Well, for all we know she did blow up (either in 2008 or 2010 or 2011) but managed to convince her investors to stay with her. In the end, running a fund like that one that is built simply selling risk premium is more about managing expectations then trading. PS. in general, you should never invest into a fund where a manager himself has invested less then 75% of his liquid net worth.
I like that.. not just skin in the game, something more like head under the guillotine. Otherwise these funds are free options for operators.. passing the harm buck. So much money can be made compounding selling premium strategies then sold as successful.... the operator gets a great paycheck until they don't. Sounds like a great job for a person with no morals... Neutral/ barbell strategies... the all the time you stay in business with the rare windfalls seem good to me... the meanial returns trading neutral pay to by tails that by nature are mispriced. I hate to make generalities... guys make fortunes selling reinsurance when risk is perceived high.
Sure it can be done. It is called OPM. Read my summary in the other thread. There are 3 returns mentioned in the video, about what she did: 1. When she had 100K, she made 50%. (The 150K to 800K was from investors) 2. Last year her fund did 53%. 3. This year she was up 30% All doable selling naked shorts (you said 13.8% for an 8 weeks and 6 times that in a year), and the rest is called successful fund rising. Obviously the video's and this thread's title are both a bit misleading... Also I don't recall her saying all the fund's money is with TOS. She mentioned her former money manager at a bank who works for her now. That indicates that the fund is NOT with TOS....
She's gotta be one slick sales person, cause some months must have been pretty painful for her investors. Do we know how well did she do last summer?
Yes, the only losing month was august, down only -4.5%. That is actually pretty good, compared that the market dropped from the July high to the Aug low like 14%, although the August monthly drop was only 6%, because it bounced back by the 31st. I read it somewhere else: "And she's managing the money of her former Merrill Lynch advisor..." So I assume her funds are with ML... The biggest question is the return for 2008. We know her returns for years: 2007: 50% on 100K 2008: ? 2009: ? 2010: ? 2011: 53% on 92mm 2012: 30% on 160mm Since the market had a -38% return in 2008, I guess it is possible that if she lost let's say -10-15%, that is a huge positive in the eye of the HF industry. The rest of the years are probably between 20-50%...
I realized that later. The point is that it wasn't run up from 100K up to 192mm AUM without adding more investor money... The video's title isn't completely BS either, you just have to know how to understand the expression "turned into."
TOS is now covered by TD Ameritrade's capital reserves so you really have nothing to worry about. Also, even with the huge margin haircut from PM, if there was a position that went way against her and wiped out all her equity, the brokerage firm would be able to get her out of the position without taking too big a hit. She's trading index options, so there's never going to be some sort of liquidity issue where she can't close out the position (by the margin dept or by her). As far as her particular strategy, it's hard to say for certain how she is managing her risk now. She has been on Tastytrade twice now but does not get too specific on exactly how she manages events like 2008 (which was apparently one of her most profitable years) and the Flash Crash. I respect what she has accomplished but agree that you can't really rely on one strategy (especially the ticking time bomb of short units). A previous poster said it well, comparing it to dealing drugs. It works great until you get caught...then it's game over.
AFAIK (from a TOS exec) she had $38MM at TOS as some time in early 2008. I don't believe for a second that this woman shorting puts into the crash survived and amassed nearly $200MM in AUM with this strategy. Nobody has vetted this beyond an interview with this Sosnoff clown.