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Abrams Capital Management’s Return, AUM and Holdings

An intriguing billionaire, David Abrams launched his own investment firm Abrams Capital Management back in 1999 in Boston, and he has run it very successfully so far. When we say intriguing, we refer to David Abrams’ low profile and interesting investment strategy. Let’s start from the beginning – David Abrams graduated from the University of Pennsylvania with a Bachelor of Arts in History. Before he decided it is time to make it completely on his own and to form his  hedge fund, David Abrams honed his investment acumen at Seth Klarman’s Baupost Group, one of the largest hedge funds in the world. After leaving Baupost Group, he stayed close to Mr. Klarman, who has said about his protégé that he is as “as smart as a whip”, and that he “loves a good puzzle and a good treasure hunt”.

Naturally, as his former boss, David Abrams is also a value investor, which means he looks for the stocks that are for some reason extremely undervalued. For him, this is the only investment strategy that truly works. “I’ve observed a great many investors over the years, and I’ve never seen a consistently successful one whose strategy was not based on a value approach—paying less for something than it is worth, either today or in the future.”  David Abrams doesn’t limit his investments to only one industry or region, on the contrary, his portfolio is quite diversified holding both domestic and foreign equity securities, distressed securities, private and illiquid investments, and debt.

Abrams Capital Management’s Return, AUM and Holdings

David Abrams, who so rarely speaks in public or answers to calls in his office, recently addressed the public at a conference in New York for Project Punch Card and shared his perspective on investing. This “unicorn”, as someone once referred to him alluding at the fact that no one ever sees him, talked about what it means to be too patient in investing. David Abrams, who is known, just as his previous boss, Mr. Klarman, for an extreme patience, holding on to its portfolio without making any changes for months, said that “while a short-term-only focus from investors will only end up hurting a company long-term, managers can actually be too patient” –  as reported on Business Insider. According to David Abrams, every investor should be aware of the fact that patience should also have its limits, and that those who wait for 20 years on a stock have a defective strategy. Abrams Capital Management can observe and analyze one company for five years before investing in it, but, “there has to be a point sooner than 10 years where you’re determining whether you are being successful or not successful.” The fund is looking for a minimum return of 15% on its first purchase.

And, usually, it succeeds. Since its inception through 2014, the fund delivered an average annualized return of around 15%, which is almost triple than the S&P 500 Index, counting dividends. David Abrams earned north of $400 million in 2013, on the account of 23% return that one of his funds delivered (this information is based on WSJ estimates). The Wall Street Journal also claimed that he is usually not included in various top-earning hedge fund managers lists, only because his earning numbers are well hidden, but according to estimates in 2013 he should have been “ahead of David Einhorn, Daniel Och and even Mr. Klarman, according to industry publication Institutional Investor’s Alpha.” At the conference, he further disapproved investors who “are always looking for a short, easy solution” in investing, explaining there is no easy answer or algorithm for investing.

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