News Flash Sax Angle Partners is one of the top performing funds in the world over the last 12 months!
The efficient market hypothesis assumes that all information about a company is already reflected in its price and there is little competitive edge to be gained from stock picking. The efficient market hypothesis theory has had a great impact on investor beliefs ushering in the era of index funds and their sponsors like Vanguard. Today, it’s the latest investment fad, even awarding the Nobel prize in 2013 to its founder Eugene Fama. There are a few glaring holes in this theory and the underpinnings of modern portfolio theory. For starters why do stocks sometime jump or collapse 5% to even 40% on the release of quarterly earnings if their price already reflects market knowledge? Furthermore “beta” one of the bedrock factors in the valuation formula is a backward looking statistic and does little to predict the future. As the old but true investment disclaimer always reads, past performance is not necessarily indicative of future. In fact the opposite is closer to the truth. What was once very stable in the past has an almost inevitable destiny to become volatile in the future given enough time.
Even the most naive or casual investor recognizes these two truths.
- There is a possibility that some information is not public, “inside information” and hence not reflected in the price.
- The past stock price performance is no guarantee of the future price performance.
That is the essence of “the insider fund”, Sax Angle Partners. We start out with a very simple premise; we like to invest in companies that management is willing to invest significant amounts of their own money in. From there we start along a long and tedious investment path far from certain but less likely to step on the minefields caused when those very same insiders are unloading their holdings.
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HSAX & CO., LLC is the general partner and investment manager for the Sax Angle Partners, LP long-short equity fund.