HF Reflections

L/S PM at Fund redacted by Compliance.

[HF Reflections @hfreflection]

An old collection of threads. I’m running out of new things to say and this platform is very ephemeral, so figured I’d post / pin this as a somewhat dated but probably pretty good guide to my historical threads around time of fund launch.

[Liger Cub @realLigerCub]

FINTWIT THREADS 🧵| @hfreflection (ERRATA CORRIGE)

Kudos to those accts generously sharing their wisdom. Let's spread that knowledge with all the threads from a L/S PM who just started out solo.

• Part 2: KNOW THYSELF: https://t.co/jcHNRGN6PM
• PART 3: ESCAPE VELOCITY: https://t.co/0JInz1PHNF
• Part 4: BUILDING GOOD CULTURE: https://t.co/7ZJRUt2gZO
• PART 5: LUCK: https://t.co/hk02bIWYKP
• PART 6: EDGE: https://t.co/bFVkc9Ye1H
• Part 8: RETURN COMPONENTS: https://t.co/fVmSFXHmfK
• PERSONAL FINANCE TIP: https://t.co/EWWGG3paPB
• IDEA GENERATION - PART 7: https://t.co/5auG4pe2DB
• PART 9: RETURN ON TIME: https://t.co/D9TS9VCEEN
• PART 10: INVESTING FRAMEWORKS: https://t.co/FBIdT55SWq
• WHY 13Fs ARE WRONG: https://t.co/vtzu9m6bYT
• PART 11: CALL DILIGENCE: https://t.co/DYomoMOAoj
• CONTROLLING SHAREHOLDERS: https://t.co/rqAd6hg4Ky
• PART 12: POSITION SIZING: https://t.co/k5mIntC0Kw
• PART 12: FALSE PRECISION: https://t.co/lvbM8NShBJ
• PART 13: DEALING WITH LOSSES: https://t.co/2sxvdS6YDp
• INTERVIEW QUESTIONS: https://t.co/yo8IoUEPix
• WHY GOOD FUNDS FAIL: https://t.co/fwto4KJk5u
• PART 13: MENTORSHIP: https://t.co/ZWwahYY7Fe
• HF COMPENSATION: https://t.co/lQuRcpLMCz
• PART 14: SELLING: https://t.co/fvgq4cxSxQ
• ALLOCATORS: PART 1: https://t.co/3Etk12NzHE
• ALLOCATOR: PART 2 - ASSESSING SKILL: https://t.co/metclXwog3
• ALLOCATORS: INTANGIBLES - PART 3: https://t.co/R90J2Hvs4j
• ALLOCATOR PART 4: AVOIDING BLOW-UPS: https://t.co/uQQ2s7a3rX
• PART 15 - HF NETWORKING: https://t.co/9tbofEvlX4
• WHY I TWEET: https://t.co/Kuxvn35D8V
• PART 16: MAINTENANCE WORK: https://t.co/4nmEeh3lP5
• WHY FUNDS FAIL PART 2 - ENVY: https://t.co/1A46X3QaVc
• PART 17: TIME HORIZON: https://t.co/92klTOxXJw
• PART 18: SHORTING: https://t.co/TxIq6cBYDf
• PART 19: THE PM JOB: https://t.co/XzxlSi21sk
• PART 20: FACTOR AWARE INVESTING: https://t.co/80aHUf9AsX
• PART 20: FACTOR AWARE INVESTING 2/2: https://t.co/ogLMVuMSy6
• PART 21: THE NO-CATALYST CATALYST: https://t.co/bnzDB0WSx6
• START UP DIARIES: https://t.co/RRX0VcKFL1
• POSITION SIZING / ALPHA THEORY: https://t.co/bDEYiuhQGc
• L/S HF LAUNCH COSTS: https://t.co/e0HSIDkXfs and https://t.co/cURQvFAWlt (slightly broken)
• HF COMP - PART 2: https://t.co/h4EiGDpaWA
• VENDOR SPOTLIGHT: LIGHTKEEPER: https://t.co/HzieqDTz0G
• HEDGE FUND GP ECONOMICS: https://t.co/bo63bsUt6n
• THE POWER OF NARRATIVE IN INVESTING: https://t.co/KL1Zz2W2fU
• HF EMPLOYER/EMPLOYEE RELATIONSHIP: https://t.co/nA5Mk51kCa

[HF Reflections @hfreflection]

@LongShortTrader I hope so!

