Trade Like Steinhardt

**teenvestor** Tue Jun 13, 2006 11:27 pm

Trade Like Steinhardt
According to his autobiography, No Bull, Michael Steinhardt’s hedge fund returned over 30% per annum for 28 years.

Steinhardt was one of the first managers to take ‘hedge’ fund seriously; he was as nimble on the short side as on the long side. Because of his ability to accurately predict where the market was headed, and his ability to seamlessly change from net long to net short his fund was down less than 5% of the months during his tenure.

Steinhardt’s succeeded by investing only when he found variant perception from the market, and the constant vigilance of making his analysts stick with their convictions anytime the stock made had an up or down move.

Thought Steinhardt’s style cannot be deployed by the individual investor, because of the frequency of trading needed, one can use his method of stock analysis to find worthy companies.
In his book Steinhardt talks about four points his analysts had to tell him in two minutes if he were to consider a stock.

1. The Idea – The idea, whether it be a stock, bond or arbitrage play. 2. The Consensus View - What the market says about the idea.
3. Variant Perception – What the analyst thinks is different. Now we call this contrarianism.
4. Trigger Event – The catalyst, which will unleash the variant perception of the stock.

What Steinhardt Owns Now

Steinhardt revealed, in a recent SmartMoney interview, two companies he has big positions in.

James River Coal (JRCC) – Michael Steinhardt is on the board of this company. According to Kevin Kelly, of Market Money, “JRCC keeps falling but nothing has changed fundamentally.” JRCC also has an activist breathing down its back, I have written before on the merits of piggybacking activists.

TranSwitch (TXCC) – Steinhardt says a money manager he knows has volunteered to let Steinhardt cut off his pinky if the stock does not triple by the end of the year. TranSwitch makes semi-conductors, and Steinhardt own 9.9% of it.

Visit this page for more info on companies Steinhardt is buying.

**grapes** Wed Jun 14, 2006 12:59 am

Re: Trade Like Steinhardt
I am sort of confused. In the url, it looked like Stein owns shares of JRVR, Jame River Group and also serves as director in this company. So what is the relation James River Group has to do with JRCC?

teenvestor wrote: According to his autobiography, No Bull, Michael Steinhardt’s hedge fund returned over 30% per annum for 28 years.

Steinhardt was one of the first managers to take ‘hedge’ fund seriously; he was as nimble on the short side as on the long side. Because of his ability to accurately predict where the market was headed, and his ability to seamlessly change from net long to net short his fund was down less than 5% of the months during his tenure.

Steinhardt’s succeeded by investing only when he found variant perception from the market, and the constant vigilance of making his analysts stick with their convictions anytime the stock made had an up or down move.

Thought Steinhardt’s style cannot be deployed by the individual investor, because of the frequency of trading needed, one can use his method of stock analysis to find worthy companies.
In his book Steinhardt talks about four points his analysts had to tell him in two minutes if he were to consider a stock.

1. The Idea – The idea, whether it be a stock, bond or arbitrage play. 2. The Consensus View - What the market says about the idea.
3. Variant Perception – What the analyst thinks is different. Now we call this contrarianism.
4. Trigger Event – The catalyst, which will unleash the variant perception of the stock.

What Steinhardt Owns Now

Steinhardt revealed, in a recent SmartMoney interview, two companies he has big positions in.

James River Coal (JRCC) – Michael Steinhardt is on the board of this company. According to Kevin Kelly, of Market Money, “JRCC keeps falling but nothing has changed fundamentally.” JRCC also has an activist breathing down its back, I have written before on the merits of piggybacking activists.

TranSwitch (TXCC) – Steinhardt says a money manager he knows has volunteered to let Steinhardt cut off his pinky if the stock does not triple by the end of the year. TranSwitch makes semi-conductors, and Steinhardt own 9.9% of it.

Visit this page for more info on companies Steinhardt is buying.

**teenvestor** Wed Jun 14, 2006 1:06 am

You're correct, I mixed up the companies on accident.