From the welter of data and information confronting decision-makers, 13D discerns, distills, clarifies and highlights.
Founded in 1983 by Kiril Sokoloff, 13D’s original, eponymous project allowed subscribers to piggyback on the ideas of the investment greats—the Warren Buffetts and Carl Icahns. At the time, 13D filings (notifications filed with the SEC when a company or individual purchased a 5% share in a public company) were totally ignored. But, Sokoloff saw their immense value as thousands of U.S. public companies were selling way below their break-up value.
Over the decades, 13D has continued to apply a unique and open perspective in order to find investment opportunities for its clients.
“ I have always been most comfortable when I am alone in an investment decision and no one agrees with me. Much of my 30-plus years in the investment business has been spent developing tools that help me think in an original way. Above all else, I strive for a flexibility of mind, which is fostered through continual learning. The ability to filter out short-termism is fundamental to maintaining the presence of mind which allows one to keep sight of the larger picture.”
—Kiril Sokoloff, Chairman and Founder
WE ARE “FOXHOGS”
To go deep, you must first go wide. The story of the fox and the hedgehog has been told in many forms through the ages, but the essence of it is always the same. The fox evades his attackers in a variety of inventive but exhausting ways, while the hedgehog adopts one tried and trusted strategy—hunkering down and letting its spikes do the work. In the words of Greek poet Archilochus: “The fox knows many things, but the hedgehog knows one big thing.” Discussions of the hedgehog and the fox often come down to whether it’s better to be one or the other. But in a world that rewards expertise and the groundbreaking insights that come from the clash of domains, we need to be both. 13D is both.
“ The thinkers best positioned to thrive today and in the future will be a hybrid of these two animals. In a highly competitive, high-information world, it’s crucial to know one or two big things and to know them in more depth and detail than most of your contemporaries. But to really ignite that knowledge, you need the ability to think about it from a variety of eclectic perspectives and to be able to collaborate fruitfully with people who have different specializations.”
—From Curious: The Desire to Know and Why Your Future Depends On It by Ian Leslie.
When 13D looks at the world, it does so through multiple lenses–mathematics, economics, engineering, physics, psychology, and other disciplines. Using multiple models is crucial; they provide a myriad of different solutions from individuals examining the same data. They turn facts into stories and information into insight.
The answers may be unknown, but it’s only through imagination that you can escape the manacles of conventional thinking. It’s hard to have vision without imagination.
THE POWER OF CONTRARY THINKING
Genuine contrary thinking requires such independence of mind and disdain for popular opinion that, by its very nature, it can be embraced by only a few.
“ Imagination is more important than knowledge. For knowledge is limited to all we now know and understand, while imagination embraces the entire world, and all there ever will be to know and understand.”
OUR THEORY OF CONTAGION
When we identify an unusual event or occurrence?for example, the weather extremes that first manifested as 500- year floods in Europe in 2002?we keep a keen lookout for similar outliers. Two or three confirmations are usually all we need. Our theory is this: The contagion will spread until proven otherwise.
OUR THEORY OF ANOMALIES
An anomaly is an inconsistency. It might be something that should be happening and isn’t, or it might be something that is happening and shouldn’t be. The best known and most common examples are stocks (or a stock market) that go down on good news or refuse to fall further on bad news. When an anomaly first appears, it is only a subject for further study. Perhaps the anomaly will disappear. But, if it persists, then you must ask the question: “Why?” The answer often leads to the truth.
MANAGING MULTIPLE MESSAGES
The messages from the markets are increasingly complex and conflicting. Therefore, we are continually evaluating our macro views in light of total market action?from credit to bonds, to currencies and equities, to emerging markets and inter-market ratios.
OUR THEORY OF INVESTOR PSYCHOLOGY
A long time ago, we came to the conclusion that investors base their attitudes on their last traumatic experience. That says a lot about the past, but virtually nothing about the future. The more traumatic the losses, inevitably, the bigger the bull market in the aftermath. Irrational under-pricing or over-pricing of assets creates the best investment opportunities.
RABBIT OR DUCK?
“ My uncle joined a prominent investment banking firm, then became a major player in intelligence. He told me that the investment business was very similar to the intelligence business—there is a lot of disinformation and bad information. Who do you trust?
I’ve watched the rise and fall of so many stock market gurus that I could write a book about it. The common theme among all of them was that their biases ended up destroying them. Often, I see very gifted money managers and/or market practitioners basing an investment strategy on certain assumptions. But, as often as not, those assumptions prove false, and then, the whole basis of their strategy crashes to earth.
The French philosopher Descartes said: ‘The one thing I know for certain is that nothing is certain.’ It’s a good place to start processing information. But many people do the opposite—they start with an assumption and then look for the data to support their view.”
—Kiril Sokoloff, Chairman and Founder
HUMILITY IS OFTEN MORE IMPORTANT THAN CONFIDENCE
Disputed loud and long,
Each in his own opinion
Exceeding stiff and strong,
Though each was partly in the right
And all were in the wrong.