Taking Advantage of the Algos

Published on
21 November, 2018
Topic
Risk Management, Equities, Financial System
Duration
29 minutes
Asset class
Equities

Taking Advantage of the Algos

Featuring Harris Kupperman

Harris Kupperman of Praetorian Capital talks to Real Vision’s Jeff Zananiri about the opportunities for finding value in small-cap stocks. Algorithmic trading programs may be making life more difficult for some market participants, but in the small-cap space, Harris believes that their rules of engagement leads to advantageously deep discounts. He also touches on a bevy of related topics, including as overall market valuations, and Mongolian mining stocks. Filmed on November 7, 2018 in Miami.

Published on
21 November, 2018
Topic
Risk Management, Equities, Financial System
Duration
29 minutes
Asset class
Equities
Rating
28
Sharing

Comments

  • MM

    Mak M.

    30 11 2018 14:30

    0       0

    Excellent interview with a lot of great informations.

  • HB

    Hector B.

    29 11 2018 22:18

    0       0

    Buy the dip as a hedge fund strategy. Never seen that before. Maybe I left the industry too long ago.

  • WB

    William B.

    28 11 2018 08:01

    3       0

    Great stuff. I watch each interview video as another opportunity to learn a lot about something that’s not my space yet. Much to learn here. For me it’s not about his specific investments but rather his thought process and logic behind them. Lots of geniuses on RealVision.

  • tk

    theo k.

    27 11 2018 10:29

    1       0

    great interview, bring him back!

  • VC

    Vince C.

    25 11 2018 21:20

    1       0

    Enjoyed it, but what I’m hearing is that discretionary traders/investors are getting squeeEd out into more and more niche markets... which in turn will crowd these spaces, lower profits with an eventual takeover of machines. Of course, the machines are simply tools leveraged by fewer and fewer humans. If anyone disagrees with my assessment please do reply comment an opposing view.

  • SS

    Sam S.

    25 11 2018 14:33

    2       0

    For me, the interview was more about ideas to follow certain opportunities then just buying Mongolian coal. How to identify what's coming for a potential yet nibble positive outcome. Also thinking about "selling puts" to pickup discount on building a position. Harris is well spoken yet I felt humble to say it doesn't always work out. I always try to learn something and just did. Thx.

  • NH

    Niall H.

    25 11 2018 13:53

    1       0

    Can’t get the numbers to add up based on H1 2018 financials.

    #’s don’t add up....
    H1 2018
    Debt $443mn (ignoring deferred tax liability)
    Cash at h1 2018 $20m.
    Net debt $420mn
    Ebitda $180mn (h2 2017 + h1 2018)
    Capex $35mn
    Market Cap $220mn
    EV (net debt + market cap) = $640mn excluding tax liability.
    FCF (EBITDA - capex, ignore WC) = $150m
    EV / FCF = 4x
    EV / EBITDA = 3x
    Market cap / FCF = 1.5x

  • DR

    Daniel R.

    24 11 2018 21:33

    3       0

    Kuppy is great. He does real fundamental research (he travels to Mongolia etc.), speaks and writes in plain language, and doesn't follow any crowd. He publishes his theses on his blog - Adventures in Capitalism - to anyone who cares to follow. I do, and when I see a new post I stop what I'm doing and read it. Would be happy to see more of him on RV.

  • RS

    Robert S.

    24 11 2018 19:20

    0       0

    Where, I can't see? here, diagonally. retty sneaky sis!

  • MK

    Michael K.

    24 11 2018 08:25

    2       8

    He's so full of it... couldn't watch the whole thing.

  • my

    markettaker y.

    23 11 2018 22:54

    5       0

    Milton can we make Kuppy an RV regular please?

  • PC

    Paul C.

    23 11 2018 12:10

    4       0

    Really enjoyed the interview & hearing how Harris approaches the market.
    So Harris likes 'bottomed-out' markets with good fundamentals... i'd like to know what he thinks about uranium miners.
    RealVision has had some interviews with Leigh Goehring, Adam Rodman & Raoul all excited by this idea over the next 5 years.

  • M.

