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 21 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
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…”
Zorub: Parsifal lost substantial short-book alpha during 2021 meme stock squeezes
“In mid-twenty-three, I wrote a letter to our partners where we actually looked at our short performance, the hard data inception to date. And at that time, I guess we had maybe north of 50 months of data. And what we saw was in the vast majority of those month…”
Zorub: Markets produce 1-2 severely mispriced, career-risk-polarizing opportunities annually
“Or simply pretty reliably each year, the market will spit out one to two opportunities that are so polarizing because people are simply afraid to lose their jobs or get fired if they even mention the name of that company.”
Zorub: Sector specialists face perverse incentives when sectors fall out of favor
“The flip side from the specialist perspective is you're under a lot of pressure day in and day out to always like and always hate something. But what if your sector or your subsector is simply out of favor? That can give rise to some perverse incentives that w…”
Zorub: Unpredictable presidential administration brings a heightened market risk premium
“We have a new administration that can be quite volatile in terms of day-to-day decisions or unpredictability, and with that comes, I think, a heightened risk premium.”
Zorub: Extremely crowded market positioning could easily trigger major risk-off event
“The market is not just all on one side of the boat. Everyone's in the bow of that boat, and it will not take much to potentially tip it and create a major risk off event.”
Zorub: Generalist investors spot inflection points faster than deep sector specialists
“As a specialist, you're going to be able to react faster. You're going to identify situations and probably have access to data that maybe we don't even have. As a generalist, you're never going to be at the tip of that spear, but the advantage that you have is…”
Zorub: First hour of LP meetings explains why Parsifal lacks fit
“When I sit down to meet with a potential partner, our first meeting is basically an hour of me telling them probably why we're not a good fit for each other.”
Zorub: Identifying why securities misprice beats screening for cheapness or quality
“When you tilt your lens away from asking, hey, is this business cheap or expensive? Is it good or bad? And instead ask, is it mispriced? If it is mispriced, why? And to what degree can I exploit it through my process? It becomes a very powerful algorithm for t…”
Zorub: Every passing day makes short selling stocks harder than the last
“In the 22 or three years that I've been shorting stocks, every day that goes by is the hardest day that it's been the short.”
Zorub: Parsifal concentrates 65% to 80% of risk in 10 longs
“We run a concentrated portfolio where we're deploying maybe 20 long securities, and ideally the top 10 will be 65 to 80% of the risk.”
Zorub: Magnificent Seven dominance has bifurcated markets and distorted bottom-up investing
“And what we've seen is that the rise and dominance of mag seven has led to a real bifurcation of markets and opportunity sets. The rise of mag seven is really distorted bottoms up investment outcomes and decision making.”
Zorub: Markets are entering a less hostile environment for small-cap equities
“I do think that we're coming into an environment that will be even better and less averse as a result.”
Parsifal Capital will hold roughly 20 longs, concentrating in the top 10
“So we're only going to be long, say, about 20 securities. The top 10 will be 60 to 70% of what we do, and then those will cut across all those different risk premiums, so traditional long, Event-driven, special situations, equity, credit”
Zorub targets 100% long and 60% to 70% short exposure
“So I construct our portfolios to be about a hundred percent long when we're fully invested and 60 to 70% short.”
Parsifal Capital underwrites longs targeting a 100 percent return over three years
“So we underwrite positions that we think can double over a three-year period with about 25, 30% downside. So if you back out that IRR, you know, it's, it puts you somewhere closer to 30.”
Zorub: Parsifal screens candidates for the ability to admit ignorance
“We have to find people who can admit that they don't know the answer to something, which is actually really hard, and so I gear the interview process towards really trying to force that, and if someone simply can't just say, hey Dave, I don't know the answer t…”
Zorub: Launching a modern hedge fund requires day-one institutional infrastructure
“The demands to start a business today and a hedge fund today are, I think, just harder than it's ever been. I think what's changed is a few things. One, the institutional demands on the business side. So the days of just kind of hanging a shingle, investing, m…”
Zorub: Parsifal has shifted roughly 25% of its risk outside the US
“About a quarter of our risk today is outside the US. I think three of the last four long ideas that we put into this concentrated portfolio are international opportunities.”
Zorub: Parsifal currently receives a 4% to 5% short rebate
“At least for right now, we're getting a four to five percent short rebate.”
Zorub: Parsifal uses a concentrated, cross-asset global long/short strategy
“My investing style Is global. It's concentrated. It's cross assets. So we do traditional long short with an emphasis on short selling, but we also do event driven, special situations, equity, credit, aspects of volatility.”