David Zorub of Parsifal Capital Management highlights the extreme volatility in small-cap stocks when explaining tactical short trading.
Insight
Zorub: Teams should reject ideas lacking potential for 5% to 7% sizing
“Mediocre ideas tend to cancel each other out in the end, and they consume a lot of time and bandwidth, and so core to our process is I tell the team, don't spend any time on something that we don't think has the characteristics of becoming a large idea. Now, i…”
Opinion
Zorub: Institutionalization of alternative asset management has degraded investment returns
“I think the institutionalization of alternatives, it's been great for alternatives, like, let's make no mistake about it, it's been good for me and for many of the people in this room. I don't think it's been good at all for returns.”
Insight
Zorub: Asset growth is unequivocally the enemy of investment performance
“Again, I think if you're prioritizing performance, you recognize that asset growth is the enemy of performance. There's no question about that.”
Insight
Zorub: Most alpha-generating strategies fail to scale or replicate
“The truth is, is that most strategies that can generate alpha don't scale and aren't even necessarily replicable.”
Opinion
Zorub: Pods and ETFs drive non-fundamental volatility, harming stock pickers
“The continued rise of passive, for sure, But also the rise of ETFs, the rise of the pod investing model. I would also add to that the rise of style factors, which are big business on Wall Street right now, have all conspired to, I think, create more non-fundam…”
Insight
Zorub: Institutional incentives block managers from running high-alpha concentrated portfolios
“When I contemplate why the combination of high active share, concentration, and volatility tolerance yields alpha over time, it's simply because it's too damn hard for most people in our industry to actually invest that way. It's too damn hard for managers to …”