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Doesn't all courage of conviction require a certain amount of arrogance?
These guys are beating the traditional moderate 60/40 return with lower volatility.
I'm inclined to give them a bit more time...believing that they will employ more dynamic, if not insightful, allocation demanded by a more volatile market environment.
But, as always, I'm sensitive to your tempered perspective.
I get that the website on the surface does seem a little, shall we say, "boast-y"? However, I don't get the same sense from the quarterly letters or anything else that I've read. Whoever did the website was trying too hard with the sell, but once I looked a bit deeper than that, I liked what I found about the fund.
Additionally, given the fund's name (a play on the opaque, "black box" strategies of most hedge funds, as Whitebox tries to present itself as more open), the letters offer a lot of insights on the fund's strategy. I'm impressed with management's history/track record (and like that the fund's management is the top-tier management at the hedge fund.) Their "news" site, "Whiteboxselectedresearch.com" also offers the fund's widely-read letters as well as selected pieces from other sources.
I'm very satisfied with the fund so far and yeah, I agree that the website could be a tad more "subtle", but what's that thing about not judging a fund by its website?
Actually, I own BRAGX and BRUSX...so there are two people that own Bridgeway funds. Took a small gamble on WMBIX, "nothing ventured...nothing gained" premise.
WBMIX is definitely available in Firstrade retirement accounts for a $500 minimum with a TF per my actual trade. Also, it appears that this class is available in TDA retirement accounts for no minimum per their web site. Obviously, one would have to verify this with an actual trade.
Err....A lot of diversified funds would have a high corelation to S&P 500 index. Would you pay ER of 1.35% for them? Sorry, but did not understand your logic
I'd argue that for dynamically allocated funds like these, it's not so much about whether you invest with the index...but when you invest with the index. Those of us that invested with index have done very well this past year, but those who invested in 2007, rode it down 55% before this reluctant bull was born.
I've reconciled that if Redleaf can spin his magic and time it right--more so than strict 60/40 allocation funds--then it's worth the ER. If he gets it wrong, it's not worth the ER...and this offering will not grow.
Wondering if David can get some insight into the past performance of this fund (or one like it in the Whitebox stable) when it was cloaked as a hedge fund, so that we have more to base our opinions on.
Bought a very small amount of WBMIX in non-taxable TDA account plus $15 T/F (former TOS account holder) once I learned about Scott's article regarding WBMIX. My trade went thru. I believe TDA still offers the fund for Advisor and Institutional shares in non-taxable accounts for low minimums. I try not to buy Advisor shares as once the financial intermediary learns I am not an Advisor, they freeze the buy option on that particular Advisor class of fund and limit me to reinvesting only or selling only. At that point, I can't do much with it.
Reply to @Charles: Keep in mind that this is a long-short fund, despite being labeled as an allocation fund. "Our fund is not currently “market neutral.” We have a strong “long-bias”."
And: "...our returns will likely be somewhat correlated to the traditional asset classes of which our best ideas of the moment are a creative subset. If our investment thesis is correct, then over a reasonable period of time our “creative subset” should do significantly better than the standard version of the asset class. Still even if our investment thesis is sound, for some period of time our “creative subset” may well underperform both the traditional asset class from which it is drawn and the broader market. We typically invest in positions we think are underpriced (or overpriced for shorts); it would be surprising if those mis-pricings began to close the very moment we invested. More likely, given normal momentum, the mis-pricings will get worse before they begin to heal."
The last page of the quarterly commentary goes into great detail about the fund's philosophies and variable tactics to hedge.
The fund has some of the same tactics as the hedge fund, but is not likely similar to the same degree as the Pimco EQS L/S fund, which apparently was straightforward enough in its strategy to transfer from being a hedge fund to a mutual fund with little (if any) change.
