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Will go one pithy finance / investing observation/opinion per like on this tweet. Will get ball rolling for free given recent talk about startup funds. Reserve the right to go back on this and delete tweets.
BG: Former BB research / Former cross-cap analyst at startup fund with “A+ capital base” that blew up / Former caretaker for sick family / Current trying to figure out what’s next.
If you know a fund looking for an analyst, DMs open (~5 years of experience). Being frank, I’ve felt lonely during COVID, so also open to FinTwit relationships. Also looking to connect with anyone who has had to try and rejoin the industry after a long time away (1 yr+)
My BG has leaned value equity/HY/distressed, but would be happy to try something new. As I’ve told friends “I would like to successfully buy something 10x revenue before I die” or "do a private investment". I’ve also noticed the secondaries ramping up and it looks interesting
Okay, meat and potatoes tweets
Even with the A+ capital base that @NoonSixCap mentions (3 year lockup / $200M+ launch), the startup fund game is rough. A successful startup fund manager IMHO needs the land the triple venn diagram of: Great Salesguy, Able To Run The Biz, Results.
Lockup takes away a lot of the stress, but not all. I wasn’t privy to discussions about what happens post lockup, but former fund blew up around 3.5 year point. You’re still fretting over monthly results and fundraising off that
With respect to equity guys, I think credit is tougher on startup managers – ISDAs to trade CDS, small credit illiquidity, managing trading desk relationships, no distressed seat at table, no flipping new issue. Especially when you’ve been used to all these advantages.
I frequently joke being a successful investor is funny. You need to have enough ego to think you can beat the market and think you’re brighter than everyone else, but enough humility to realize when you’re wrong, the market is right, and get out.
The crazy confidence goes doubly for starting a fund. I don't know how to embed tweets, but @ShitFund says it better than I can https://twitter.com/ShitFund/status/1334304429521076224
@LFCCapital7 deleted his tweets on this, but he did a great job highlighting that the guys that rise up at big places get less experience than you think on decision making
Read this joke on FinTwit once: "Job of a buy side analyst: 20% research, 50% selling / writing notes, 30% baby sitting PMs." My previous gig never felt that way, but I’ve bounced this quote off of a few friends at big bad credit funds and they say it definitely feels true.
Okay, change of pace. Some investing tweets/greatest hits. I found it interesting @supermugatu had a background in standup because I’ve always thought my most successful investments had a hint of humor to them if you took a big step back
“It’s funny $DWA is selling at current film library replacement value because of the negotiations with Paramount over distribution when this will ultimately blowover and you’re getting all the future movies and franchise value for free”
“It’s funny $ALGSCO bulls are so convinced this is a good business and think earnings are inflecting when they’re about to get smoked and they’re clearly misleading investors on the unit economics.”
“It’s funny that all the sellside models for the OSV market have industry pricing here when if you call up operators and dig a little, it’s clearly WAY lower” $HOS $GLF
“It’s funny the $JCG PIKs are trading in the 30s when there are enough holes in the docs to kick the can on the capital structure and bears think they WON’T screw over the TL holders”
I'm still reading "What Are You Laughing At" recommended by Dan in the @BillBrewsterSCG podcast, but there's something about a joke and needing a punchline. Although I suspect I'm a dork that finds IP being stripped from TL holders deeply funny
Okay FinTwit, that's all you get for free. Gonna go watch football for a bit, if this thread goes 0 for likes, thanks for reading! Will keep tweeting below this if I start getting likes.
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1. From a PM I met: “It’s important to know whether you like the hunt or the kill of investing. Do you like keeping your ear on the ground and turning over stones looking for ideas, or do you like the deep research process. Rarely are people good at both / like doing both.”
2. My favorite non-investing investing quote: "Reality is that which when you stop believing in it, doesn't go away."
3. That quote guided a lot of my "metagame" thinking on investing. I used to annotate every single line of my investment notes with [source][fact type].
4. As a former sellsider, I know how many facts that seep into the market can become "accepted reality" that lazy buysiders build their models/theses off of. "6th Gen Drillships go for $XXX" "Regional casino assets must always trade at discount to Vegas assets"
5. This becomes even more pronounced with small credit situations with <3 market makers, 1-2 SS analysts at most covering the name. Never professionally covered smaller cap equity co's, but I'd imagine a similar dynamic must exist.
6. Within the lines of metagaming, know your strengths and what the market is keeping an eye on. For credit, it's really observable seeing the long-only/CLO guys bust out, distressed stepping in, and that awkward in-between where I used to play mostly.