[HF Reflections @hfreflection]

@SowingAlphaSeed The guy stayed silent for years as Fishback slandered him - give him a break. I thought that was kind of funny - just don’t think the hate he’s gotten for the charity stuff is fair personally especiallly given what his foundation does.

[HF Reflections @hfreflection]

Might be the best post I’ve read on this platform. Separately, the Einhorn Collective is a truly wonderful organization run by trying to build a shared sense of community and empathy in a country that desperately needs it - criticism of politics is unfounded and unfair IMO.

[David Einhorn @davidein]

Greenlight has won all litigation with James Fishback. @jamesfishback has been ordered to return every penny of salary and bonus that we ever paid him, to repay the money we lent him, to pay most of our legal fees, and to stop claiming titles, roles and responsibilities he never had. No, Fishback was not the “Head of Macro.” Rather, as the arbitrator found, he was a “faithless servant.”

That’s a fancy legal way of saying that Fishback was so disloyal during his employment that he was ordered to refund to us his entire compensation during his tenure at Greenlight.

Ordinarily, my style would be to let this decisive ruling speak for itself.

However, Fishback has made himself a public figure. He publicly requested appointments to be a governor of the Federal Reserve and a U.S. Senator. He unsuccessfully ran for Florida Governor and has hinted that he intends to run for President in the next election. I therefore feel a civic duty to share additional details and thoughts about Fishback’s character and why he should never be placed in a position of trust.

For more than three years, Fishback engaged in a scheme to harass Greenlight Capital and me. While he made a series of false allegations against us, I generally chose to remain silent and allow the legal process to run its course. It has now done so. The result of the final arbitration is that every single claim Fishback ever made about us was either withdrawn or was legally found to be untrue. The conclusion of the arbitration represents the end of all litigation between Greenlight and Fishback, with Greenlight winning a clean sweep and being awarded over $4 million of damages against Fishback due to his tortious actions, false statements and baseless allegations.

Fishback has accused us of lawfare. Let’s set the record straight: it can’t be lawfare when he started the litigation. We simply defended ourselves and made now proved counterclaims.

This all began with Fishback demanding a $5 million pay-off to spare us the reputational harm and legal costs of defending frivolous accusations of religious discrimination, age discrimination, a politically hostile work environment and defamation.

After filing his lawsuit, Fishback told Jack Farley on the Forward Guidance podcast that “discovery is going to be fun” and would vindicate his story. Farley asked how frequently Greenlight employees referred to him as ‘Head of Macro’ and what written evidence supported his claims. Fishback answered “Well, I don’t have access to my company email. If I did, we could produce them up the wazoo.”

Well, discovery came and went and not a single piece of evidence supported any of Fishback’s bogus claims. A company-wide email search revealed that the only additional Greenlight emails calling him “Head of Macro” were those where he gave the title to himself in his signature block while sending external emails where nobody from Greenlight was copied.

Instead, discovery uncovered some outrageous conduct by Fishback. For example, Fishback and his father concocted a scheme to use a fake reference check to create his fraudulent defamation claim against us.

In September of 2023, after his employment ended, Fishback texted his father a draft of a fake reference check email that included an inquiry as to Fishback’s duties as Greenlight’s “Head of Macro.” In the same chain, Fishback texted his father:

“We need them to DEFAME us. Which THEY WILL. That’s another $1 MM right there.”

Fishback persuaded a friend of a friend who worked at an investment firm to send us the fake reference check. When we responded that Fishback was not the Head of Macro, Fishback promptly sued us, claiming that our response caused the friend’s company to walk away from making a $5 million investment in Fishback’s start-up hedge fund.

