Readit Newsjustinmares commented on I Bought a Business for $0 every.to/superorganizers/... · Posted by u/catchmeifyoucan
I assume he hired one or two people from overseas and paid them the bare minimum to keep the business just operational so that he could pocket as much as possible.
Nope, we did not do this. We invested a ton in the business and didn't take a dollar out (besides small salaries) for 2.5 years.
More context here - https://microconf.gen.co/justin-mares/
justinmares commented on Universa tail fund returned 3,600% in March bloomberg.com/news/articl... · Posted by u/ZeljkoS
In layman's terms, it's like saying when your life insurance pays out $1M you have a 2500000% return on that month's $40 payment. It's not wrong, but if that's the only number you look at you'll always conclude that buying insurance is the road to riches.
Exactly
justinmares commented on Universa tail fund returned 3,600% in March bloomberg.com/news/articl... · Posted by u/ZeljkoS
My impression is Universa is in effect, a product that aggregates intelligent short positions based on their assessment of tail risks, which other mainstream managers use as a hedging instrument. Their %3.5 management fee is a multiple of the 1:10 that other funds have been forced to take, and almost double the 2:20 model of pre-08 hedge funds.
Speculating, but the kind of fund I would imagine buys their product would be in the 5bn+ AUM range, who has broad exposure to a bunch of mark-to-unicorn venture backed startups in their book.
It'd be like %2 Universa, %60 index funds, and %20 buying sand hill dead dogs and F rounds as the price of admission for participation in their next fresh funds, %10 unicorn, %4 on something socially earnest and backed by someone politically connected for social climbing, a management fee, and spoilage. How close is that?
Universa being the tool that offsets the tide rolling out on those other bets.
This is almost exactly correct. Though what's crazy is they charge fees on the notional - aka the amount they're "insuring".
So if you have a 4b portfolio, they're charging fees on the 4b.
justinmares commented on Universa tail fund returned 3,600% in March bloomberg.com/news/articl... · Posted by u/ZeljkoS
The 3600% return in March is sort of misleading.
The returns are on the premium paid for options (or margin), not the notional (which is where fees are paid). That $4bn fund is counting its performance on only $40 million of invested capital (of the $4bn). So they are up 3600% on $40 million.
Universa’s model is they take 3.5% of a portfolio value per year and use it to buy puts over the course of a year. So at any time, maybe they have 30-60 basis points of the portfolio in puts. So they are up 3600% on 30 basis points or like 12%.
"Spitznagel included a chart in his letter showing that a portfolio invested 96.7% in the S&P 500 and 3.3% in Universa’s fund would have been unscathed in March, a month in which the U.S. equity benchmark fell 12.4%."
"The same portfolio would have produced a compounded return of 11.5% a year since March of 2008 versus 7.9% for the index."
2.6% per annum is a lot of outperformance, albeit not quite as eye popping as 3600%.
which isn't anywhere close to true. Wheat sells for $7/bushel, a bushel is 60 pounds. Corn & soy are similarly low value crops. Farmers just can't afford to put lots of pesticide and fertilizer on their crops. Fruits and some vegetables are far more valuable so spending more on inputs to increase yields makes sense.