Former hedge fund trader Derek Capo argues to Nathan Latka that activist investor campaigns damage companies and future shareholders.
Disclosure
Capo: Hedge fund got repeatedly stopped out shorting housing stocks before crash
“What ended up happening was the last year I was there, we were shorting housing stocks. We were shorting mortgage insurance companies. It just kept going up. They just, they kept on going up on us. We kept on getting stopped out”
What-if
Capo: Working at a hedge fund cost him early internet marketing opportunities
“Because I worked at the hedge fund, I built up business skills, and I didn't build up marketing and kind of hustle skills. I missed out on a lot of ways to make money”
Assertion Not checkable as stated
Capo: JetBlue trade netted $3M to $4M in two weeks
“My biggest win, ah, was I think buying JetBlue. It was actually, ah, it was actually early in, in the time when they were still growing, and I think I made them within, I think in about a week or two, I made them like three or four million dollars.”
Assertion Not checkable as stated
Capo: Peregrine Software holding produced $9M to $10M profit
“There was another one called Peregrine Software, where my boss had had the position for a long time, and I had been in charge to start monitoring the company. I went over to meet the CEO in Atlanta and I came back and I said, no, we're not selling the position…”
Insight
Derek Capo: Hedge fund trades depend on 3-to-6-month catalysts
“Well, usually whenever we make investments we always try to look for a catalyst that's going to happen within the next three to six months. It's going to get the stock to move higher, whether it's a corporate event whether it's earning surprises, whether it's …”
Disclosure
Derek Capo: Everest Capital Main Fund Managed $300M-$400M Around 2004
“The main fund at that time, I think, was about 300 or four hundred million dollars, and we put about a one or two percent position, which basically means two percent of the entire fund was invested into buying shares of the company, and so two percent of like …”