    Milton ..

    23 11 2018 08:27

    7       0

    Hey folks - I bet you loved this interview. Make sure you check out Harris's blog at www.adventuresincapitalism.com

  • DS

    David S.

    22 11 2018 21:06

    0       0

    Algos can help create mini to maxi-bubbles. Maybe a good way to play around a current position. DLS

  • MH

    Michael H.

    22 11 2018 19:22

    8       0

    Kupperman has been making a bull case for Mongolia for a long time. I think his thesis is analytically attractive, and I'm sure we'll look back in 2040 and value his insight. However, his thesis hasn't worked at all since 2012 or so. Paraphrasing Howard Marks, being early is effectively indistinguishable from being wrong. Given the political situation in Mongolia and the economic situation in China, I'm not aware of any potential catalyst that changes that reality. If Kupperman knows of one, I didn't hear him share it in the interview.

    I'd caution anyone who gets excited about Mongolia from this interview to chart Kupperman's company, Mongolia Growth Group (YAK), over the past five years. I don't mean to criticize, because I thought it was a good idea and we all have losses. He's an entrepreneur hustling to make something happen, and I wish him the best. Yet the reality is I'd take the odds at a rigged online casino over the odds that any aspect of his Mongolia thesis works in the near future.

  • EF

    Eric F.

    22 11 2018 03:50

    8       0

    What a fantastic interview. I’m definitely going to read / subscribe to that blog. I could definitely have listened to Harris for an hour or more.

  • CS

    C S.

    22 11 2018 02:03

    1       0

    Knowing the Chinese and Chinese stocks, I doubt the risk/reward prospects for 0975. If its such a great buy, how come management havent gone private (its massively down)? How about the myriad of potential Chinese insiders/connected interests that arent buying? Did they ever pay dividends? I wouldnt risk much on it.

  • SL

    Shanan L.

    21 11 2018 22:39

    8       0

    Recognized the name, been reading his blog for over a year... it’s insightful (and free). Good commentary and unique ideas/perspective. Thank you Real Vision, I think I may have requested this interview with Kuppy.

  • RM

    Robert M.

    21 11 2018 21:35

    1       0

    Interesting idea on 975HK (Mongolian Mining Corp).
    It has been in a down trend since 2012 and still is. The only rally was out of the Feb 16 general mkt bottom (and Oct copper recovery). The downtrend has slowed since late 2016 however is still in place. Given global and China growth is slowing, the downtrend will probably continue and the downside moves will be substantial if the general market sells off hard (per Jan16). That will be the time to buy.

  • TR

    Thomas R.

    21 11 2018 20:39

    5       0

    Excellent

  • WM

    William M.

    21 11 2018 19:19

    8       0

    Excellent! Microcap investing is one of the few areas where individual investors can have a big advantage over institutions and computers - mainly because of the lack of liquidity. The little guy can build a significant position without moving the price a lot etc. But be prepared for (and ideally take advantage of) really crazy price moves...that often are just short term noise... Harris clearly does excellent in depth research of his chosen companies - and that's really essential. He's one of the few investors who actually embraces averaging down - which most investors avoid (even using stop losses to do the opposite of what Harris does). It takes a lot of guts to do what he does ... most investors would get too rattled and nervous to do this. but for those that can, there's clearly a lot of potential opportunity.

  • AP

    A P.

    21 11 2018 18:01

    5       0

    Learned a ton. Very open and good vibes. Loved how he moved from "I'm primarily interested in US liquid companies" to a rocking thesis on a distressed Mongolian mining company.

  • JV

    James V.

    21 11 2018 16:26

    1       0

    Interesting interview. Would have been even more helpful to talk about specific examples of themes discussed (e.g. LNG shippers).

  • JH

    Justin H.

    21 11 2018 16:06

    8       0

    here's his blog, he's a great writer - http://adventuresincapitalism.com/

  • MM

    Mike M.

    21 11 2018 15:51

    3       0

    Smart guy has a discipline and it makes money for him. Nice.

  • Nv

    Nick v.

    21 11 2018 14:27

    3       0

    Very interesting. Great job