The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
why aren't all 20 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 0 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
Sandler: In late 2019, short-term stock movements detached from fundamentals
“What we began to notice in 2019 was stocks were behaving unpredictably, even if you really knew the fundamentals. It was as if the things that we were doing in the short run Didn't matter at all.”
Sandler: Collaborative funds beat joining platforms or launching solo firms
“They have to realize that they're good investors, but they could be great inside of this system, and therefore, a solid piece of this pie is better than signing up to live and die by every other own decision, let's say if you went to a platform, or having to b…”
Sandler: One-week to three-month stock price action is now mostly meaningless
“Implication number one was price action is much more meaningless than we used to think. Call that the one week to two, three month price action was stocks were Acting weirdly, and it meant nothing.”
Sandler: Post-GFC stocks disconnect from fundamental value much longer
“What I noticed after the GFC was that stocks would trade at bigger disconnects to fundamental value for much longer than they used to, and we couldn't just count on the market to Correct things.”
Sandler: Multi-Year Reviews Are Necessary to Accurately Diagnose Investment Mistakes
“And at the end of the year, everybody goes back and looks at their winners and losers and tries to learn from them. And what I started to do is look at the last three years. Because oftentimes, in the moment, you bought a stock, it disappointed, it went down, …”
Sandler: Fund managers must be 'long-term greedy' and err on generous pay
“I think you have to compensate people. You have to err on the generous side. I don't think you have to dramatically overpay them, but you can't be cheap, and you can't be greedy. You gotta be long-term greedy.”
Sandler: In late 2022, growth stocks traded below their historic 50-year premium
“So in late, twenty-twenty-two, as an example, we did a fifty-year analysis on the premium for growth. When analysts came to me in the middle of twenty-twenty-two and said, hey, this stock is cheap, it's back at pre-COVID multiples. I instinctively knew pre-COV…”
Sandler: Eminence doubled its compensation weighting for generating short alpha
“I changed our compensation structure to add double weight for short alpha, and preached to the team.”
Sandler: Eminence gained early edge by screening accounting pressures
“And this was still the early days before people were ripping through 10 queues, before accounting services were out there, before CFRA, and I think that we identified an ability to screen for pressures in accounting that provided an early window into doing som…”
Sandler: Emotional stress makes investors incapable of making unemotional decisions
“Ultimately, the thing we want to try to do is remove emotion from investing, and so if you put somebody under emotional stress for making a bad stock pick, or for the way a stock is behaving, What's the likelihood that that person's going to be able to make an…”
Sandler: Passive equity market share has risen to 60%
“We just went from 25% passive, I think at that time it was probably 50. Now it's 60.”
Sandler: Stock multiples expand due to shifting marginal buyers, not personal valuations
“The stock isn't going to go from 12 times earnings to 18 times earnings because you think it's worth 18 times earnings. It's going to go from 12 to 18 because the next investor believes something different.”
Sandler: Eminence spends 20% to 30% of research time on market setup
“We're still doing the deep research on the business, but we're probably spending 20, 30% of our time understanding that and hopefully taking advantage of it.”
Sandler: Eminence portfolio turnover spiked up to 80% on shorts since 2019
“What I noticed when I look back over the last four years is that our turnover since the end of 2019 is 40% higher on the long side, and 70 or 80% higher on the short side.”
Sandler: Single-stock to index volatility ratio is at historically high levels
“The ratio of stock vol to index vol is at very high levels relative to history, and so that creates this challenge on the short side where these movements are not necessarily based on bottoms up fundamentals.”
Sandler: Eminence caps individual short positions at 2% of capital
“We don't allow shorts to grow above two percent of capital.”
Sandler: Eminence holds Dave & Buster's on store remodel thesis
“Dave & Buster's is a company that we own, and we have a thesis around new management, putting in place menu changes for the food and beverage, remodeling all the stores, and so they have 10 stores out of 200 that are remodeled.”
Sandler: Eminence allocates 70% to long strategies and 30% to hedge fund
“Today, only 30% of our assets are in our hedge fund. 70% are in long-oriented products, a long fund, And a one 50 by 50 fund, which is a long replacement, portable alpha, alpha extension, but it's a hundred percent net long, it's competing with the market.”
Sandler: Eminence was founded on a 120% long and 80% short model
“As an investor, I wanted to build what I thought was a classic Jones model hedge fund approach. True long short, more moderate long short ratio, spending significant amounts of time on alpha generating single stock shorts. That model of a 120 long by 80 short …”
Sandler: 1998 market dislocation prompted rigorous short selling approach at Eminence
“That feeling of not being able to be offensive when things are dislocated was something that caused me when I transitioned from fusion into eminence was a big part of what set my foundation for much more of a proactive and rigorous short selling approach.”