From the Barrons article on the hedge fund: "Multi-Strategy boasts a 10-year annualized return of 15.3% through the end of the second half 2012; its three-year annualized return is 17.2%. The fund has twice been a member of Barron's Hedge Fund 100 ranking of top performers. (Whitebox in December launched an open-end mutual fund, the Whitebox Tactical Opportunities Fund [ticker: WBMAX], which uses some of the same strategies and has an expense ratio of 1.6%.)"
In terms of the hedge fund, there is definitely some things that would not be allowed under the mutual fund format: "WHITEBOX IS KNOWN to leave no stone unturned in finding interesting ways to play investment themes. When commodities were hot a few years ago, Redleaf bought entire grain elevators for his funds."
My view: you have three managers with impressive backgrounds (co-manager Robert Vogel's convertible arb fund was named best non-directional hedge fund over the last ten years by hedgefundreview - http://www.whiteboxselectedresearch.com/news/2012/whitebox-fund-named-best-non-directional-hedge-fund-over-10-years/, Cross worked with Scholes and Redleaf has a highly regarded track record, etc) and a flexible strategy. While the website could have been a tad more subtle, I'm very comfortable with an investment in the fund.
Hedge funds can't publicly discuss their performance, though individual investors in the fund can choose to share information. Funds can voluntarily report to a service like Morningstar's, but I don't seem to have access to that database anymore.
Try Googling "Whitebox hedge fund." When I do that, this article appears as the second result. I clicked on it and got in without payment or registration. David
Thank you David. Excellent! I too found my way in via Google, just like you advised.
Sir, this article seems consistent with the other posts scott has made, the shareholder letters, and articles I've read. (I did not know hedge funds could not disclose, but makes sense now that you point out.) Trust the article is not just fluff.
I hope you find a way to interview Mr. Redleaf...like you and MFO, such a request may appeal to the evangelical in him. And certainly WBMIX needs the attention given the small asset base so far.
In any case, I'm firmly in scott's camp on this one...I think, like AQRIX, it could be a game changer. While respecting, even demanding, your healthy dose of skepticism...like we all do.
Reply to @scott: Man, we need to start paying you commission. (Of course, WBMIX was up 0.43% today...that should help.) Can't thank you enough for all you contribute to the healthy debate on MFO. Very much appreciate.
PS. Not yet reading Dark Pools, but will. Have a couple other books I'm reading, which I'll share when I get back home.
Comments
Additionally, given the fund's name (a play on the opaque, "black box" strategies of most hedge funds, as Whitebox tries to present itself as more open), the letters offer a lot of insights on the fund's strategy. I'm impressed with management's history/track record (and like that the fund's management is the top-tier management at the hedge fund.) Their "news" site, "Whiteboxselectedresearch.com" also offers the fund's widely-read letters as well as selected pieces from other sources.
I'm very satisfied with the fund so far and yeah, I agree that the website could be a tad more "subtle", but what's that thing about not judging a fund by its website?
You can say the same as Bridgeway. As long as it "works", no one cares. I think at this time I'm probably the only Bridgeway owner on MFO.
In any event WBMAX is a LOAD fund. We really shouldn't spend too much time discussing, IMHO.
WBMIX is definitely available in Firstrade retirement accounts for a $500 minimum with a TF per my actual trade. Also, it appears that this class is available in TDA retirement accounts for no minimum per their web site. Obviously, one would have to verify this with an actual trade.
Kevin
I've reconciled that if Redleaf can spin his magic and time it right--more so than strict 60/40 allocation funds--then it's worth the ER. If he gets it wrong, it's not worth the ER...and this offering will not grow.
Wondering if David can get some insight into the past performance of this fund (or one like it in the Whitebox stable) when it was cloaked as a hedge fund, so that we have more to base our opinions on.
Bought a very small amount of WBMIX in non-taxable TDA account plus $15 T/F (former TOS account holder) once I learned about Scott's article regarding WBMIX. My trade went thru. I believe TDA still offers the fund for Advisor and Institutional shares in non-taxable accounts for low minimums. I try not to buy Advisor shares as once the financial intermediary learns I am not an Advisor, they freeze the buy option on that particular Advisor class of fund and limit me to reinvesting only or selling only. At that point, I can't do much with it.
