Our selling discipline reflects our desire to exit investments when they reach fair value, although we do pay a lot of attention to taxes, which are inexplicably overlooked by a lot of long/short funds. The common wisdom seems to be that you shouldn't let taxes cloud your investment judgment, but that's unrealistic to us given [...]
We keep our net exposure to the market in a tight band, usually from 0 percent to 25 percent. The basic rationale is that while we're confident in our skill as stock pickers, we're not confident at all in our ability to predict market direction. Another key aspect of our portfolio strategy is to limit [...]
There's the perception that having specific catalysts for all your positions mitigates risk, when in fact we believe the opposite is true. If there's an obvious catalyst, there's an excellent chance that it's at least partially priced into the stock, which increases your risk in the event it never shows up. As long as the [...]
We’re not reluctant to invest in pretty hairy situations. That by no means suggests complexity or controversy is always better, but it can often scare enough people away to create opportunity.