Wednesday, July 18, 2012

Third Avenue Hires David Resnick

So, according to this report from Morningstar, David Resnick will be joining Morningstar in September 2012.

Who is David Resnick?

Resnick "made his name as an advisor on bankruptcies and restructurings for many years and who in fact had worked with fund-family founder Marty Whitman on Public Service of New Hampshire's restructuring in the late 1980s."

What does his hire mean for fundholders?

Again according to the report, "In the tight-knit network of bankruptcies and reorganizations, Resnick's rolodex and expertise...should come in handy for many years to come. Overall, it's a positive development for a firm that has succeeded with distressed investing in the past."

Tuesday, July 17, 2012

3 Short Quotes from Ken Heebner

So, Ken Heebner hasn't been getting the best of returns of late. In fact, as this article points out, he's been getting rather bad returns--and for a while.

Nevertheless, as these three quotes show, Heebner hasn't changed his general strategy:

1. "“Most people think this is the worst time in the world to be optimistic, but my portfolio is positioned for strength in the U.S. . . I am functioning in a contrarian mode.”

2. "[Negative sentiment] historically has been associated with maximum points of opportunity for investing."

3.  "I am completely outside the mainstream. I see the mainstream in the distance."

Will Heebner's fund come back yet again? Or is an investment in the banks ultimately a doomed strategy?

My own view is that if anyone can pull off a successful investment in them from here that man is Heebner--but even so I wouldn't want to join him in the bet.

Saturday, July 14, 2012

How to Play Poker (or Invest) Like David Einhorn

In some circles, David Einhorn is admired as much (or even more) for his poker abilities than his investing skills. But as Einhorn himself points out in this article his strategy with both is similar. 
Einhorn has said his approach to poker resembles his approach to investing: He doesn’t play a lot of hands. When “the situation feels right, I put in a big, aggressive raise with a marginal holding,” he said in a 2006 speech. “It is very hard to describe how I know the ‘feel,’ and sometimes I get it completely wrong. But to do well in a poker tournament, you have to recognize a few non-traditional opportunities and you need to get people to sometimes fold the better hand. I think we invest similarly. By this, I mean that most of our investing lines up nicely in the disciplined, traditional value camp—very low multiples of book value, revenues, earnings, etc., but occasionally we are opportunistic and invest in situations that are difficult to justify under traditional criteria."
The article contains some inaccuracies--for example, Einhorn wasn't bluffing and thus couldn't have been out-bluffed--but in addition to the above it contains how many millions Einhorn won playing poker this time and how Einhorn felt doing so.