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Season 2, Episode 18: The Methods of a Short Activist Hedge Fund

With Gabriel Grego, Quintessential Capital Management

Gabriel Grego of Quintessential Capital joins the podcast to discuss his short activist strategy.

Grego finds three or four “high conviction” ideas to trade a year. His process is exhaustive but straightforward, though few managers have the stomach to replicate it. The reasons for this are discussed in the second half of the podcast.

Content:

  • How it all starts. Finding the right target is crucial. Grego’s focus on “extreme corporate catastrophic situations” (1:39);
  • Some of the typical “red flags” to look for (3:43);
  • Trendy industries are often clusters for fraudulent behavior. COVID-19 is the most recent example (6:01);
  • Narrowing the target list and creating a thesis (10:37);
  • The final step: “boots on the ground” research (16:46);
  • Background on the guest (21:57);
  • Activist shorting is “scary stuff” (25:38);
  • More terrifying than being a paratrooper? (27:29);
  • Background on QCM’s fund and current exposure (30:28);
  • How QCM has dealt with the events of 2020, including a rare (and successful) attempt to time markets in March (34:05);
  • Chinese companies traded in the U.S. look “very very interesting,” though Chinese fraud is “a different beast” (42:14).

More Information on the Guest:

Not intended as investment advice.

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