The friend of the friend testified under oath that he sent the fake reference check as a favor and that his company was never considering investing with Fishback. The friend got fired.

It was all a sham to conjure a fake legal claim to extract money from us.

There’s more that came out in the litigation:

On his final day of employment, Fishback stole Greenlight’s most valuable property, its portfolio of investments, by emailing it to his personal email (in our industry this is a big deal).

An even bigger deal is that he and his father were secretly trading positions in Greenlight’s investment portfolio in their personal accounts.

Fishback admitted to violating his confidentiality obligations to Greenlight over 60 times, including by sending confidential investment information to third parties.

Fishback made numerous statements, including that he ran macro trading at Greenlight and that he was responsible for generating over $100 million of profits – none of which were true.

Fishback told various lies about why he left Greenlight, including that he left due to a hostile political environment.

In a classic example of “You can’t fire me, I quit,” Fishback resigned right after my assistant scheduled a meeting with him so I could fire him for not doing his job.

As for the political environment at Greenlight, Fishback has repeatedly claimed that I am “a Soros aligned hedge fund billionaire.” That’s simply not so. Politically, I am just left of center. I have made large philanthropic contributions to causes supporting bi-partisanship, bridging differences and pluralism. I support centrist Democrat politicians. Some on the far-left have even tried to fight my efforts to have a more civil culture by labeling me a far-right conservative. That isn’t true either.

At Greenlight, we discuss politics so infrequently that I was unaware of Fishback’s views during his tenure. And it surprised me when he quoted scripture in his resignation email. His politics have since been made clear to all. We have no view on the sincerity of his religious beliefs but suffice it to say that we’ve been witness to him breaking those Commandments regarding stealing and lying.

Fishback campaigned for Florida Governor on an extreme “tough on crime” platform. He threatened homeless people with 15 years in jail for being homeless; he threatened teenagers participating in riots with 5 years in jail, including prosecuting minors as adults; he promised criminal prosecutions of homeowners’ associations; and planned for mass deportations of non-citizens. He even said a black man “should be lynched” for confronting him.

And yet, Fishback is a man who believes the laws don’t apply to him. Rules are for other people.

During his campaign, Fishback was challenged for living outside of Florida. His testimony that he lived in Florida was certainly news to us. When Fishback worked for Greenlight, he provided his address as being in Washington, D.C. He had us withhold D.C. resident taxes from his payroll. When he visited our New York office, he frequently submitted expense reimbursements for Amtrak trips between D.C. and New York.

Before this final arbitration, we had already won verdicts against Fishback to repay the loans that we generously lent to him on favorable terms for what he claimed at the time to be a family emergency (though that’s not what he told Jack Farley).

Even with valid court orders of U.S. Federal District Court Judges ordering him to repay us and surrender property to satisfy the judgements, Fishback simply thumbs his nose at the rule of law. He decides on his own that the Judge was a Democrat, or was appointed by a Democrat, or was otherwise politically motivated, rendering the rulings (in his mind) invalid. Fishback was ordered to repay his debt to us: He ignored it. Fishback was ordered to turn over shares in a company and 43 luxury items he owns to us: He ignored it. A company owned by Fishback was ordered to produce documents in discovery: He ignored it. And that is just a partial list.

We have little doubt that he will try to ignore the arbitration ruling against him from the arbitration he commenced. Ignoring court orders is a very dangerous way for anyone to behave. But those that do, especially in such a self-serving fashion, should not be put in a position of public trust or have influence in the enforcement of laws against others.

It doesn’t matter that I’m a Democrat. What does matter is that we gave a seemingly intelligent college drop-out a chance to achieve what he once said was his dream job. And once he was provided with that opportunity, instead of applying any semblance of a work ethic, he chose to be a “faithless servant”.

