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Gavin Baker’s memory-contract thesis: chase a lower price today, risk losing supply to a competitor in the next cycle.
Investor Gavin Baker, CIO of Atreides Management, explains:
"We're shifting, particularly for memory, from crushing numbers short term to trading short-term upside for long-term agreements — the customer prepays, there's a floor and a ceiling."
"The more memory you put with flop for a given unit of compute, the more tokens you get out. It’s the single most important thing you could do to increase token output per unit of compute."
"That definitionally lowers costs — which is why demand hasn't responded negatively at all. There's been no elasticity."
"At some level this is a giant Game of Thrones between these companies."
"To a large degree, market shares, I think for the next several years, are going to be determined by supply, by supply chain allocations and what you have pre-purchased."
"If you break your LTA, and leverage shifts back to the memory guys, you're out of business. It's over."
"This is cyclical — oversupply is followed by undersupply. What do they think happens to your allocations next time?"
"You broke the price agreement, we're gonna break the volume agreement — give it to your competitor. You just lost share."
Ilana Weinstein’s $30B fund example: a team of 10 can still depend on the same 1–2 people for returns.
Ilana Weinstein, founder and CEO of The IDW Group, at SALT New York in 2021:
"You need to give people room to fail and to learn. Otherwise you're not collecting any ROI on the effort to get these great people through the door — and talent is scarce."
"The flip side: there comes a point where you have to pull the plug, and founders can't be afraid to do it."
"The number one corrupting thing at a fund is a lot of deadwood."
"That $30B fund with a team of 10 that matters — they're not all A-pluses."
"You peel back the curtain, it tends to be the same one or two people driving returns year after year."
"It's fun to be the smartest guy in the room — up to a point. After a while you start questioning whether you're in the right room."
An earnings beat can still trigger a selloff. Kelly Granat on whisper numbers, crowded positions and pod incentives.
Kelly Granat, CIO of Lone Pine, explains:
"I have never worked at a pod but have several friends who have, still do, and have come out of there."
"You have 20, 30, 40 desks covering a sector. They look at the same data, sit in the same meetings, on the same calls."
"You'll have 20, 25 books long a stock into a quarterly print."
"The numbers come out, and it was better, but it wasn’t better enough because the whisper number, the data was suggesting they were gonna beat by three points, and it only beat by two points, and so the stock’s actually gonna sell off."
"Hand me an earnings release and I'll tell you what the stock does was a fundamental game we were good at a decade ago. Now it's a coin toss."
"The opening reaction vs the full day: everyone's covering the short because it was bad, but it wasn't worse."
"They have drawdown limits — monthly, quarterly. Their capital gets pulled. That's the lives they lead."
"Market reactions to events are a function of those incentives and those structures."
Pabrai’s Citadel story: Ken Griffin hired a temp to protect a mathematician’s uninterrupted research time.
Mohnish Pabrai explains:
"I met Ken around 2000 or so. My wife went in as a consultant to Citadel."
"She'd come home every evening with a whole bunch of Ken stories. This guy is very unusual, and the place is very unusual."
"He had hired a whiz-bang Russian mathematician, PhD, postdoc, working on the algorithms."
"Everyone at Citadel would come to this guy with their problems, and Ken didn't want anyone coming to him. He just wanted him to crank."
"Ken told the temp: here's your desk, here's the mathematician. No one crosses."
"The temp says, “What do I do?” “Nothing.” Your whole job is to make sure no one crosses."
"The temp herself is in shock. Someone's paying me to file my nails."
"He found all the different nooks and crannies, built a tremendous business."
Hedge Fund Clips retweeted
Trading firms are building desks to trade GPU compute like a commodity
Jump Trading has hired the founders of GPU trading platform Itô Markets to run a new compute desk, per Bloomberg. DRW and Vitus Commodities posted compute trading roles last month.
DRW's Don Wilson says compute could surpass crude as the world's largest commodity. CME has delayed its planned GPU rental futures.
The constraints look like power markets. Compute cannot be stored, forwards run three to five years, and the CFTC has flagged concentrated pricing power.
CoreWeave shows the credit side. It finances GPUs against offtake contracts, and Bloomberg currently says its debt prices a 60% chance of default within five years.
Compute curves will end up tied to power curves. The desks that price both will set the market.
Before launching Woodline, Mike Rockefeller asked top managers and LPs what to do first. Their answer: hire a rockstar COO.
Mike Rockefeller, Woodline co-CIO, recounting the firm’s launch at SALT New York in 2021:
"We interviewed a lot of top fund managers and LPs and asked, 'What do we need to do first?' The answer was somewhat surprising."
"It was: go hire yourself a rockstar chief operating officer."
"These are businesses. We know about investing, but we don't know how to run a business."
"The complexities of managing a hedge fund today are pretty immense — technology, risk, legal, compliance, cybersecurity."
"You need a fully built-out operations team to ensure this business is sustainable for a long time."
Hedge Fund Clips retweeted
“15 pods in London and 30 pods in New York all pricing the same 10 stocks.” Where a concentrated manager refuses to play:
Joe Walsh is the Founding Partner of hedge fund Code Partners. 60% annualized, Sortino over 2 in his personal account.
Joe Walsh explains:
“Where there is definitely room for outsized edge is where new sectors come along and no one knows how to value it.”
“Space is a great one. It wasn’t really an asset class 10 or 15 years ago. Then you got the satellite players, and SpaceX came out of the private markets into the public markets with a launch asset that’s effectively a monopoly.”
“I would go as far as to say most of us are making mistakes in how we try to value that equity, because it’s new. There’s not the familiarity, there’s not the track record.”
“For a specialist in that area, there’s probably a higher degree of edge on offer, because you’re competing against people who know less than you and have been through fewer cycles than you.”
“Where sectors are very competitive and you’ve got 15 pods in London and 30 pods in New York all pricing the same 10 stocks that have been listed for 30 years, the edges are so thin. I don’t think people are making big mistakes there.”
“If you’re going to sit down and take those people on, you need to be very, very good. That is not what I’m trying to do.”
“I don’t have to have a view on those names running a concentrated portfolio, and I can make fantastic returns by avoiding it completely.”
"Take advantage of volatility. Don't get taken advantage of by it. The last thing you want is to be the guy stopped out at the low."
Joe Walsh is the Founding Partner of hedge fund Code Partners.
Personal track record: 60% annualized with a Sortino over 2.
"The expected value of buying a stock at 100 on a certain day and 100 on a different day, they're not the same."
We cover:
- Pods run equity books at up to 8x GMV, credit at 10–15x, vol-targeting with centralized stops. "Volatility targeting is not profit maximizing," and their forced selling is his entry
- Why he runs no portfolio leverage in normal times and preserves the balance sheet for when vol erupts, then puts 20–25% of the book in a truly exceptional situation
- The right side of the V: buying at 100 on the way down and at 100 after the bottom are not the same trade, because only one has a defined stop
- Liberation Day: financial conditions worse than the 2011 Eurozone crisis, PM sentiment worse than 2008, and why that read as a bottom
- Poker and trading are both games of missing information, and the winning players who never make it have the wins but not the bankroll management
- Game selection: you have to increase your edge faster than the market becomes efficient, which means running away from competition
- Time horizon is game selection: don't price a stock on 3–6 months against a PM with better corporate access. His edge is 12+ months in sectors where the pods got shut down
- Passive is a price-indiscriminate buyer, and market-cap weighting makes it a momentum trade: from 6% of flows to over half
- Why two investors who both made 100% on the same stock took wildly different risk. The early alpha is the best alpha (bought Palantir at a $20B EV, sold too early)
- The AI trade: 40% of S&P earnings, data-center landlords at teens yield-on-cost trading at single-digit cap rates, and gigawatt delivery missing by 25% as the risk to consensus
- Industry structure as the biggest edge: power-shell players at $1M/MW that went to $7–8M, and the offshore-wind value chain where one installation-vessel company became the monopolist of the profit pool
Highlights:
00:00 Intro
01:10 What poker teaches you about trading: missing information and bankroll management
06:04 Game selection: avoiding passive flows and the pods
13:34 De-grossing events: SVB, the yen carry blowout, Liberation Day
21:01 Dry powder: how much to deploy when volatility erupts
27:32 Reflexivity: why a windfall tax belongs in your bull case
35:08 Underwrite the downside first, then size the upside
41:53 The right side of the V: why 100 is not always 100
48:39 When to put 25% of the book in one name
51:18 Why shorts get hard limits and far smaller sizing
56:24 New sectors nobody knows how to value: space and SpaceX
01:01:42 Tesla, Palantir, and why early alpha is the best alpha
01:11:24 The AI trade: hyperscaler CapEx, power constraints, where the asymmetry is
01:21:40 Industry structure: mapping profit pools in offshore wind and AI power shells
Dmitry Balyasny’s leverage problem: a modest unlevered alpha spread can turn investing into a people-management business.
