About Mab Faber
Overview and Thoughts about the BookInvest with the House - Hacking the Top Hedge Funds is one of Meb Faber's more recently published books about investing. Meb begins the book illustrating the difficulties in picking great stocks. He cites statistical data such as 64% of stocks underperformed the broad stock market and 25% of stocks were responsible for all of the market's gains. This makes the game of investing seem especially difficult. On top of this, you are playing in a zero-sum game (your gain is someone else' loss) against the top most talented investors in the world.
Suppose you were able to put down bets with the house? In Vegas the house is the casino; in investing, top hedge funds are considered house. Suppose you were able to buy the same stocks as the top hedge fund managers. Faber goes through in-depth how to track the top hedge funds' picks and use that information to create your own portfolio.
One tool that Faber suggests using is reviewing SEC filings of 13F. Large hedge funds are required to disclose their holdings quarterly to the public. Most of these investors have a long-term investment horizon. Therefore, even though there is a forty-five day delay in reporting their 13F, you'd still be able to get a good idea of what stocks they own at a point in time. Here is a sample of LSV Asset Management's 13F.
Beyond Warren Buffet and Charlie Munger there are a whole host of successful hedge fund managers. Faber breaks each of them down with their background stories, investment style and strategy, and provide a snapshot of their performance. In addition, he shows their holdings and how a cloned portfolio based on 13Fs would have performed compared to the market. Each of which, beat the the market by large margins. Mab summarizes all the great investors and their styles into one compact book. This is a must read for any investor looking to broaden their knowledge and learn from the very best. Most people are not managing huge sums of money and therefore should be able to compound at greater percentages than those managing billions. While I wished he would've went more in depth on the beginning years of the fund managers, he did a great job accentuating their successes.