Mab Faber is a co-founder and the Chief Investment Officer of Cambria Investment Management. Faber is the manager of Cambria’s ETFs, separate accounts, and private investment funds. Mr. Faber has authored numerous white papers and five books including Invest with the House – Hacking the Top Hedge Funds. He is a frequent speaker and writer on investment strategies and has been featured in Barron’s, The New York Times, and The New Yorker. Mr. Faber graduated from the University of Virginia with a double major in Engineering Science and Biology. He is a Chartered Alternative Investment Analyst (CAIA) and Chartered Market Technician (CMT).
Overview and Thoughts about the BookInvest with the House – Hacking the Top Hedge Funds is one of Meb Faber’s more recently published books about investing. Meb begins the book illustrating the difficulties in picking great stocks. He cites statistical data such as 64% of stocks underperformed the broad stock market and 25% of stocks were responsible for all of the market’s gains. This makes the game of investing seem especially difficult. On top of this, you are playing in a zero-sum game (your gain is someone else’ loss) against the top most talented investors in the world.
Suppose you were able to put down bets with the house? In Vegas the house is the casino; in investing, top hedge funds are considered house. Suppose you were able to buy the same stocks as the top hedge fund managers. Faber goes through in-depth how to track the top hedge funds’ picks and use that information to create your own portfolio.
One tool that Faber suggests using is reviewing SEC filings of 13F. Large hedge funds are required to disclose their holdings quarterly to the public. Most of these investors have a long-term investment horizon. Therefore, even though there is a forty-five day delay in reporting their 13F, you’d still be able to get a good idea of what stocks they own at a point in time. Here is a sample of LSV Asset Management’s 13F.