Killing Hitler, The Bigfoot, and Then
I recently watched The Man Who Killed Hitler, and then the Bigfoot - a 2018 adventure film starring Sam Elliott, Aidan Turner, and Bigfoot. The movie had a mixed reception, and grossed $3,822 in the box office****(not a typo). Despite the promising title, the movie was not that good.
When a friend mentioned this movie- I assumed that Bigfoot was a metaphor. I assumed that the movie would be about a man who peaked at a young age and was deluded into chasing the illusion that he could regain that feeling in his old age. I assumed wrong.
I talked about this decision [to not short the subprime mortgages]. He [Charlie Munger] said that if you made a lot of money by doing CDS, you may still be looking for the next one today. The opportunity of a big short. The nature of human beings is like this. - Li Lu
Who were some investors who peaked early- and later destroyed their businesses? My mind wandered to those who shorted subprime mortgages 14 years ago.
John Paulson founded his firm in 1994. By 2007, he became a celebrity by earning $15 billion for his investors by shorting the subprime mortgage market. His assets under management peaked at $38 billion shortly after. After predicting 5 more global financial crises from 2009-2018 , Paulson’s investors lost ½ of their money!
David Einhorn had great returns from 1996-2006, 10x his investors money! He recommended shorting companies that were manipulating numbers to fool regulators- such as Lehman Brothers. Over the next 13 years, David continued to short these companies- and his investors enjoyed a 2.6% annual return, while the S&P 500 returned 15% per year. There has not been a year where his firm outperformed the S&P 500 since 2009. Assets under management are now $1.7 billion, down from a peak of $12 billion.
Meredith Whitney became a celebrity overnight, after recommending to short various banks in 2007. Her best prediction was shorting Citigroup. Within days of her recommendation, Citigroups’ CEO resigned, and the company ran out of capital. What happened? Well, she continued to predict macro events, such as a meltdown in the municipal bond market that never happened. In 2015, she started a hedge fund and quickly closed after negative returns. She recently left Wall Street to focus on financial technology startups.
Steve Eisman bet against the subprime mortgage market, and quickly doubled his client’s money to $1.5 billion. In 2012, he started his own fund, but closed it in 2014 due to under-performance. He stated that individual stock picking was dead- and focuses on macro-events, like the 2008 bubble. Now he continues to manage money under a large investment manager as a portfolio manager.
Michael Burry, as usual, is the outlier here. He has seemed to fare just fine after the Global Financial Crisis. He made a ton of money for his investors (>4x!), and then closed his fund- defying industry convention. He stopped chasing the next “Big Short” , and continues to focus on individual companies. Sure, he lost his business, but his track record continues to impress!
If you do not let go of your past successes, then you will never be able to embrace the exciting future. Focus on what you can do today- not what you did a decade ago.
“Some old ones just…hang around” -The Man Who Killed Hitler, and then the Bigfoot