarter, Loeb’s three largest positions included Yahoo, American International Group and Sotheby’s. He was also invested in FedEx Corp and said in November that he had taken a stake in Japan’s Softbank Corp.
This is astounding. The average hedge fund gained 6.5% on the year, when the S&P 500 gained 29.6%, and Loeb is congratulated because he gained 25%. It shows how hard it is when you are investing billions of dollars, and how we can beat any Mutual or Hedge Fund on a consistent basis. He’s too big to invest in most MF RB type stocks.
Saul
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we can beat any Mutual or Hedge Fund on a consistent basis
Saul, after discovering you and searching specifically for your posts for the past month or so, I would like to add that I thank you for being generous enough to say “we” instead of “I,” which you have already shown you’ve been doing for the last twenty years.
I’m really grateful and excited that you’ve started Saul’s Investing Discussions. I look forward to following your wisdom Thank you!
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This is astounding. The average hedge fund gained 6.5% on the year, when the S&P 500 gained 29.6%, and Loeb is congratulated because he gained 25%. It shows how hard it is when you are investing billions of dollars, and how we can beat any Mutual or Hedge Fund on a consistent basis. He’s too big to invest in most MF RB type stocks.
It really is amazing.
To give another example, I have two young children (ages 26 months and 4 months). They each have a 529 college plan that is managed by TIA CREFF. I also have another account that I manage that is earmarked for their college. Money goes in equally - so for example each quarter I’ll put $1,000 each into both 529 plans and then $2,000 into the combined, self managed account, totaling $2,000 invested into the CREFF accounts and $2,000 invested into the account I manage myself. That way, with the CREFF accounts and my own account getting the same amount of “seed capital” I can really see how I’m doing against CREFF (the wife was nervous about me managing ALL of the college money).
As you mentioned in your post, in 2013 the S&P 500 returned 29.6%. For 2013 I generated a 60% return in the self-manged college account while the CREFF account for my daughter (the only CREFF account that was open all year) generated a 21.6% return. And her account is in the most “aggressive” category as she has at least 16 years until the money will be needed.
I was able to add to BOFI, DDD, PCLN, Z, and a number of other stocks on dips throughout the year - while the professional money manager trailed an index fund by 8 percentage points. The small investor has a HUGE advantage provided he/she has the right temperament and can spot (and act) on good opportunities when they present themselves.
Fletch
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