$9 billion hedge-fund manager David Abrams, who rarely makes public appearances, lays out his investing strategy — and cautions against being too patient

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  • David Abrams, who manages nearly $9 billion with his fund, Abrams Capital, rarely makes public appearances.
  • He told attendees at a New York conference on Friday that while a short-term-only focus from investors will only end up hurting a company in the long term, managers can actually be too patient.
  • “The long term is made up of a lot short terms,” said Abrams, a protégé of Baupost’s Seth Klarman.
  • He derided investors who look for the easy way out, saying there’s “no algorithm” for investing.

Even patience has its limits.

It’s a mantra every investor should subscribe to, says David Abrams, managing partner of $8.7 billion hedge fund Abrams Capital.

Even though he considers himself to have “higher end patience” relative to his peers, Abrams said people who buy a stock and sit on their hands for 20 years have a “flawed approach.”

“Being patient is very good, but there has to be a limit,” he said, noting that his firm has closely watched securities for five years before deciding to invest. “The long term is made up of a lot of short terms.”

Abrams, a protégé of Baupost’s Seth Klarman, gave a rare public address on Friday at a conference in New York for Project Punch Card, a charity aspiring to improve access to investing and finance jobs for underrepresented people. He was critical of people who are “always looking for a short, easy solution” in investing.

“I don’t think there’s a black box or easy answer or algorithm” for investing, he said.

Abrams’ firm primarily takes long positions on different equities, but it also invests in distressed and nondistressed debt. His investing philosophy, he said, starts with a question asking, “What is the risk of any given asset or security?”

“We make a lot of money from mucking around in the garbage, and we also buy nice, shiny things, and we care what we pay for both,” he said.

The firm puts a three- to five-year time line on stocks, looking for a minimum return of 15% on its first purchase, he said.

“There has to be a point sooner than 10 year where you’re determining whether you are being successful or not successful,” he said.

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