1st up, note that TT Fund is not = my personal fund. But I retain all rights to invest it as I deem fit.
In my last post, which was barely what, 2 weeks ago?, TT Fund’s ROI has changed dramatically. And I mean dramatically.
From -146.63% To +14.11% in 2.5 weeks!
In my last post (TTI’s Personal US Fund + TT Holdings Fund Results YTD), TT Fund’s ROI was an absolutely horrifying…….
LOL. -146.63% MWR.
I got a little kick out of writing about it actually. It’s kinda funny.
That’s what a short term MWR can do to you. How is it possible to lose more than a 100%, but it is what it is. Hey man, I don’t do the calculations.
Even the TWR as shown in the previous post, was terrible:
-11.06% looks bad, but it’s certainly better than losing more than a 100%!
In that post though, I’ve wrote:
“It’s still early days, I was unlucky in timing, but it’d sort itself out in the longer term. The gains will stack up with time, so I’m not too worried. The quantum itself is small anyway. Luckily I’ve only deployed about 25% of the TT Fund’s funds.”
Well, just 2 weeks later, things are looking decidedly brighter:
Ah there. The exact same measure (MWR).
That’s what a couple of brave bets in the midst of volatility can do for your portfolio. Wonders. A >160% reversal in 2 weeks. That’s like Liverpool coming back from 3-0 down to win the Champions League 4-3 with a last min goal in the 94th min.
This crazy episode packs some lessons though:
- In the longer term (ok ok I get the irony here. 2 weeks more is not exactly “longer term”, but I’m using the term in a generalized way), getting in at the wrong time isn’t going to be a complete RIP for your portfolio. So I’m a lousy market timer. That’s ok. It’s not part of my game anyway.
- Having capital to capitalize when the world is running scared, is absolutely critical. Hence regardless of whether it’s TT fund or TTI’s personal fund, they’d both have a reasonable amount of liquidity at all times.
- When it’s raining gold, reach for a bucket, not a thimble. OK, I stole that from WB. Quantum wise, I didn’t exactly reach for a bucket, but as a % of the portfolio NAV, it was a massive tank.
Even TTI’s personal fund did pretty ok throughout the volatility of the past 2 weeks:
That’s slightly up from the 6.03% I posted 2 weeks ago. (TTI’s Personal US Fund + TT Holdings Fund Results YTD)
Yet in this 2 weeks, the MWR actually went all the way to negative (albeit just barely), before going up to 6.49% right now. So that’s how volatile it is. Imagine I freaked out and “cut loss” when it dipped into negative territory. I guess I’d be singing a very different tune today.
The bulk of the returns came from long bets in Broadcom (AVGO), Bausch Health (BHC) and Centurylink (CTL). I was also very much long volatility (VXX) at the start of the market weakness, and took the chance to offload VXX positions and at the same time, swing to shorting VXX (not directly, but indirectly by selling naked calls)
For BHC in particular, I got real lucky and went for broke in both TT Fund and TTI’s personal fund, at the exact bottom, betting that the quarterly results will again surprise the markets. Feels good to beat Bill Ackman in this instance. LOL.
I’m not thinking that everything’s hunky dory though.
Thus far, TT fund has short positions in 2 names: Herbalife (HLF) & JD.com (JD). They’re not direct shorts, but short positions in the form of sold naked calls. None of the calls have been exercised, and all have thus far at least, either got covered profitably, or expired uneventfully. These are whatever’s remaining:
I had some shorts on Tesla as well, but quickly covered those and stayed out as I’ve come to realize that the financials don’t quite matter for Tesla. The company can be crap, I can be right, and still lose a ton of money. Simply cos a large premium baked in Tesla’s share price is EMOTION.
It doesn’t have to be fundamentally supported. It just doesn’t make sense. It’s emotional. The crowd loves Musk. Even I love Musk when I was short Tesla tbh. All that talk about Tesla’s negative cashflows and repeated capital raising, is missing out this vital point: Musk himself is Tesla.
I betcha if Tony Stark and Stark Industries were real… anyone shorting Stark Industries would be dead. Completely dead. Imagine this: Aliens invade New York, and after Stark destroyed their mothership…. imagine the news headlines!
Stark Industries share price would rocket like the prodigal Mark III suit.
Never mind that the company would probably have had to take a massive write down in the number of suits destroyed. Their missile inventory would’ve been depleted, NAV would’ve taken a massive hit, and future CFs would’ve to consider replenishment of inventory and “spare parts”.
Plus Tony would get more paranoid and probably allocate 99% of the revenue into R&D to get the new nanobots suit that we see later when Thanos came. So we know the R&D expenses and the SG&A expenses would shoot up.
Ultimately, Stark Industries earnings would come in crazily massively negative. Like ridiculously negative.
But I’m pretty sure the share price would go ballistic.
So there. This is a perfect example of Tesla.
And BTW, I think Tesla’s reported positive CFs in the latest quarter is not sustainable. Markets are going to be sorely disappointed if they think it’s hunky dory from here on.
How does 1 “play” Tesla?
By staying away.
(Or u can ask Thanos when he’d be arriving. And I’d say, prob short Tesla/Stark Industries just before the aliens invade, and cover quickly and go long at the peak of the invasion, since u know that the avengers would always win and the jubilation from the win would sky rocket the share price after that.)
Greenlight Capital’s Einhorn made the massive mistake of looking at the financials. Of being value focused… in a situation whereby the whole world isn’t. And would likely not be anytime soon.
I think Einhorn’s not wrong. In fact, I think he’s very right. But I also think he’s going to lose a lot of money being very right. And therein lies my deepest thinking:
One doesn’t have to be right to make a lot of money. It’s a complete fallacy.
One just needs to be very much different from everyone else, and THEN, have everyone come over to your different opinion. And preferably come over real soon after you’re ready.
yup. there. I’ve said it.
Right now, I’m looking real deep at a 3rd short idea. I’d probably start selling calls on that, thus far, it checks all the boxes. Perhaps I’d write about it when I’m done.