JL versus the “Giant” Hedge Fund Industry

Written and contributed by John Wilson, Successful Options Trader of the Month – May 2016

Here’s the image…JL versus the “Giant” Hedge Fund industry in a boxing ring.

Here we go:

“Ladies and Gentlemen.  Standing in the near corner we have the “Giant” Hedge Fund industry.  Weighing in at around $2.9 Trillion (11,000 funds)* with a large losing streak but that’s not important.   In the far corner, we have the undefeated challenger, JL, weighing in at about “a buck 60” with a multi-degree black belt. (*August 31, 2014, CNBC)

Let’s get ready to rumble!”

I think this is where we see Sherri acting as Adrian on the sidelines.   😀

All right.  I had to have a little fun with that image, but once the bell sounded here’s what happened.  Result = KO 1st Round, Winner = JL.  It would be a complete no contest.  Why?  Check this out.  The first two charts are from Tasty Trade while the third piece of data comes from Bill Ackman’s Pershing Square latest hedge fund letter.  If you don’t have JL’s most recent numbers, please peruse the website.  It’s all here.

Takeaways from the below slides (you can’t make this stuff up):

• Bill Ackman has returned an overall .25% to investors from 12.31.2012 to 4/30/2016 while pocketing 13% during that time. Yes, you read that right.  That is absolutely ridiculous.  He should be fired as a manager of anyone’s portfolio for principal alone.  I know he did well pre-2012 but those fees add up.  In other words, stellar returns are not long term sustainable.

• The hedge fund industry has underperformed the S&P500 by 57% since 2010. They all should be fired.

• The top hedge funds make their money as market makers not using fundamentals. Fire them anyways.  I sound like Trump. 

Source: https://www.tastytrade.com/tt/shows/you-gotta-be-kidding-me?locale=en-US

Source: https://www.tastytrade.com/tt/shows/you-gotta-be-kidding-me?locale=en-US

Source: https://www.tastytrade.com/tt/shows/you-gotta-be-kidding-me?locale=en-US

Source: Bill Ackman’s Pershing Square Holding’s May 2016 letter

Overall, it’s easy to beat up on the hedge fund industry.  It doesn’t matter.  They deserve a big ole “BOO!”

As you can tell, there’s a better way to grow your money.  It’s certainly not with these guys.  Hmm.  Where is it?  I’m sure you figured that out.  Right here!

Btw, rumor has it that a statue of JL may be erected on the steps of the capitol in Concord, NH.  Doesn’t that make you want to get up at 5am and eat raw eggs before a long run!

Happy trading!

Written and contributed by John Wilson, Successful Options Trader of the Month – May 2016