Cause and effect and be quite obvious.
First order effects usually get priced in quickly.
Target and profit is in playing for second order effects.
Figure out themes on page 15.
When theme hits page 1, risk goes up. Start taking chips off the table.
Be very thoughtful on the best way to express a given view. E.g. 90/100 call spread on 2025 oil has less risk vs. junior exploration co., requires less capital than long oil, and more upside than long oil producer.
Sometimes in inflection investing the company that is losing the most money is about to be the most profitable.
When macro tailwind, valuation, and event catalyst all align — that’s when you’ve hit the sweet spot.
Initial approach was “how do I make 25x my money?”
Now approach is “how do I be totally wrong and still get my money back?”
If I like something I want to own a lot of it.
Max 20% in one position.
Max 35% in one sector.
Illiquid stays less than 10% of the book.
Harvest positions if get to 80% of potential.
Target 115 - 125% exposure. Currently at 5% cash.
Don’t short.
Don’t try to damp volatility.
Making money is easy — buy cheap companies with great tailwinds. Keeping the money is hard. It is natural to give some of it back.
If you’re going to panic, make sure you panic first.
6-12 themes tops. Very concentrated. Want most “directional torque” with least risk. Rarely put anything on that is at least a 5-bagger. Run too concentrated to take substantial losses on positions. Main question: is the company evolving / moving forward / doing what I thought?
Press positions that start working early. Sell before anyone else realizes the tailwind is slowing.
Continually recycles profits from event-driven trades (short duration) into core book of 6-12 positions. Event driven book is a great “hedge” to core book, as it will often pick up when market declines whilst core book will decline with the market. This is a hedge, but all expressed through longs.
Often writing puts. Only writing puts on things he “doesn’t mind owning”. Can get paid well to own these. Sell insurance on things you want to own...can end up owning them at prices you would buy them anyways, if not get paid well for that option. Sets strike at price he would like to own it at. Hope he gets assigned some of them. Generally keep c. 200bps in options for BS management, on stocks where vol. is rich.
“Opportunist.” No style or style boxes.
“Low risk opportunities with multi-bagger upside.”