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Profiting from Hedge Funds: Winning Strategies for the Little Guy

Profiting from Hedge Funds: Winning Strategies for the Little Guy

John Konnayil Vincent

ISBN: 978-1-118-46520-2

Aug 2013

256 pages

Out of stock

$63.00

Description

Learn to apply the strategies of top hedge fund managers to your personal investment portfolio

The most successful hedge fund managers and superstar investors outperform the markets impressively, while most fund managers—and individual investors as well—usually underperform the market averages. Based on the figures released by the Edgar System each quarter, this book analyzes the performance of hedge fund managers controlling at least $100 million in Assets Under Management to help other investors close the gap between themselves and the industry's top fund managers. With model portfolios that produced solid returns, examination of the tactics of the best fund managers, and a set of effective strategies for sound absolute returns, Profiting from Hedge Funds is the perfect guide for investors who want to improve their game by learning from the best.

  • Includes fascinating insights into the investment styles of the most successful hedge fund managers
  • Features model portfolios based on the holdings and activity of high-performing money managers
  • Offers key lessons for success that work across all portfolios
Acknowledgments xiii

Preface xv

Part One: Tracking 12 of the Greatest Money Managers 1

Chapter 1 Introduction 3

13Fs: A Window into Hedge Fund Activity 6

Filtering 13Fs for Relevant Activity 8

Raw 13F Filings from EDGAR 11

Notes 15

Chapter 2 Bill Ackman 17

Philosophy and Style 18

Marquee Trades 19

Portfolio Analysis 20

Notes 23

Chapter 3 Bruce Berkowitz 25

Philosophy and Style 26

Marquee Trades 27

Portfolio Analysis 28

Notes 31

Chapter 4 Warren Buffett 33

Philosophy and Style 34

Marquee Trades 35

Portfolio Analysis 37

Notes 39

Chapter 5 Ian Cumming and Joseph S. Steinberg 41

Philosophy and Style 42

Marquee Trades 43

Portfolio Analysis 44

Notes 46

Chapter 6 David Einhorn 47

Philosophy and Style 48

Marquee Trades 49

Portfolio Analysis 50

Notes 53

Chapter 7 Carl Icahn 55

Philosophy and Style 56

Marquee Trades 57

Portfolio Analysis 58

Notes 60

Chapter 8 Seth Klarman 63

Philosophy and Style 64

Marquee Trades 65

Portfolio Analysis 66

Notes 68

Chapter 9 John Paulson 69

Philosophy and Style 70

Marquee Trades 71

Portfolio Analysis 72

Notes 74

Chapter 10 Wilbur Ross 77

Philosophy and Style 78

Marquee Trades 78

Portfolio Analysis 79

Notes 82

Chapter 11 George Soros 85

Philosophy and Style 86

Marquee Trades 87

Portfolio Analysis 88

Notes 91

Chapter 12 David Swensen 93

Philosophy and Style 94

Marquee Trades 95

Portfolio Analysis 96

Notes 98

Chapter 13 Prem Watsa 101

Philosophy and Style 102

Marquee Trades 103

Portfolio Analysis 105

Notes 107

Part Two: Mechanical Approaches to Following the Masters 109

Chapter 14 Introduction 111

Manager Selection 113

Asset Allocation and Sentiment Capture 119

Risk Avoidance 121

Constructing Model Portfolios Mechanically: A Primer 122

Equal Allocation Largest Positions 123

Equal Allocation Largest New Positions 124

Weighted Allocation Largest Positions 124

Weighted Allocation Largest New Positions 126

10-5-2 Allocation Largest Positions 128

10-5-2 Allocation Largest New Positions 131

Notes 133

Chapter 15 Equal Allocation Models 135

Portfolio Management and Performance Analysis 136

Bill Ackman: Largest Three 136

Warren Buffett: Largest Three 138

David Einhorn: Largest Three 141

Combined Portfolio: Largest Positions 143

Combined Portfolio: Largest New Positions 145

Summary 146

Chapter 16 Weighted Allocation Models 149

Portfolio Management and Performance Analysis 150

Bill Ackman: Largest Three 151

Warren Buff ett: Largest Three 153

David Einhorn: Largest Three 155

Combined Portfolio: Largest Positions 157

Combined Portfolio: Largest New Positions 159

Summary 161

Chapter 17 Ten-Five-Two (10–5–2) Allocation Models 163

Portfolio Management and Performance Analysis 164

Bill Ackman 165

Warren Buffett 168

David Einhorn 172

Summary 174

Chapter 18 Alternate Models 177

Portfolio Management and Performance Analysis 178

Bill Ackman: Exact Match Approximation Model 179

David Swensen: Asset Allocation Model 183

Sector Rotation Model 185

Simple Moving Average (SMA) Based Model 188

Summary 191

Note 192

Part Three: Learning from the Masters 193

Chapter 19 Introduction 195

Beating the Managers at Their Own Game 198

Trading Alongside the Managers 203

Summary 206

Notes 207

Chapter 20 Fundamental Analysis 209

Margin of Safety 212

Basic Checklist 215

Business Understanding 216

Business Sector and the Company’s Standing 216

Management Integrity and Competency 217

Valuation 217

Emotional Stance 218

Quantitative Measures 219

Profitability Indicators 219

Management Effectiveness 220

Liquidity Indicators 222

Valuation Indicators 224

Fair Value Estimates 227

Risk-Free Equivalent Fair Value 227

Fair Values Based on Earnings Growth 228

Fair Values Based on Benjamin Graham’s Teachings 230

Fair Values Using Present Discounted Value 234

Summary 240

Notes 241

Chapter 21 Types of Positions and Sizing 243

Diversification and Hedging 244

Keeping Your Powder Dry 251

Building and Sizing Positions 253

Low Probability Positions 261

Summary 262

Notes 263

Chapter 22 Conclusion 265

Ad Hoc Cloning Strategies 268

Mechanical Cloning Strategies 269

Implementing Manager Strategies 272

About the Author 273

Index 275