Einhorn Says Value Investing Will See Comeback

Value investing is in the doldrums, but billionaire fund manager David Einhorn says that eventually things will turn around. This according to a recent CNBC interview. Einhorn argues that the last time value saw a turnaround– after the dot-com bubble in 1999 when, he said, “everyone was talking about eyeballs as the new paradigm for investing”—it ended badly for momentum investors. He believes that value investing will rebound: “When it reverts,” he adds, “it tends to revert pretty sharply.” Pointing out that the companies owned by his hedge fund Greenlight Capital (which focuses on value strategies) are generally profitable, Einhorn expresses […]

Tech Sector Heavy Hitters: The Only Market Constant is Change

By John Reese (@guruinvestor) —  There are precious few certainties when it comes to the stock market, but there’s one that should be written in permanent ink and glued to every screen: Nothing stays the same forever. Market capitalization, the value of a company’s outstanding shares, provides a snapshot of what the market is valuing most (in absolute terms) at any given time. The loud-and-clear message delivered by today’s market is that the tech sector continues to reign as flavor of the month. And, while this isn’t new and probably won’t end any time soon, it’s important for investors to […]

For Hedge Funds, Being Like Buffett Isn’t Easy

While Warren Buffett’s track record is appealing to large private equity firms, his buy-and-hold strategy (averaging 10-20 years rather than the hedge fund industry norm of 3-5 years) can be hard for many to adopt, according to a recent Bloomberg article. “To play,” the article says, “they would need to give themselves lots of time—decades, in fact—and as near-to-permanent capital as they could muster. Ambitious buyout firms bet that by raising long-duration funds, they would finally have the patient capital to do those eye-watering megadeals they’d been coveting.” Some of the biggest hedge fund firms (such as Carlyle Group, Blackstone Group, […]

Bloomberg’s Kaissar Weighs-In on Morningstar Fund Ratings

In a recent article, Bloomberg columnist Nir Kaissar challenges the rationale of a Wall Street Journal article suggesting that Morningstar mutual fund ratings lead investors to “assume erroneously” how those funds will perform in the future. “That analysis is flawed,” Kaissar writes. “Morningstar awards stars for beating peers, not the market. Given that the vast majority of funds lose to the market, highly rated funds may not be delivering any value to investors. Buying the best poorly performing fund is cold comfort,” he writes. Kaissar suggests that a more helpful exercise would be to gauge whether funds with high ratings […]

Shiller: Another Bear Market Could Happen

The kind of panic that ensure thirty years ago, on October 19th, 1987, could happen again. This according to Yale professor Robert Shiller in his recent New York Times article. While Shiller points out that regulatory and technological progress has ruled out an exact repeat of that day, the results of a survey he conducted within four days of the event revealed that “fundamentally, that market crash was a mass stampede set off through viral contagion.”  Shiller explains that after sending out 3,250 questionnaires to both individual and institutional investors, he found evidence that differed sharply from the findings reported by […]