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No. of Recommendations: 15
My letter for q1 is out.

http://goo.gl/mTx3Gp
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No. of Recommendations: 1
i'm quitting fool if your note doesn't get at least 10 recs....
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No. of Recommendations: 5
I thought you might like some feedback on the letter. I don't have a lot of time, but will give some quick thought. The main comments I have are that I think I would try to put a more optimistic spin on everything and write more in the passive voice when discussing positions that didn't work out.

For example, with Blucora, I would be inclined so say something like: (1) We saw such and such value; (2) Management made a poor decision on something and has failed to realize this value; (3) We no longer have faith in management to realize the value and so are moving on to more productive uses of our cash.

If you are going to discuss underperformance, I would also try to say some positive things. For example, you are holding a lot of cash - maybe you believe you are taking less risk than the market; you are well positioned to take advantage of opportunities as they arise; you expect to outperform over the cycle; etc.

I don't manage money and have never written an investment letter, so you can take what I say with a huge grain of salt. However, I work for a relatively large and successful company and like to watch how the most successful marketers and executives make presentations. They are as a rule overwhelmingly positive. Markets presented challenges. They made great decisions. Anyway, just some thoughts.
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No. of Recommendations: 3
I wanted to make a couple points about your response:

*I thought you might like some feedback on the letter.

I am 100% sure this is why IC posted his letter. And yours is the sort of helpful commentary that anyone would be thrilled to have. Many years ago there was a 'big time money manager' who posted on the BH board and if you had anything remotely negative to say about his letters he would react with a fit of rage. Thing is, all he was doing was running continuous advertising with no thought of learning from the little people on the boards or getting any sort of constructive feedback. That is not how this board is run, and it isn't how any person - whoever they are - should be in trying to perfect his or her craft. Unless they reached the point where asset gathering skills translate into their minds as superiority to their fellow man.

*The main comments I have are that I think I would try to put a more optimistic spin on everything and write more in the passive voice when discussing positions that didn't work out.

I agree 100% but with slightly different language. I don't think this even requires optimism - sometimes, things just don't work out. At times, this IS the fault of the money manager, but sometimes predictions about future success don't work out. It is important to point this out. Lynch himself wrote that if you buy 5 stocks, 3 will do as expected, 1 will do better, and 1 will do worse. The future is unknowable.

*If you are going to discuss underperformance, I would also try to say some positive things. For example, you are holding a lot of cash - maybe you believe you are taking less risk than the market; you are well positioned to take advantage of opportunities as they arise; you expect to outperform over the cycle; etc.

Again, a super comment. Everything should be placed into context, esp. on the heels of a terrific period before the underperformance began. There are a gazillion studies that most long-tenured successful money managers endure a period of significant underperformance. It is the way it is.
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No. of Recommendations: 0
it. Thanks for posting your letters.

2 suggestions for now and I will try to look at it further later.

1) I would create a standard boiler plate for your return table. I suspect that you will beat the market over the longer time periods (7+years) and will have shorter periods of time (1-7 years) where you will underperform the market. I like that you give full disclosure and appreciate the honestly but I would also do it in a way that make your long term results stand out.

Maybe start with since inception and then work backwards
7 years
6 years
5 years
4 years
3 years
2 years
1 year
quarterly


2) If you are going to mention generals and special situations each quarter you might want to build a boiler plate that gives a little more detail to what a general is. You state, The ‘Generals’ are undervalued equity investments. And special situations "are short term investments with a specific event that can unlock value)" sepcial situations seem like a subset of generals. I think it is fine and I think I know what you mean from reading all of your reports but it might be more clear for new clients. Maybe even have a link to the definition of each so you don't have to spill too much ink every quarter.


Don't mean to be nit picky. I like your style, overall, for sure.

Good luck and more when I get a moment.
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