And: "...our returns will likely be somewhat correlated to the traditional
asset classes of which our best ideas of the moment are a creative subset.
If our investment thesis is correct, then over a reasonable period of time our
“creative subset” should do significantly better than the standard version of
the asset class. Still even if our investment thesis is sound, for some period
of time our “creative subset” may well underperform both the traditional asset
class from which it is drawn and the broader market. We typically invest in
positions we think are underpriced (or overpriced for shorts); it would be
surprising if those mis-pricings began to close the very moment we invested.
More likely, given normal momentum, the mis-pricings will get worse before
they begin to heal."
The last page of the quarterly commentary goes into great detail about the fund's philosophies and variable tactics to hedge.
http://www.whiteboxmutualfunds.com/content/assets/docs/newsletters/Whitebox-Tactical-Op-Newsletter_Q2_2012.pdf
The fund has some of the same tactics as the hedge fund, but is not likely similar to the same degree as the Pimco EQS L/S fund, which apparently was straightforward enough in its strategy to transfer from being a hedge fund to a mutual fund with little (if any) change.
From the Barrons article on the hedge fund: "Multi-Strategy boasts a 10-year annualized return of 15.3% through the end of the second half 2012; its three-year annualized return is 17.2%. The fund has twice been a member of Barron's Hedge Fund 100 ranking of top performers. (Whitebox in December launched an open-end mutual fund, the Whitebox Tactical Opportunities Fund [ticker: WBMAX], which uses some of the same strategies and has an expense ratio of 1.6%.)"
Here's a 2007 article discussing the fund: http://dealbook.nytimes.com/2007/10/03/a-hedge-fund-that-saw-what-was-coming/
In terms of the hedge fund, there is definitely some things that would not be allowed under the mutual fund format: "WHITEBOX IS KNOWN to leave no stone unturned in finding interesting ways to play investment themes. When commodities were hot a few years ago, Redleaf bought entire grain elevators for his funds."
My view: you have three managers with impressive backgrounds (co-manager Robert Vogel's convertible arb fund was named best non-directional hedge fund over the last ten years by hedgefundreview - http://www.whiteboxselectedresearch.com/news/2012/whitebox-fund-named-best-non-directional-hedge-fund-over-10-years/, Cross worked with Scholes and Redleaf has a highly regarded track record, etc) and a flexible strategy. While the website could have been a tad more subtle, I'm very comfortable with an investment in the fund.
But that's just me.
Hedge funds can't publicly discuss their performance, though individual investors in the fund can choose to share information. Funds can voluntarily report to a service like Morningstar's, but I don't seem to have access to that database anymore.
I can share an article on the Whitebox hedge fund which is most like Tactical Opportunities but I don't know how discerning the writer is; that is, I don't know whether he has a track record for promotional fluff or serious inquiry. Here, in any case, is the link: http://www.hedgefundsreview.com/hedge-funds-review/profile/2144335/whitebox-multi-strategy-fund-whitebox-advisors.
David
Try Googling "Whitebox hedge fund." When I do that, this article appears as the second result. I clicked on it and got in without payment or registration. David
Sir, this article seems consistent with the other posts scott has made, the shareholder letters, and articles I've read. (I did not know hedge funds could not disclose, but makes sense now that you point out.) Trust the article is not just fluff.
I hope you find a way to interview Mr. Redleaf...like you and MFO, such a request may appeal to the evangelical in him. And certainly WBMIX needs the attention given the small asset base so far.
In any case, I'm firmly in scott's camp on this one...I think, like AQRIX, it could be a game changer. While respecting, even demanding, your healthy dose of skepticism...like we all do.
PS. Not yet reading Dark Pools, but will. Have a couple other books I'm reading, which I'll share when I get back home.