Abrams Bison Investments is a hedge fund founded in 2000 by Gavin Abrams, a value investor. In 14 years since its inception, the fund had north of $2 billion in regulatory assets under management.
In 2008, Abrams Bison Investments widely outperformed the market bringing a return of 8.7%, vs. -37% for the S&P 500 for the same year. In an old but very interesting investor letter from 2008, Gavin Abrams explains that this performance was mainly due to the luck they had that year, as their averaged annual net return since inception has been 10.3%, vs. -4% for the S&P500 for the same period of time.
Two years later, Abrams Bison Investment may had less luck, but has brought positive returns again, beating the market by 4%. More precisely, in 2010, the fund had partnership net return of 19.1%, vs. 15.1% for S&P 500 for the same year. In this letter, Gavin Abrams insist that we should ignore these good returns for a three-year period if we are considering investing in the fund, as three-year period or their past moves are far from enough for analyses. He think that we should dig deeper and try to really comprehend the fund’s investment philosophy.
We bring all three very intriguing letters for further information below: