Clarium Loses 90% From Peak After Thiel Hedge Fund Has Third Losing Year

http://www.bloomberg.com/news/2011-01-12/clarium-hedge-fund-shrinks-90-as-thiel-has-third-losing-year.html

by borism • 16 years ago

53 18 16 years ago

btilly2• 16 years ago

This reminds me of http://www.boston.com/bostonglobe/ideas/articles/2011/01/09/... in that here we have a person who successfully called big extreme things (PayPal, Facebook, rising oil prices, the economic collapse) but yet has, in aggregate, lost almost 2/3 of his investors money with his predictions.

yummyfajitas2• 16 years ago

Most of his investors did not lose 65%.

During 2008, he gained 59% in the first 6 months, lost 40% during the second 6 months, and so was only down about 4.5% for 2008. He then lost another 25% during 2009. The fund is down 65% from it's peak (Jun 2008), so investors only lost 65% if they bought into the fund in July 2008 and pulled money out in Dec 2009.

An investor who got in on Jan 1, 2008 is only down 30%, and an investor who got in in 2002 has gained 12%/year.

btilly2• 16 years ago

Thanks for the correction. May I suggest sending it to the editors of the article? I got the "almost 2/3" line from their first paragraph.

localhost3000• 16 years ago

It's amazing the opportunities that spawn from one big success. He could lose 100% of the fund and he'd still be the guy who did Paypal.

drawkbox2• 16 years ago

I am no market genius, I do alright, but how do you lose 23% in 2010? or how did he not make a killing in 2009? Those were two of the best stock years in this decade and going back to the Great Depression aftermath the last century (barring the tech bubble).

Also, if they warned of the housing bubble, did they do nothing to protect assets? The losses should have stemmed around 20-40% if they knew that.

chrismealy• 16 years ago

I'm sure it's all those women voting to blame.

maukdaddy• 16 years ago

sigh Here we go with the "predicted" housing bubble again:

If I make 10 predictions per day, per year, statistically one of them will probably come true. Get mainstream media involved, ignorant "financial" bloggers, etc. and suddenly I'm a freaking genius who predicted something long before anyone else did!

This doesn't make me start, trustworthy, or anything else, and it certainly doesn't warrant investing billions of dollars with.

brown9-2• 16 years ago

His fund is investing in much more than just stocks:

His fund seeks to profit from broad economic trends by trading everything from currencies to commodities, a strategy known as macro investing. Such hedge funds returned an average of 2.2 percent last year, 12.6 percent in 2009 and 5.9 percent in 2008, according to data compiled by Bloomberg.

...

The bulk of Thiel’s losses last year came in April, June, September and November. The Clarium fund declined 6.5 percent in April, as losing bets in U.S. equities and overseas debt offset gains made in commodities, according to an investor letter. Two months later it slumped 7.7 percent through stocks and currencies.

The biggest losses came in September, when the fund slumped 8.4 percent on stock bets, according to a letter. Two months later Clarium dropped 7.8 percent because of currencies and fixed income.

...

In October, the Clarium fund had a gross exposure to currencies of 33 percent, which increased to 45 percent the following month.

gojomo• 16 years ago

Not everyone is 'long' in stocks (betting they go up). So it really doesn't matter if a year is the 'best' (for those 'long'); it matters the specific positions held.

drawkbox2• 16 years ago

Yes hedge funds are notorious for liking volatility along with HFT algorithms, so steady bull markets maybe not so much. I realize people are bull/bears long/short call/put etc. However, hedge funds really should have made more than most in 2009/2010 unless leveraged and caught in the financial housing special products or overseas in EU rather than in other better performing diversifications. Hedge funds usually just like 'movement' or volatility to play off of. However a solid bull market is just as easy as a solid bear market to make money in especially for the leverage they have in volume/size of the funds.

gsmaverick• 16 years ago

Predictions of events occurring are quite easy to make. Predicting the exact timing of those events in order to make money from trading on them is much more difficult and risky.

Umalu• 16 years ago

I'm waiting for some honest soul to start the Lightning Strikes Twice Fund. Whenever someone succeeds massively, intellectually we may "know" that there's a great deal of randomness in that but instinctively we want to believe it must have happened because they are smarter, better, etc. So for their next venture we throw our money at them hoping lightning will strike twice. This phenomenon is most acute where markets are most efficient, such as in the stock market.

nickpinkston• 16 years ago

Don't laugh - VCs enjoy people with past success which is the same as saying "lightning strikes twice" - for both some type of filter and personal reputation hedging.

jam• 16 years ago

...unless you consider financial markets to be sufficiently complex that individual success is unlikely to be correlated to good decisions. It's more difficult to say the same of successful entrepreneurs.

marvin• 16 years ago

That's not a bad idea at all, if it possible to somehow short a fund. On average, the new best-performing funds each year will invariably do worse the next year, just because on average they were lucky to do so well in the first place. But investors will be more drawn to them than to the funds that performed worse.

hristov• 16 years ago

Thiel is very intelligent, but the problem is he is not nearly as smart as he thinks he is. That is a common problem with a lot of successful people.

Clarium Loses 90% From Peak After Thiel Hedge Fund Has Third Losing Year

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