HF Reflections @hfreflection

Most investors don’t forget people who helped them get a job, helped them make money with a good idea, helped them raise capital, or supported them when they were down. Every investor remembers the person of people who took advantage of them or screwed them over.

POSITIVE SUM OUTCOMES (1/X) In a world where information and analysis are becoming commoditized, other skills become more valuable.  Our ability to build trust, work collaboratively, and create community allow us to be more than the sum of our parts and increase the likelihood of success for both ourselves and the people we partner with. A 🧵: The basic premise here is that we can be more than the sum of our parts when we work with others collaboratively towards a mutually beneficial goal, and that doing this is more likely to engender the same in return. Everyone has stories about how someone screwed them over, but people don’t talk enough about the person or people who helped them succeed and how those relationships were built.   HOW CAN YOU HELP Helping people makes me happy and feel good about myself. I’ve always naturally been a helper, but throughout my my career encountered more cynical people who believe most aspects of life or career is a competition to be won. But doing well doesn’t have to be at the expense of others.   1) “Look for the helpers” Mr Rodger’s said it best - find people who like helping and put your effort into those relationships / friendships, and generally avoid ones that are more one-sided, or where you don’t like the person. Helpers attract other helpers to their networks and make more meaningful introductions and partners over time. 2) Be genuine There is an episode of South Park where Cartman, a horrible person, tries to figure out how to act nice so he can get invited to another kids birthday party. I don’t know how to help someone become a helper, but if you find yourself inclined that way, I think you can lean into that. If you are a Cartman, and try to act nice for your own benefit, this becoming transparent in time.  3) Tell the truth, not what people want to hear In an industry built around narrative and persuasive storytellers, you can do this while also being honest and candid. One of the best ways to build credibility is to admit weaknesses and mistakes, and also to be known as someone who will give candid feedback. Too often investors are trying to sell LPs, other investors, and their employees stories that aren’t true.  Everyone has had these experiences - being known as someone who never does this, over a long period of time, is invaluable. I’m finding it harder to find time to right very long threads, so this is all I’ve got for now.  This weekend I’ll give some practical examples of how I’ve seen people do this / tried to do it myself, also will be active in q&a as time allows

@QLagarde @alixpasquet Generally agree. One of the biggest predictors to getting knocked out the industry, other than being not very good, is not being able to imagine scenarios where you might be wrong and an inability to balance confidence with paranoia.

Working on 🧵’s on building community and creating “positive-sum outcomes” in investing.  My increasing belief is that approaching relationships - in investing and in life - as genuine partnership vs a “zero sum game” often creates more positive outcomes for all.

I second this - really top notch firm.

West4thSt Capital @West4thCapital

3 months ago

The best Multi-Family Office I know is looking to hire. Wants someone with a passion for investing with 2-5 years HF experience, an existing buyside network, and a strong work ethic. If interested, please email with a resume to: [email protected]

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Thinking about this more recently. Interesting element this time is that a lot of the momo has actually come from historically deep value names, less speculative / new issues. Reminds me a bit of covid in that way, except harder to see end state & when that happens.

HF Reflections @hfreflection

3 years ago

THE POWER OF NARRATIVE IN INVESTING Before I fell in love with investing, I fell in love with stories. I am an avid film buff in college and briefly flirted with a career in it. I think investors - especially value ones - underestimate the power of narrative in stocks. A 🧵

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We are short $YSS because our research shows the Pentagon is replacing $YSS’s primary customer (96% of 2025 revenue) with a program where SpaceX's Starshield is the currently named—sole-sourced—provider. $YSS was banking on funding from the Tranche 3 Transport Layer for its future growth—and now it appears to be completely gone. We expect $YSS to miss its FY 2026 revenue guide by ~30% and face a dilution spiral in 2027 as its backlog withers. Former employees described a chaotic picture where the company cut corners and delivered “poor quality” satellites that were figuratively held together by “zip ties” and mission software that wasn’t capable of fully operating at launch. We believe $YSS’s systemic problems were partly to blame for the Pentagon’s move to completely scrap the Tranche 3 funding and will also make it extremely difficult for it to win any sizable government or commercial contracts sufficient to replace its lost revenue stream.

@rellahcsedaw @BuffaloBillCo @beachbumcapital Thx. That was my rough understanding as of a couple years ago but I've not seen numbers so was hesitant to stick my neck out.

Pretty amazing what Eminence achieved over 27 years - that kind of longevity, at their scale, for a single manager is impressive. There also are some really talented folks over there who will land just fine when the dust settles. Best of luck to all finding good homes.

I don't know the magnitude of the underperformance and I generally believe that years of no or negative alpha suggests a fund should shut down. But within many large firms there are good firms and good people and I think that's worth remembering as well. I believe that was the case with Eminence.

I think they attracted and retained some very good analysts / PMs who just consistently did good work and had a good process. I think they thought a lot about how they could do better and institute better processes. At my prior firm I learned a lot from them around how they managed a team, paid people, etc. I have no desire to try to build a business of that size and no real idea how to do that (almost every single manager I know of whose hit a few billion eventually breaks), but I think their challenges may tell you more about the difficulties of managing a fund of that size / number of people than it does something specifically about the firm. Kudos to those who continue to generate returns at that scale - I think it's really hard.

Just feel the need to defend the truth here a little. The hedge fund did not shut down (until now) - it is true they started a long only vehicle. My impression is the returns were not good recently but not horrible - there is a big difference between a melvin capital debacle (lose a ton of money, walk away with a ton of fees), and underperforming but not destroying massive amounts of capital before you shut down. I don't think people appreciate the complexity of managing a fund business at that scale and after so long - I think they did better than many just from a qualitative standpoint knowing folks who worked there.

@PPointpass31044 Reasonable people can disagree, but I don't you stay in business 27 years based on luck. At minimum you built a good business that attracted and retained capital. For a single manager, that's probably in the top 1% of longevity.

@BuffaloBillCo @beachbumcapital I don't know / don't have them. Just qualitatively I believe there were some really good folks there who consistently generated alpha, but I don't have hard data.

It’s easy to forget these larger firms are made up of groups of people with varying levels of talent and different personalities. There were / are some amazing folks there who are both good people and good investors - it’s rare these days for a firm of that size to have one let alone several.

@BayesBull Slowly and carefully.

Trying to institute some more process around idea gen again as team grows and matures. Resurfacing, will probably update with some new thoughts when I have time. Still agree with most of this.

HF Reflections @hfreflection

4 years ago

PART 7: IDEA GENERATION One of our strengths is generating a high volume of “off the beaten path” ideas resulting in a portfolio that looks unique relative to other funds. This is how we do it. Focus here on longs. A 🧵

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@bestinvestorevr If it's your team fix it, if it's not better find a new home!

More and more I’ve thought of investing as a team sport. When I was younger, even as an analyst, I felt it was all up to me. Having a group of likeminded, passionate people who are aligned in philosophy, process, and incentives is a magical thing.