The Long and Short of It With John Hempton

Investor Highlight - John Hempton, CIO of Bronte Capital, is one of the more fun individuals we have come across in the investment world. He runs an interesting twist of a long-short strategy. He buys larger longer-term positions where the main goal is “8-10 percent positions we can hold for decades”. On the short-side, he focuses on a large portfolio (1,000+ over their history) of very small positions (<0.5%), meaning they can’t fall into short pits like Bill Ackman’s now famous failed $1 billion short of Herbalife (yikes – hopefully we have money like that to lose someday!). Now, us here at CVI haven’t typically been shorters. We like complaining about bad companies with bad reporting, but we haven’t gotten out of our armchairs yet.

Track-record-wise the annualized return of their Amalthea Fund has been 13.8% average per year since 2014 through 2018 (off-cycle year-end where 2018 YE was June calendar 2019).

So, should you short Telsa? How do you not blow up a short book? Why is General Electric such a mess in spite of still building some amazing products? John Hempton covers all this in about an hour. Enjoy!

John Hempton, CIO of Bronte Capital, is one of the most colorful short-sellers in the business. In this deep and wide-ranging discussion with Matt Milsom, he discusses the red flags that lead him to short particular stocks, and shares some of his methodology for managing his short book.

Public information on the funds can be found here - https://www.brontecapital.com/partners-letters

There is also his blog that has the “sometimes eccentric views of John Hempton”.