7. I like @SirBaby6's stuff but torn on this . However, have met LO equity guys that *literally* recoiled when I said I focused on HY. "Isn't that risky?" which makes me think there is a mispricing somewhere - equity guys that demand pristine B/S https://twitter.com/SirBaby6/status/1335231175351209988
8. Market is either paying attention to the short term, medium term, or long term. Your job is to figure out which and when. Can't recall who said that one.
9. FWIW, I think I'm more of a killer. Love deeply understanding my coverage - the biggest thing I miss about the old gig is the endless expert network calls. I don't get how people do without - I feel so blind after not having that accesss. https://twitter.com/milken_cookies/status/1335686032050642944
10. Something I dislike about credit - low scalability of knowledge over different situations. Focused on niche dying industries. Looking at you Syniverse. Envious of VC guys where it feels like knowledge really compounds. https://twitter.com/LFCCapital7/status/1336518921562812418
11. Never tracked this, but I swear there has been a positive correlation in my returns and businesses/situations that I found interesting in some way. It's a big investable world out there, life's too short to spend time on a biz you hate looking at.
12. Be extra careful on commodity-ish cyclicals as a generalist - there are people that have covered the industry for years, you are the dumb money. Never get generous with the multiple. Bought into hype $WRK / boxes had secularly changed. Ouch.
@NoonSixCap
@NoonSixCap
13. Tiger-traits I observed at old fund - security momentum, no knife-catching, willing to get big in companies/industries, "know everything", business and earnings trend before valuation, evolving theses are fine https://twitter.com/S_curvecap/status/1339576733889155072?s=20
13.5. Old fund was not classic Tiger-related fund (focused on HY/distressed and their equities, spunout from lesser-mentioned cub with multi-B) so YMMV. I know shit-all about investing in tech (although I'd really like to learn how), so take #13 with a giant heap of salt
14. From a call with a former consumer exec: "A consumer turnaround requires a marketing genius, time, and money." I know that's a "water's wet" comment, but that statement helped me dodge some busted turnarounds, and hindsight 20/20, was characteristic of the successful ones.
15. Superior communication/liquidity provides lower cost of capital - IR/CFOs aren't stupid and realize this. We used to submit slide ideas to IR teams. We used to send our research to bond desks and encourage them to make markets in illiquid bonds. Win-win.
CC @Post_Market
CC @Post_Market
16. The three rules of shorting at my old fund that I still like:
1. Will this underperform in a bull market?
2. Will this underperform in bear market?
3. Does it have significant downside?
If you have 1+2, we're talking. If you have 1+2+3, it's in.
1. Will this underperform in a bull market?
2. Will this underperform in bear market?
3. Does it have significant downside?
If you have 1+2, we're talking. If you have 1+2+3, it's in.
17. A great chapter I still think about is the "Plasticine Macro Trader" from "The Invisible Hands". It broadly outlines @hendry_hugh evolution from concentrated "best ideas" to his "centipede" method.
18. I've seen way too many get married to positions and get chunked for it. Knowledge is fallible - see Tiger Cubs/Ackman and Valeant, see TXU and certain trading desks. Very very smart people getting scalped.
WTBS - ~100 feels like too much.
WTBS - ~100 feels like too much.
19. My PM used to "harvest intuition" as he called it-small starter positions (<1%) of hunches. I used to hate it, but liked it over time. You can't nail down everything, or the opportunity is gone.
Full-heartedly agree with Skele's sentiment https://twitter.com/SkeleCap/status/1336546657454866436?s=20
Full-heartedly agree with Skele's sentiment https://twitter.com/SkeleCap/status/1336546657454866436?s=20
20. Paraphrased quote: "The bear case always sounds smarter than the bull case." - Jim Cramer. Hate that I'm quoting him, but that's always felt true.
21. Related to 20, but it's why I think markets trend upwards. "Weak hands" drawn to simplicity of bull case, can't understand/don't care to understand bear case. The bull case is also more memeable.
"You want to talk fraudulent conveyance or make money"
"You want to talk fraudulent conveyance or make money"
22. I've always had a preference for small-cap / off-the-run bonds, but I think another interesting opportunity is "wrong analyst coverage". Best example off the dome is $VICI where for a long time, half the analysts were gaming guys who were doing the bare minimum on it
FD: Still an owner of $VICI, but do your own research.
I screwed up threading, keep going here: https://twitter.com/milken_cookies/status/1344013610389893121?s=20
