Masters in Business From GameStop to Meme Stocks with Ricky Sandler
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Aug 22, 2024 Ricky Sandler, the founder and CIO of Eminence Capital, discusses the evolving landscape of investing as he shares insights from his impressive career. He elaborates on the importance of blending active and passive strategies for robust portfolios. The conversation delves into the short selling intricacies and challenges posed by market shifts, using GameStop as a case study. Sandler emphasizes retail investing's rise, fueled by technology, and reflects on the lessons learned from navigating a volatile market.
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Power of Single-Stock Shorting
- Long short hedge funds work best when single-stock shorting protects capital effectively during crises.
- This downside protection enables offensive investing during market dislocations, planting seeds for future gains.
Innovative Alpha Extension Strategy
- The 150 by 50 portfolio runs 100% net long with a 50/50 long-short sleeve to generate additional alpha.
- Fee structure charges a modest base with a performance fee only on alpha above the market benchmark.
Recovery of Shorting Environment
- Higher interest rates improve shorting by reintroducing discount rates and rational capital costs.
- Short sellers now earn rebates on shorted stocks, making shorting more attractive despite market challenges.