On the heels of a sober look at Dennis Garman’s secret Canadian fund, I was asked about the Hussman Strategic Growth Fund HSGFX.
If a picture is worth a thousand words, then here you go. The most troubling aspect of the fund is the fact that it went down with stocks, but was not able to rise when they recovered.
It’s no better on a total return basis either.
What we really think
We were dumbstruck. Literally speechless.
Peter: So how’s your evening going?
Teresa: I’m looking at the Hussman numbers. How can this even happen?
Peter: That bad?
Teresa: It’s below the 2008 low. I didn’t even think it was possible. You would have to live in an alternate universe, make every mistake in the book, get every forecast and prediction wrong, or be suffering from vascular dementia to achieve this. This is no mean feat.
Peter: He did it with a public record and still has AUM
Teresa: It’s just like that Prudent Bear Fund. 3-year price return is -16.51% with a 10-year CAGR of -1.60%. This year is nearly -13% and doubling down on his low-water mark in the latest commentary published on Monday. Unbelievable conviction usually means arrogance and ego problem.
Teresa: If he thinks it’s Armageddon, he should return the money and quit.
Peter: Look, if people are willing to let him manage their money and get paid nicely, why quit?
Teresa: Because it is the right and honorable thing to do. Yikes! $4 BILLION under management still at 1.05% expenses. That’s $60 MILLION A YEAR to write B.S. excuses. $60 million reasons for him to keep going.
Teresa: An investor would have to be a coma to ignore this. With this kind of performance, what is the risk of holding CASH? Or burying gold in the backyard?
Peter: They can read his stuff for FREE and keep their $ or use our U.S. Dollar Core/Sat combination strategy.
Teresa: I’m sitting here stunned.
Maybe he should never have left academia, but then again, where else can you make $60 million a year to write bearish commentary? Another Type 3.