John A. Thaler, the 36-year-old wunderkind of hedge fund JAT Capital, is getting some unwanted press in the New York Times. A year ago his fund was up 30% and he had investors practically throwing money at him. Now the fund is down 20%. The Times spins this is a cautionary tale for investors chasing star managers.
So what did Thaler do wrong? He’s not big on diversifying, for one thing. At the end of April, five stocks made up 43% of his $2.3 billion fund. Also, he made some bad bets. Among them, he went long Tempur-Pedic (TPX):
And he bet against Sears (SHLD):
The report says 81% of his losses came from the consumer sector. But don’t weep for Thaler, he recently bought an 11,000 square foot, seven-bedroom home in Greenwich.
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