Send an Email
Favourite Sites
  • Whitney Tilson
  • Recommended Booklist

  • Favourite Blogs
  • Calculated Risk
  • Reflections on Value Investing
  • "The market can remain irrational longer than you can remain solvent" - John Maynard Keynes

    Thursday, May 14, 2009


    Baupost's (Seth Klarman's) Latest Thoughts on Hedging Strategy

    I wrote about Baupost's (Seth Klarman's) Hedging Strategy based on his view in 1995-1997. In a recent speach he updated his thoughts on insurance (hedging).

    "Do you overpay for insurance — or do you go uninsured?

    Klarman: In terms of our firm, I tried so hard to learn
    the lessons of 1998 in particular, which were: Don’t be
    unprepared for something out of the blue that’s really bad.
    To some extent, we were prepared this time. However,
    you can never be prepared enough. We had a lot of macro
    protection in terms of credit default protection on bonds
    where we were just betting that credit spreads would widen.
    That’s been incredibly helpful. But we’ve gotten really tired
    of buying market puts, or anything like that, because they
    inevitably are expensive and expire worthless.
    So as an investor, you have terrible trade-offs. Do
    you overpay for insurance — or do you go uninsured?
    That’s just one of those dilemmas for which there are really
    no perfect answers."
    Outstanding Investor Digest March 17,2009
    Comments: Post a Comment

    << Home


    April 2003   May 2003   June 2003   July 2003   August 2003   September 2003   November 2003   January 2004   February 2004   March 2004   April 2004   May 2004   June 2004   July 2004   September 2004   October 2004   February 2005   March 2005   April 2005   May 2005   June 2005   July 2005   August 2005   September 2005   December 2005   April 2006   May 2006   June 2006   January 2007   December 2007   February 2008   April 2008   May 2008   June 2008   July 2008   August 2008   September 2008   October 2008   November 2008   December 2008   January 2009   April 2009   May 2009   July 2009   August 2009   September 2009   October 2009   January 2010   February 2010   April 2010   July 2010   August 2010   October 2010   November 2010   January 2011   February 2011   April 2011   June 2011  

    Disclaimer and Disclosure Analyses are prepared from sources and data believed to be reliable, but no representation is made as to their accuracy or completeness. I am not paid by covered companies. Strategies or ideas are presented for informational purposes and should not be used as a basis for any financial decisions.
    To reduce Spam click here for my email address.

    This page is powered by Blogger. Isn't yours?