$9 billion hedge fund manager David Abrams, who rarely makes public appearances, lays out his investing strategy - and cautions against being too patient
- David Abrams, who manages nearly $9 billion with his fund Abrams Capital, rarely makes public appearances.
- He told attendees at a New York conference on Friday that while a short-term-only focus from investors will only end up hurting a company long-term, managers can actually be too patient.
- "The long term is made up of a lot short terms," said Abrams, who is a protegee of Baupost's Seth Klarman.
- He derided investors that look for the easy way out, saying there's no algorithm" for investing.
Even patience has its limits.
It's a mantra that every investor should subscribe to, according to David Abrams, managing partner of $8.7 billion hedge fund Abrams Capital.
Even though he considers himself to have "higher end patience" relative to his peers, Abrams said people who buy a stock and sit on their hands for 20 years to have a "flawed approach."
"Being patient is very good, but there has to be a limit," he said, noting that his firm has closely watched securities for five years before deciding to invest. "The long term is made up of a lot of short terms."
Abrams, who is a protegee of Baupost's Seth Klarman, gave a rare public address on Friday at a conference in New York for Project Punch Card, a charity aspiring to improve access to investing and finance jobs for underrepresented people. He was critical of people that "are always looking for a short, easy solution" in investing.
"I don't think there's a black box or easy answer or algorithm" for investing, he said.
Abrams' firm primarily takes long positions on different equities, but also invests in distressed and non-distressed debt. His investing philosophy, he said, starts with a question asking "what is the risk of any given asset or security?"
"We make a lot of money from mucking around in the garbage, and we also buy nice shiny things, and we care what we pay for both," he said.
The firm puts a three- to five-year time horizon on stocks, looking for a minimum return of 15% on its first purchase, he said.
"There has to be a point sooner than 10 year where you're determining whether you are being successful or not successful," he said.
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