We have a theory as to why Fishback wishes to continue his political ambitions. We believe that by continuing to seek office, he will find donors to his campaign, PAC and charitable endeavors, and he will use those funds to stay in hotels, rent cars, travel and dine out – all without ever acquiring an asset in his own name that can be used to repay his legitimate creditors, like us. It’s the perfect way for Fishback to continue to grift and continue to avoid paying his debts.

It won’t work. James, you owe us over $4 million and interest is ticking.

And, when we do collect it, I will in turn donate it to a combination of the National Immigration Forum, The Center for Reproductive Rights, The Florida Rights Restoration Coalition, and The Florida Chapter of the ADL. The best way to fight your hate is to support those you hate.

[HF Reflections @hfreflection]

@orrdavid This was more of a comment on David as a person and his character, less on investment focus. Returns have been poor but he’s still net made a ton of money for LPs over ti e - I think they’ve returned $3-4b of capital more than they took in.. Much worse actors out there.

[David Einhorn @davidein]

Greenlight has won all litigation with James Fishback. @jamesfishback has been ordered to return every penny of salary and bonus that we ever paid him, to repay the money we lent him, to pay most of our legal fees, and to stop claiming titles, roles and responsibilities he never had. No, Fishback was not the “Head of Macro.” Rather, as the arbitrator found, he was a “faithless servant.”

That’s a fancy legal way of saying that Fishback was so disloyal during his employment that he was ordered to refund to us his entire compensation during his tenure at Greenlight.

Ordinarily, my style would be to let this decisive ruling speak for itself.

However, Fishback has made himself a public figure. He publicly requested appointments to be a governor of the Federal Reserve and a U.S. Senator. He unsuccessfully ran for Florida Governor and has hinted that he intends to run for President in the next election. I therefore feel a civic duty to share additional details and thoughts about Fishback’s character and why he should never be placed in a position of trust.

For more than three years, Fishback engaged in a scheme to harass Greenlight Capital and me. While he made a series of false allegations against us, I generally chose to remain silent and allow the legal process to run its course. It has now done so. The result of the final arbitration is that every single claim Fishback ever made about us was either withdrawn or was legally found to be untrue. The conclusion of the arbitration represents the end of all litigation between Greenlight and Fishback, with Greenlight winning a clean sweep and being awarded over $4 million of damages against Fishback due to his tortious actions, false statements and baseless allegations.

Fishback has accused us of lawfare. Let’s set the record straight: it can’t be lawfare when he started the litigation. We simply defended ourselves and made now proved counterclaims.

This all began with Fishback demanding a $5 million pay-off to spare us the reputational harm and legal costs of defending frivolous accusations of religious discrimination, age discrimination, a politically hostile work environment and defamation.

After filing his lawsuit, Fishback told Jack Farley on the Forward Guidance podcast that “discovery is going to be fun” and would vindicate his story. Farley asked how frequently Greenlight employees referred to him as ‘Head of Macro’ and what written evidence supported his claims. Fishback answered “Well, I don’t have access to my company email. If I did, we could produce them up the wazoo.”

Well, discovery came and went and not a single piece of evidence supported any of Fishback’s bogus claims. A company-wide email search revealed that the only additional Greenlight emails calling him “Head of Macro” were those where he gave the title to himself in his signature block while sending external emails where nobody from Greenlight was copied.

Instead, discovery uncovered some outrageous conduct by Fishback. For example, Fishback and his father concocted a scheme to use a fake reference check to create his fraudulent defamation claim against us.

In September of 2023, after his employment ended, Fishback texted his father a draft of a fake reference check email that included an inquiry as to Fishback’s duties as Greenlight’s “Head of Macro.” In the same chain, Fishback texted his father:

“We need them to DEFAME us. Which THEY WILL. That’s another $1 MM right there.”

Fishback persuaded a friend of a friend who worked at an investment firm to send us the fake reference check. When we responded that Fishback was not the Head of Macro, Fishback promptly sued us, claiming that our response caused the friend’s company to walk away from making a $5 million investment in Fishback’s start-up hedge fund.

