O. Andreas Halvorsen: More Info

O. Andreas Halvorsen was a member of the Williams ski team.

O. Andreas Halvorsen said that he is often asked what his opinion is about owning stocks that are widely held by other hedge funds. In response he replied that “there is no one answer to this question, however I would like to discuss some of the factors we take into account when establishing and maintaining positions in companies known to be popular with there hedge funds.”

O. Andreas Halvorsen said that “we often find the greatest success in investments where we our view is different from the Street. However, we do not shy away from solid investment ideas just because other hedge funds are involved. Although we succeed by standing alone, we do not take positions opposite to other companies just to be contrarian. We realize that all the shares of a specific company must be owned by someone. It can be a comfort to know that the other shareholders are firms whose opinion we respect.

There is obviously some risk associated with being in an investment alongside like minded investors who may have been trained in the stock-picking trade in similar ways in that we may decide to sell at the same time. To limit the consequences of crowded exits, we pay attention to the liquidity of the stocks we trade and take large positions only in the most liquid stocks in the world. The problem of crowding is most acute in our shorts due to the risk of unlimited loss and the potential for canceled borrow arrangements.

As you are aware, we are guarded in disclosing our shorts to anyone and we do on occasion limit the size of our positions, or eliminate them altogether, when we perceive a position to be tight in the borrow market or crowded by equity long-short investors.”

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