Thursday, July 19, 2012

Salida Capital - Death of a Hedge Fund?

Salida Capital, the once loved commodities hedge fund may be nearing death. 

See the link below for details why. 

http://www.salidacapital.com/admin/media/salida_strategic_growth-formerlymulti_performance_report_june_2012.pdf

They also released this additional commentary on their performance for May. 

http://www.salidacapital.com/admin/media/salida_strategic_growth-formerlymulti_performance_commentary_may_2012.pdf

I don't know how any investor can withstand that kind of wild ride.  Hedge funds have no advantage over an individual investor provided that investor has the right character traits.  Intelligence not required.

In the addition commentary they discuss how loyal their investors are.  Appealing to your investors loyalty seem pretty desperate to me. 

I particularly enjoyed this quote from the commentary letter.  

Though we have reduced our exposures to weather this volatility storm, we believe timing the market is an impossible task. We believe we must “take a side” in order to generate wealth over the long term.

Maybe it's just me but I have a hard time making sense of these two statements.  On one hand they don't believe in timing the market yet on the other hand they must "take a side" (or speculate) in order to generate wealth.  What if they continue to be on the "wrong side?" 

They continue to speculate that the US Federal Reserve will do QE3 and investors will flock to commodity investments. 
I believe they won the ebay auction to have dinner with Buffett a few years ago.  Not sure what they learned but it doesn't seem to be paying off. 


Best Regards,
Kevin

1 comment:

  1. The volatility of returns on that fund is amazing. When you sum it all up, since November 2004 they are up 47.9% to date, which works out to 5.2% compounded annually. I'd be really curious to know how many people in that fund cashed out after the negative years.

    The line "In addition, the fund held a short position in natural gas-producer Progress Energy (PRQ)" was a big ouch considering the takeover premium was massive.

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