Value investing is dead!
At least that's what I keep hearing. It's definitely no secret that value fund managers have struggled since the GFC, so I thought it would be a good idea to actually inspect what went wrong for these funds. My initial thought was that value traps were the culprit, and that these managers fell victim to good multiples on dying businesses.
So I'm starting a series of posts with the aim at hunting this down, and seeing if there are any lessons to be learned.
I started with David Einhorn, who has been pretty vocal about value's demise.
Going through his filings for the past decade+, I found some pretty interesting nuggets. Here are some of my high-level findings.
1. ***David Einhorn actually is a pretty good buyer of stocks*** \- it's his short book that killed him
2. At the end of 2013, ***he held Apple, Micron, Marvel Technologies, and Cigna*** as his top holdings. Had he just sat tight with that long portfolio, he would have trounced the market (I can't insert images here, but there's a chart in the post)
3. ***More action definitely isn't better***. I checked out a few of his positions through time, and he's constantly trimming and adding. It definitely gives a sense that we'd be better off anchoring into positions and letting it ride.
I probably need to think about number 3 a little more. He also held some stocks that went to zero, so who knows if 'riding out the bumps' is the right lesson - I'm sure it's much more nuanced than that.
***Who should I cover next?***
I think next on my list is Terry Smith, maybe. Who are some other previously prolific managers that floundered in this recent era?
