4 ms·

The article is a little too breathless in its amazement at the performance of the hedge fund - if mentions in passing that the annualized return rate is somethi

The article is a little too breathless in its amazement at the performance of the hedge fund - if mentions in passing that the annualized return rate is something like 11% which means, despite all these “massive wins” demonstrating “amazing predictive prowess” or whatever, there were (admittedly fewer) hedges that didn’t work out so well for them, too. It’s just business.

mamonster 3y ago
You don't understand how the HF industry works. If his benchmark (HFRI Event Driven) returned 4.47% annualized from 2007 to 2023 and he averaged 11.1% then it is literally anywhere from an "amazing" to an "extremely exceptional" hedge fund. Put it another way: Over the last 16 years, you have more than twice the money if you were with him all the way as opposed to with the "average" event driven fund(represented by the index). There are some particularities due to how HF indexes work(you submit performance voluntarily etc) but these numbers are literally exceptional.
- ComputerGuru 3y ago
  I fully understand that. But the numbers they are mentioning (excluding the flops) would give you insane performance numbers.
  - mamonster 3y ago
    My point was that given how hard this guy destroyed his benchmark over the last 16 years it is completely appropriate to be "amazed" at his performance, he is literally like top 1-0.5% in his field.
- burkaman 3y ago
  Why would you use that benchmark? If you invested in an S&P 500 index fund you'd have about the same amount of money, without paying his (probably very large) fees.
  - mamonster 3y ago
    I mean it's a pretty simple explanation: Because his strategy does not have a high beta(it isn't taking on SP500-like risk). SP500 may go down and a merger still goes through, or SP500 goes up and a merger falls through. Sure, general stock market conditions can influence merger completions(for example Musk wanted to pull out of Twitter buyout partially because he realized he overpaid) but in general mergers are not super correlated with SP500 performance. So it doesn't really make sense to compare the 2.

mamonster 3y ago

You don't understand how the HF industry works. If his benchmark (HFRI Event Driven) returned 4.47% annualized from 2007 to 2023 and he averaged 11.1% then it is literally anywhere from an "amazing" to an "extremely exceptional" hedge fund. Put it another way: Over the last 16 years, you have more than twice the money if you were with him all the way as opposed to with the "average" event driven fund(represented by the index). There are some particularities due to how HF indexes work(you submit performance voluntarily etc) but these numbers are literally exceptional.

ComputerGuru 3y ago
I fully understand that. But the numbers they are mentioning (excluding the flops) would give you insane performance numbers.
- mamonster 3y ago
  My point was that given how hard this guy destroyed his benchmark over the last 16 years it is completely appropriate to be "amazed" at his performance, he is literally like top 1-0.5% in his field.
burkaman 3y ago
Why would you use that benchmark? If you invested in an S&P 500 index fund you'd have about the same amount of money, without paying his (probably very large) fees.
- mamonster 3y ago
  I mean it's a pretty simple explanation: Because his strategy does not have a high beta(it isn't taking on SP500-like risk). SP500 may go down and a merger still goes through, or SP500 goes up and a merger falls through. Sure, general stock market conditions can influence merger completions(for example Musk wanted to pull out of Twitter buyout partially because he realized he overpaid) but in general mergers are not super correlated with SP500 performance. So it doesn't really make sense to compare the 2.