The friend of the friend testified under oath that he sent the fake reference check as a favor and that his company was never considering investing with Fishback. The friend got fired.

It was all a sham to conjure a fake legal claim to extract money from us.

There’s more that came out in the litigation:

On his final day of employment, Fishback stole Greenlight’s most valuable property, its portfolio of investments, by emailing it to his personal email (in our industry this is a big deal).

An even bigger deal is that he and his father were secretly trading positions in Greenlight’s investment portfolio in their personal accounts.

Fishback admitted to violating his confidentiality obligations to Greenlight over 60 times, including by sending confidential investment information to third parties.

Fishback made numerous statements, including that he ran macro trading at Greenlight and that he was responsible for generating over $100 million of profits – none of which were true.

Fishback told various lies about why he left Greenlight, including that he left due to a hostile political environment.

In a classic example of “You can’t fire me, I quit,” Fishback resigned right after my assistant scheduled a meeting with him so I could fire him for not doing his job.

As for the political environment at Greenlight, Fishback has repeatedly claimed that I am “a Soros aligned hedge fund billionaire.” That’s simply not so. Politically, I am just left of center. I have made large philanthropic contributions to causes supporting bi-partisanship, bridging differences and pluralism. I support centrist Democrat politicians. Some on the far-left have even tried to fight my efforts to have a more civil culture by labeling me a far-right conservative. That isn’t true either.

At Greenlight, we discuss politics so infrequently that I was unaware of Fishback’s views during his tenure. And it surprised me when he quoted scripture in his resignation email. His politics have since been made clear to all. We have no view on the sincerity of his religious beliefs but suffice it to say that we’ve been witness to him breaking those Commandments regarding stealing and lying.

Fishback campaigned for Florida Governor on an extreme “tough on crime” platform. He threatened homeless people with 15 years in jail for being homeless; he threatened teenagers participating in riots with 5 years in jail, including prosecuting minors as adults; he promised criminal prosecutions of homeowners’ associations; and planned for mass deportations of non-citizens. He even said a black man “should be lynched” for confronting him.

And yet, Fishback is a man who believes the laws don’t apply to him. Rules are for other people.

During his campaign, Fishback was challenged for living outside of Florida. His testimony that he lived in Florida was certainly news to us. When Fishback worked for Greenlight, he provided his address as being in Washington, D.C. He had us withhold D.C. resident taxes from his payroll. When he visited our New York office, he frequently submitted expense reimbursements for Amtrak trips between D.C. and New York.

Before this final arbitration, we had already won verdicts against Fishback to repay the loans that we generously lent to him on favorable terms for what he claimed at the time to be a family emergency (though that’s not what he told Jack Farley).

Even with valid court orders of U.S. Federal District Court Judges ordering him to repay us and surrender property to satisfy the judgements, Fishback simply thumbs his nose at the rule of law. He decides on his own that the Judge was a Democrat, or was appointed by a Democrat, or was otherwise politically motivated, rendering the rulings (in his mind) invalid. Fishback was ordered to repay his debt to us: He ignored it. Fishback was ordered to turn over shares in a company and 43 luxury items he owns to us: He ignored it. A company owned by Fishback was ordered to produce documents in discovery: He ignored it. And that is just a partial list.

We have little doubt that he will try to ignore the arbitration ruling against him from the arbitration he commenced. Ignoring court orders is a very dangerous way for anyone to behave. But those that do, especially in such a self-serving fashion, should not be put in a position of public trust or have influence in the enforcement of laws against others.

It doesn’t matter that I’m a Democrat. What does matter is that we gave a seemingly intelligent college drop-out a chance to achieve what he once said was his dream job. And once he was provided with that opportunity, instead of applying any semblance of a work ethic, he chose to be a “faithless servant”.

We have a theory as to why Fishback wishes to continue his political ambitions. We believe that by continuing to seek office, he will find donors to his campaign, PAC and charitable endeavors, and he will use those funds to stay in hotels, rent cars, travel and dine out – all without ever acquiring an asset in his own name that can be used to repay his legitimate creditors, like us. It’s the perfect way for Fishback to continue to grift and continue to avoid paying his debts.

