Thursday, 28 February 2013


$HLF +7.5%.

$JCP is -17% today.

Ackman is short the former and long the latter.

Zerohedge blogged Ackman's position list according to his 13F filing.

If I were Bill Ackman's, I would be bricking it.

JCP's move is fundamental. The company's results were very poor. 

It seems as if the superstar manager that Ackman spent so much time praising suffers from the same blindspots as he does. Massive overconfidence and an apparent unwillingness to change course even when data and events contradict their model of the world.

As a manager this is bad. As an investor this is lethal. 

The biggest and most dramatic blow ups occur when overconfidence and a stubborn reluctance to change your view meet the market.

The market is telling Mr. Ackman he is wrong.

You can't change your mind every time a position ticks against you, but there should always be a fixed regular periods in both price and time that one re-evaluates the investment thesis. Buying a stock that falls 25% before it begins to rise, is not "early", it is wrong. And looking at Ackman's investment record it appears he's made plenty of mistakes, yet seems to leave himself no room for error.

Being a concentrated investor has its merits, however if you are shorting and using leverage then that concentration becomes a weakness. Other traders and investors are now talking about what he holds, that is chilling. 

I've bought Herbalife today, because I think he is wrong, the chart looks good and it makes a lot of sense that other investors begin to see that too. 

The more noise and adverse price action he faces the tougher his position becomes and the more likely he is to face redemption requests and be forced to liquidate.

Time to buckle up, it's about to get bumpy.

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