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 40 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
Algorithms eliminated value investing alpha because computers do not feel embarrassment
“I do think this is why a lot of fundamentally based value strategies have struggled for a long time, because the alpha in those strategies Was being willing to own these stocks that other people were embarrassed to own because they were so out of favor. And yo…”
Baker: VC operational value-add is wildly overstated and unappreciated by founders
“The short answer is a lot of the operational value add from a lot of these firms is wildly overstated. The wise advice is super not appreciated.”
Baker: Evaluated analysts on clear factual arguments, not hit rate
“I didn't care whether the analysts at Fidelity got their stocks right or wrong. It was utterly immaterial to how I evaluated analysts. There's an analyst, he consistently had some of the worst stock picking metrics in the department. But I made a vast amount o…”
Baker: Investors must choose to panic early or double down late
“As an investor, you have to either panic early or double down late, and you have to be one of the two. It's hard to be both.”
Baker: Process-driven alpha in fundamental investing is quickly competed away
“By the way, you have to have a process, and you have to have the process that works for you, but any process that's repeatable that generates significant alpha, it's a very competitive world. It's going to quickly be armed away. In fundamental investing, any p…”
Top fund returns are driven by just two to ten key people
“I would just submit that any investment organization, no matter how big, there's somewhere between two and 10 people, and if you took those people out, and the organization had the exact same process, the results would be very different.”
Baker: Portfolio turnover is driven by volatility, not time horizon
“Turnover should be a function of how often you change your mind, and part of that in any discipline valuation-based process should be about how the stocks move. For me, turnover is mostly a function of volatility.”
Baker: Multi-manager hedge funds are driven by a few star pods
“At a lot of these multi-managers, there are a couple of pods, and maybe I am out of date, who are running a disproportionate amount of money with really good returns. The reason they have a disproportionate amount of money is because they have a long history o…”
Baker: Public companies targeted by short sellers should never publicly respond
“This is what you do the first time you get a short seller, write a report about you. Do not respond. I know it feels so personal. I know how personal it is, but just don't respond. Let the numbers do the talking. If you get in a public fight with them, it's ju…”
Baker: Private Markets Suffer Far More Bad Behavior Than Realized
“There is more bad behavior in private markets than I think people realize. FTX, it's very public, but these companies, they're not filing always audited financials. They don't have the controls. Particularly when something starts to go bad, there's a lot of ba…”
Baker: AI Is in Year Three of a 20- to 30-Year Cycle
“We're, I think, in the very early days of AI. If ChatGPT is to AI as Netscape Navigator was, we're in year three of what should be a 20, 25, thirty-year really exciting cycle or trend.”
Gavin Baker: Price determines returns only for a given business outcome
“Warren Buffett's famous statement is the price you pay determines your return. I would modify that and say the price you pay determines your return for a given business outcome.”
Experienced investors must calculate DCF models instantly in their heads
“If you've been doing this more than five years and you can't instantly do a DCF in your head, this is the wrong business for you.”
Baker: Fidelity led three Roku rounds when VCs feared Big Tech
“There's this company, Roku, no VCs would fund it, because every venture capitalist was worried about competition from Amazon, Google, and Apple. I was like, well, I'm really familiar with those companies. Competing with Roku, it is not on their top 50 list of …”
Baker: Competitive sports experience is essential for hiring resilient analysts
“In today's world, actually having played sports is an advantage or done anything where there's objective outcomes. For a lot of children, they've lived in a world of participation trophies and great inflation. They haven't been confronted with losing, with an …”
Baker: Effective crossover investors should never encounter genuinely new ideas
“Because, particularly as a crossover investor, there should be no new ideas if I'm doing my job well. You should have a defined universe where we have a very high knowledge level.”
Baker: Good stock pickers will be good at shorting stocks
“There's no difference except for the risk, but the same principles apply. If you're good at buying stocks, you're going to be good at shorting stocks.”
Baker: Long growth and short value pairs create levered factor risk
“You can't be long a stock like GM and be short Tesla. From a quantitative perspective, that makes no sense. If you're long growth and short value, that's equally painful. If you're long value and short growth, that means you're just levered value. If you're lo…”
Baker: For an unlevered long book under 100%, short alpha is irrelevant
“If you're going to run with an unlevered long book under a hundred, then short alpha is irrelevant. All that matters is your shorts must make money. Full stop.”
