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Hedge Funds Have Their Worst Decade Ever - Now What?

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You may have heard about a legendary bet that Ted Seides made with none other than Warren Buffett back in 2008...
Ted told the Oracle that a portfolio of hedge funds would be able to outperform the S&P 500 over the next ten years. Buffett won the bet, but Ted won also - as he learned some important lessons about the industry he loved and had been so successful in.
These days, Ted is the founder and host of the wildly popular Capital Allocators podcast. He joins Michael Batnick of Ritholtz Wealth Management for a wide-ranging discussion about the state of the hedge fund industry, what went wrong and what could still go right.
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Опубликовано:

21 авг 2024

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Комментарии : 31

@bobby6462 3 года назад

Ted’s behavior and mannerisms are so emblematic of an executive. Really smart and calm charismatic

@jefffawcett 4 года назад

The should be maligned MORE. "you've massively underperformed for 10 years, you don't want to change strategy now, do you?" that's basically the sales pitch. The chickens have come home to roost for the most overpaid group of people on the planet. I love the Steve Eisman quote about the CDO crash, "they mistook leverage for genius", it applies to this industry too. So many so-called superstars who have crashed and burned, costing their clients billions. Of course they don't return any of the 2% + 20% of the profits from the good years. There are pensions in every state, across multiple industries, in serious financial trouble because instead of a nice simple, low cost strategy that any individual person could do they trusted vast sums to hedge funds. Oh, he didn't just lose the bet to Buffett, it was a massacre, not even close.

@annabellesmith4450 4 года назад

I love your thoughts

@eddierosario1537 3 года назад

Do you think the hedge fund industry is dead

@DarkoFitCoach 2 месяца назад

@@eddierosario1537no, there are always enough dumb people to give them money

@DP-dc2vv 4 года назад

Honestly, had low expectations given the Ritholtz tie in, but the three or four videos I've watched have all been really informative. I do take issue with one point the interviewee made regarding the future of the HF space though, specifically the idea that the days of 'three guys setting up shop' are over. To his point, it's increasingly difficult to operate as a mid-sized (ie, $1-10B AUM) shop given the behemoths that have taken over. The reality is that small and super lean (ie, $500M and the aforementioned three guys) is the only way to sustain in an environment of over-saturation and stagnating fees. There've been a number of launches in this vein the last few years with strong resumes, so we'll see what shakes out, but it's simply too expensive to run a mid-sized shop when you're competing against the likes of Citadel and Two Sigma with established and robust infrastructure. The only way through is building to buy out or running super lean under the radar.

@hoskinsresearch 4 года назад

I really support the lean fund idea. The ideal thing to do as a manager is to keep the operating costs low, and stop at about $800M AUM. Nobody wants to do that partly because egos get in the way. Everybody wants to be like Ray Dalio and take home 2-4% of $150B. Managers forget that they have a fiduciary duty to act in the best interest of their clients, not themselves; which means keeping fees and AUM low. I'd like to see most funds have only 1-3 people, manage $200M or so, and charge a 1% fee.

@jeeed6390 4 года назад

Raymond Spicer with what little I know... Wouldn’t a lean 3 person operation keep and grow clients by holding long positions? Requiring algorithms means in and out of trades quickly; which means your money management skills are poor and you are just taking tiny profits for your clients on a hit or miss basis. And if that’s the case, then fund managers aren’t doing their value investing research and are even lazier than I thought.

@jeeed6390 4 года назад

Raymond Spicer good point. To me the up and down of a few big movers is too volatile and nerve wracking to manage as a business. Long on 7-10 researched equities with good fundamentals would let me sleep at night and would appear more stable to clients. Too naive?

@hoskinsresearch 4 года назад

Raymond Spicer I’m not talking about b.s. algorithmic trading, I’m talking about actual investing in companies, which costs essentially nothing. Ask Buffett or Chamath about their short positions and algorithms lol.

@Ygnez 4 года назад

Jake Hoskins Finance the problem is also that the large institutional firms often do not want to allocate less than a billion because it’s simply too much hassle... it also gives a big reputational risk to invest in funds of < bln... but youre correct that more value can be created by smaller funds

@Jorgetrader 4 года назад

Excellent interview. Spot on in every single detail.

@Derek5920 4 года назад

I really enjoyed this chat. Thanks for having Ted on.

@jjgrant35 2 года назад

When did Michael get sponsored by Nike? Great video though, really like these interviews.

@strongforce79 3 года назад

loved the part about the low key moves and shakers of this world that lurk in the shadows, i am sure this is a book somewhere.

@bigbossyouknow 4 года назад

Really good interview, I like the way you frame your questions.

@kevinjohannesmeyer4707 4 года назад

Very good interview. Interesting

@Useruytrw 4 года назад

High fees, High competition, higher board scrutiny and Low rates

@jeeed6390 4 года назад

I like the Compound’s interview discussions like this. He doesn’t specifically say why today’s investors are more savvy. Also why can’t hedge fund managers choose stocks like they used to? I guess the deeper question is “is it harder to find high growth stocks that it was 10 years ago?” It isn’t for me. Just sayin’