$9 billion hedge fund manager David Abrams, who rarely makes public appearances, lays out his investing strategy — and cautions against being too patient


wall street

  • David Abrams, who manages nearly $9 billion with his fund Abrams Capital, rarely makes public appearances.
  • He told attendees at a New York conference on Friday that while a short-term-only focus from investors will only end up hurting a company long-term, managers can actually be too patient.
  • „The long term is made up of a lot short terms,“ said Abrams, who is a protegee of Baupost’s Seth Klarman. 
  • He derided investors that look for the easy way out, saying there’s „no algorithm“ for investing. 

Even patience has its limits. 

It’s a mantra that every investor should subscribe to, according to David Abrams, managing partner of $8.7 billion hedge fund Abrams Capital.

Even though he considers himself to have „higher end patience“ relative to his peers, Abrams said people who buy a stock and sit on their hands for 20 years to have a „flawed approach.“

“Being patient is very good, but there has to be a limit,“ he said, noting that his firm has closely watched securities for five years before deciding to invest.  „The long term is made up of a lot of short terms.“ 

Abrams, who is a protegee of Baupost’s Seth Klarman, gave a rare public address on Friday at a conference in New York for Project Punch Card, a charity aspiring to improve access to investing and finance jobs for underrepresented people. He was critical of people that „are always looking for a short, easy solution” in investing.

“I don’t think there’s a black box or easy answer or algorithm” for investing, he said. 

Abrams‘ firm primarily takes long positions on different equities, but also invests in distressed and non-distressed debt. His investing philosophy, he said, starts with a question asking “what is the risk of any given asset or security?”

“We make a lot of money from mucking around in the garbage, and we also buy nice shiny things, and we care what we pay for both,“ he said.

The firm puts a three- to five-year time horizon on stocks, looking for a minimum return of 15% on its first purchase, he said. 

“There has to be a point sooner than 10 year where you’re determining whether you are being successful or not successful,“ he said. 

Join the conversation about this story »

NOW WATCH: 7 things you shouldn’t buy on Black Friday

Source: Business insider

Kommentar verfassen