Baker: Extreme single-stock concentration turns a fund into a single stock
“If you have a 35% position in one stock, and then your second position is three or five percent, you're not a fund, you're a stock.”
Understanding a business takes years, not 90 days of due diligence
“It's funny that some investors have an idea that you can do 90 days of work on a business and really understand it. I don't think it's possible. For me, to really understand a business, I need years of history, in some case decades, to see how the business and…”
Baker: AI Uniquely Features Public and Private Rivals Across Every Layer
“I have never seen a new technological trend where at every level of the stack, the competitors are both public and private.”
Baker: Scale and business resilience provide an essential advantage for hedge fund performance
“Hedge funds are fragile, and the smaller they are, the more fragile they are. I do think it's becoming a scale game, and that was very important advice from Mike. So if you have a diversified business, it makes it a lot easier to be rational when you're wrong.…”
Baker: Ages 50 Through 70 Are Peak Performance Years for Investors
“Point number one, something I profoundly believe is that 50 through 70 are peak performance years for professional investors.”
Baker: Investors must urgently focus on data outside probability distributions
“Investing is a Bayesian endeavor. You have a Bayesian probability space of expected outcomes. The data points should fit within that. And then if there's a data point outside that, that's what you have to super focus. If a data points inside your expected prob…”
Gavin Baker: Contrarian style relies on buying 52-week low lists
“For me, I'm a double down late person. I'm always buying stocks on the fifty-two-week low list. It makes me uncomfortable when a name is in the consensus. Sometimes consensus is right, but it's important to me to be contrarian.”
Gavin Baker: Fundamental alpha requires out-of-consensus estimates and correctness
“The alpha in the market as a fundamental investor comes from having earnings estimates or free cash flow estimates or whatever metric you choose that are materially different from consensus and being right.”
Baker: Framing investment ideas as falsifiable hypotheses limits confirmation bias
“Instead of having an investment thesis, we have an investment hypothesis, thesis being a literal statement of belief, and if you state a belief, as a human, you become attached to it, whereas a hypothesis is quantitatively falsifiable, and you're attempting to…”
Baker: Managing basis risk is essential when running high gross exposure
“If you're going to run a high gross, the most essential thing that you have to manage is basis risk.”
Baker: Atreides requires trusted founders or board VCs for large private bets
“I don't like to invest in a company and make it a big position unless it's either a repeat founder who I've had a long duration relationship with, or there is a VC who I have a close personal and professional relationship with, Who has a really good track reco…”
Baker: Google JAX and Meta PyTorch teams fought publicly on X until leaders called truce
“The JAX team at Google got into a giant fight with the PyTorch team on Meta on X, and the heads of each company's respective AI division had to make a public truce and instruct their troops to stop fighting.”
Baker: A high-IQ social following sharpens investment ideas and drives venture deal flow
“Our friend Patrick O'Shaughnessy has said having a big
High IQ following is actually a superpower, and it really is. So I think for sharpening your ideas, it's incredible. Then there's a whole nother dynamic. It really matters for deal flow.”
Baker: Fantasy football and investing both require non-consensus differential opinions
“Fantasy football and investing, they're fundamentally the exact same thing. You have to have a differential opinion. If you just draft everybody where their ADV is, you're never gonna win.”
Baker: Investment success requires a philosophy matching your emotional makeup
“A lot of being successful as an investor is finding an investments philosophy. That fits your own emotional makeup such that you can be rational when you are wrong.”
Baker: Fidelity invested privately in Facebook in 2010
“I reengaged with venture right around the time Allen and company started bringing growth stage equity opportunities to big mutual fund managers, which is so important to own Facebook privately in 2010.”
Baker: Cut WeWork allocation in half when valuation was pushed
“I did invest in WeWork. They pushed the price, and I did cut my order in half. Never did anymore, to the best of my memory, but it's not like it was all roses or successes.”
Baker: Atreides manages fund positions via dynamic pilot and co-pilot roles
“Every position in the fund, I think of it as like an airplane. You can pick any moving vehicle. On some positions, I'm the pilot. On other positions, I'm the co-pilot. Some positions, I'm in the plane, and maybe the pilot or the co-pilot are people who I've wo…”
Baker: Atreides measures annual gap between insight quality and portfolio performance
“For me, execution is the gap between our performance and the performance we could have had based on the quality of our insights. I make an effort to measure that every year.”