Its the time of year when the hedge fund issue their q4 letter to shareholders.
Two of the most consistently high achieving hedge funds over the last decade have been Green Light Capital and Third Point achieving an average annual return of over 19% over the last decade.
What I like about both these hedge funds is that they manage their risks very carefully going both long and short the market whether in a bull or bear market. Their consistent performance numbers are impressive and reflect their ‘careful’ approach to markets and leverage.
Here the brilliant David Einhorn ceo Greenlight Capital:
Here the hugely successful Third Point Capital:
And its no wonder that the two Ceos of these hugely successful hedge funds site Seth Klarman as a big influence on their approach. He was a great advocate of managing risk and moving to cash when valuations are stretched.
Seth Klarman is one of the most successful Hedge Fund managers in history. He fortunately wrote a book called “A Margin of Safety”. (You can buy a copy on Amazon for between $2,000 to $4,000).
Here a pdf of the famous book that many notable risk adverse hedge fund managers still recommend as their most useful of reads.
We have volatility here in world markets. We have a rising US$. Both events usually spell a period of de-risking asset allocations and de-leveraging.
All the best
Rich