It won’t work. James, you owe us over $4 million and interest is ticking.

And, when we do collect it, I will in turn donate it to a combination of the National Immigration Forum, The Center for Reproductive Rights, The Florida Rights Restoration Coalition, and The Florida Chapter of the ADL. The best way to fight your hate is to support those you hate.

[HF Reflections @hfreflection]

@ACapitalLP I’d find that harder. That it’s complex to figure out how to know what’s priced into a stock is probably one of the biggest reasons for misvalauton. And I think pods / others would beat us in most cases on calling kpis

[HF Reflections @hfreflection]

The difference is I know if I put 6 months into a junior analyst with good base skills they will do well - ai is great but the effort especially for a small fund to put into having a really top down systematic ai approach is much more time than spent on a junior analyst, and has much lower returns than early junior analyst ramp. With ai, not sure I will get there, and can get good benefit from smaller investments or using third party tools.

[HF Reflections @hfreflection]

@WaterworldCapi1 I tend to agree. This was inevitable and has happened as recently as 21/22. Not sure why this is so shocking to people that volatile returns are volatile both ways…

[HF Reflections @hfreflection]

The last 3-5 years / 60+ bets should be sufficient. Anything less than that and it’s hard to judge or you could have timed something right by luck. It’s easiest to test if the factor tilts don’t change - eg we run negative momo because we buy beaten down stuff. If factor tilts are always changing harder to prove durability of that.

[David Orr @orrdavid]

"He's just been lucky on factor bets."

How many individual bets, and after how many years, does it become unreasonable to keep thinking this?

[HF Reflections @hfreflection]

The second half of this is one of the better articulations of why it may never be a better time to be a single manager with duration and smaller size. The dislocations are getting bigger and bigger and the amount of capital that can take advantage of this with duration continues to shrink.

[HF Reflections @hfreflection]

@uncovered_alpha Agreed, with nuance - the market more often attributes skill to success but finds clever ways to make excuses on the unwind. A business failure is never to be celebrated, but excessive risk takers giving back some of their winnings to the house feels like a form of justice.

[HF Reflections @hfreflection]

Epic. May use this in my q4 letter if you’ll allow it.

[Square Mile Strat (formerly REIT Strategist) @SquareMileStrat]

Wealth effect latest as of Friday 6th Nov 🫥

[Square Mile Strat (formerly REIT Strategist) @SquareMileStrat]

Wealth effect latest as of Friday 6th Nov 🫥

[Matt K @KmateoK]

Looking to add another analyst at a growing SF Bay Area HF.

Global generalist fundamental l/s equity strategy + proprietary sourcing and data science platform.

If you have a passion for public markets, reach out. 3-10 years experience req’d. DMs open, retweets appreciated.

[HF Reflections @hfreflection]

I think funds tend to forget that by and large they are small pieces of much broader portfolios - it’s really hard emotionally to underperform, but there are certain environments / strategies where you probably should - you need to adapt but you also don’t want to lose discipline even if others seems to be doing it.

[HF Reflections @hfreflection]

I think it just it harder to evaluate managers (or yourself) on a shorter-term basis especially if you have structural factor biases - or when you do evaluate them you need to know the factor biases and distinguish their performance in the context of those. It also makes it more likely that managers loose discipline and change their style because what they do “isn’t working”, often at the point of peak pain. I would imagine the later is the biggest risk.

[HF Reflections @hfreflection]

@MadsenSouth Post Covid is a whole new level IMO. Market broke when GameStop went bonkers and since then speculation seems to know no bounds, until it suddenly does, and then within months we are off to the races again.

[HF Reflections @hfreflection]

Not done detailed work but npv of secured cash flows with appropriate discount rate depending on counter party and option value there after. But honestly I expect most of these will keep investing and potentially destroy cash flow. I know some smart people in these I just struggle