Something About Pride and Falling...
Goldman Sachs made close to $700 million in fees in 2005 from its Global Alpha hedge fund. 2006 was not so good and 2007 is shaping up poorly too. Investors in this type of vehicle have little patience for poor performance and the article hints at the risk that the fund might have to be unwound if things don't pick up and enough clients head for the door. Doubtful that will happen. Goldman will cashier Carhart and Iwanowski well before that tipping point. They'll both walk away plenty rich, but somewhat humiliated. Serves them right for disparaging the master:
NEW YORK: Mark Carhart looked out over the packed New York conference room and told investors that Warren Buffett had it all wrong. Carhart, co-head of the quantitative strategies group at Goldman Sachs, used his speech in July to poke fun at the penchant of Buffett, the Berkshire Hathaway chief executive, for investing in market-leading brands like Coca- Cola. He cited study after study showing that big-name companies with high price/earning multiples or rapid growth rates make poor bets. Traditional stock pickers like Buffett, a fabled raconteur, do have one redeeming quality, Carhart joked: "They tell great stories."
NEW YORK: Mark Carhart looked out over the packed New York conference room and told investors that Warren Buffett had it all wrong. Carhart, co-head of the quantitative strategies group at Goldman Sachs, used his speech in July to poke fun at the penchant of Buffett, the Berkshire Hathaway chief executive, for investing in market-leading brands like Coca- Cola. He cited study after study showing that big-name companies with high price/earning multiples or rapid growth rates make poor bets. Traditional stock pickers like Buffett, a fabled raconteur, do have one redeeming quality, Carhart joked: "They tell great stories."
posted by Donny Baseball at 5:06 PM
3 Comments:
Currency market is a killer. Look at JWH, another firm that has gone down due to bad currency bets. I think that for funds like Global Alpha, they need at least one of two things: 1)luck, or/and 2) global turmoil. In a stable world, they run out of luck sooner or later.
Another problem they have, I suspect, is that their models can't find enough "value" stocks in this environment...
Buffett is a puzzle. To me, he is not a great investor, but a brilliant businessman. He knows value when he sees it, that's for sure, but so does every smart businessmen. It's hard to say if he would be as successful if he were content being a passive investor.
Sorry TS, I believe in Warren's greatness like I believe in gravity. He is both a great investor and a great manager which is a rare combination indeed. The evidence is just too overwhelming to pick nits against Warren.
oh well, great investor or great businessman, what difference does it make. I agree that he is great. the bottomline is that buffett is the 2nd richest person in the US.
That said, if I want to be a great investor, I would not model after Buffett.
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