May 22, 2008
David Tice’s Dead Houseplant Fund
Tice Proves Every Bear Has a 9.5% Return as He Invokes `D’ Word
“Tice’s offices look like the headquarters that time forgot, with prints of English fox hunts lining the walls and dusty stacks of financial reports in wooden bookcases. A dead houseplant sits on a filing cabinet. Paintings depict lighthouses withstanding the crashing sea, presenting an apt metaphor for how Tice and his colleagues see themselves in relation to the markets.”
No, the dead houseplant is the apt metaphor. I’m a fan of “skeptics” and “contrarians,” but in the stock market you have to be opportunistic. A perma-bear’s opinion is as worthless as a perma-bull’s. What good is the boy who cried wolf about the tech bubble in ‘98 and ‘99 (steamrolled) and who later cried wolf about the credit bubble in ‘04 ‘05 (steamrolled). Skepticism is useful, but timing is everything.
BEARX’s 1.77% management fee probably translates into a large six-figure income for Tice, year after year. Pays for plenty of grilled salmon filet lunches, no doubt — not sure what his hapless investors are eating.
May 22nd, 2008 at 2:01 pm
over the last 8 years, his investors have been snacking on dry aged prime filets of bull
mmmmmmmmm
May 22nd, 2008 at 2:59 pm
Chairman, six-figure? Seriously, it should be at least a seven-figure income.
Cheers,
Markus
May 22nd, 2008 at 3:03 pm
@Markus: Ya think? There’s no transparency of course but he’s probably compensated as well as the next guy in the world’s largest skimming operation.
May 22nd, 2008 at 3:06 pm
Tice proves that raising capital for your fund has nothing to do with performance. A slick presentation is still enough to fool enough people so that you can have salmon lunches for a lifetime. This guy has made no money…..I love it!
May 22nd, 2008 at 3:24 pm
manuel: It’s interesting that there’s always a market for naysayers … if you were an opportunistic cynic, and maybe guys like the Daily Reckoning crew (Bill Bonner, etc) are exactly like this, you could just tap into that sentiment (without being a believer yourself) and laugh all the way to the bank.
May 22nd, 2008 at 4:22 pm
Maoxian, 1.77% of 1.1 billion makes almost 20 million USD. After expenses for 8 employees and budget office space there should be a nice 7 figure income for himself - even after taxes.
I do not think it is so easy to raise this amount of money - at least he must deliver something (Soros and other high profile investor were subscibers to his newsletter for 10 grands a year). People always tend to oversimlpify or overcomplicate matters - reality lies in between. Or otherwise go with Nike: Just do it (yourself) and prove it is really such easy to skim all this dumb multi-millionaire investors.
Cheers,
Markus
May 22nd, 2008 at 5:21 pm
Markus: The 1.1 billion is fairly recent, but yes, you’re probably right about his seven figure income. He’s not skimming multi-millionaires, BEARX has a $2K minimum investment. No one said entering the world’s greatest skimming operation is easy, but once you’re in life is surely good.
May 22nd, 2008 at 8:00 pm
Ditto the skimming for Hussman. Same sentiment play, essentially the same results, expanding AUM and multiple years of underperformance. They are both bear funds and both singing the same economic collapse song.
From date of founding, BEARX has underperformed SPY on price. If it had had the advantage of being founded a few years later, it would have had similar relative results to the HSGFX, I believe.
HSGFX has OUTperformed SPY from founding, but underperformed since mid-2002.
Since the time that both BEARX and HSGFX have existed, mid 2000, HSGFX beats BEARX by just a hair.
May 22nd, 2008 at 8:19 pm
r u guys serious? did u not click that link i provided? the guy is crushing his category and there will always be a need for bear allocations. why in the world does everybody hate us short sellers–we’re your more rational alter ego!
May 22nd, 2008 at 8:20 pm
oh wait i see, somebody deleted my link to his superior 8 year performance….shame
May 22nd, 2008 at 9:53 pm
@Tim: I didn’t delete the link, I embedded it into “prime filets of bull” phrase.
@Bill: Underperform or outperform it doesn’t matter, these guys have gathered the assets that allow them to live the good life regardless of their returns.
May 23rd, 2008 at 8:25 am
i’ll take the dead house plants - at least they only croak once. i cal’ced BEARX’s return since inception losses one time adjusting for inflation and it was brutal. todd harrison over at minyanville harps on discipline over concvition - the PruBear guys are definitely super smart. i was thinking about them recently and high IQ doesnt equal good trading results.
May 23rd, 2008 at 9:31 am
@ Tim, you can’t eat “crushing your category.” You’ve gotta PERFORM on an ABSOLUTE BASIS to impress me.
I got nothing against shortsellers, especially the fundamentally-based ones, because you can learn a lot about fundamental investing from the LONG side by watching them. What makes a half-assed decent underperforming short book are the same things you avoid or screen out from your long book.
@ QQQBall: you wouldn’t happen to know the Cramer-Berkowitz Fund’s returns when Todd-o was head of trading, would ya? If you do, could you share them with the class?