Dmitry Balyasny explains:
"Markets are pretty efficient. The alpha spread you can make consistently on an unlevered basis is pretty small."
"A good long-short team can make 3, 4, 5% a year over five years on GMV, unlevered. That's pretty good."
"One year they might make 10, next year they might be at zero. But over time, if they’re hitting four, 5%, that’s pretty good, if you’re neutralizing factors."
"A couple groups of these guys is just not enough return. You really need to lever it."
"To lever it, you need a lot of people — otherwise you have a lot of risk with a few positions or a few people getting cold."
"Now you're in a completely different business. Instead of managing investments, you're managing a lot of people."
Steve Cohen replies:
"If you have people, you have problems. Just pure and simple."
"Who's Jeffree Star?" — every top cosmetics analyst on Wall St, while a 10M-view video cleared e.l.f. off Walgreens shelves.
Chris Camillo turned $20K into ~$80M over 18 years trading 'social arb.'
Chris Camillo explains:
"One influencer did a video, got 10M views, said this $7 product was as good as the $60 one."
"I went to Walgreens and sat there all day, watched moms come in with their teenage girls buying every e.l.f. product off the shelf."
"I was like, this is it — made a massive investment because of that one video."
"I called the biggest analysts on Wall St following the cosmetics sector. 'Did you see the Jeffree Star video?' 'Who's Jeffree Star?'"
"Called a fund trading a lot of cosmetics. Same answer: 'Who's Jeffree Star?'"
If every earnings report sends the stock up or down 20%, Kelly Granat sees a communication problem inside the business.
Kelly Granat, Lone Pine co-CIO in March 2025, explains:
"So many companies have eight different initiatives that are simultaneous, and there’s a lack of understanding when you talk to people inside of a company of what actually matters."
"There’s really clear strategy in terms of what are we focused on. What are we driving towards?"
"There’s a culture of accountability and measurement. There’s some companies that are religious about having those be thoughtful exercises and accountable exercises, and ones that are not."
"When you talk to customers, you hear how they are treated, and it is different. Their needs are being met. Their price is not being used as a weapon against them."
"When you have a lot of turnover, incentives get set, whether that’s tied to a stock price or the metrics that drive compensation, and people’s incentives are not aligned. That doesn’t promote long-term strategic thinking."
"They’re trying to make numbers, make budget. That’s a very different way to live as a company than it is around, we may miss a quarter, but this is the right investment to make."
"Every time you open your mouth to report your quarter, your stock’s up or down 20%. What that tells me is you were not doing a good job communicating your business."
"You don’t have good visibility around your business because you are surprising the market every time you speak, good and bad. That’s not multiple enhancing for your company over time."
Pabrai’s investment filter: explain the thesis to a 10-year-old in about four sentences—or pass.
Mohnish Pabrai, explaining his simplicity test in a May 2026 My First Million interview.
Mohnish Pabrai explains:
"One of my Ten Commandments: thou shall not use Excel."
"If you cannot explain your investing thesis to a 10-year-old in about four sentences so that 10-year-old can understand it, it’s a pass."
"Every investment has to be very simple. It starts off being this complex thing, but when you’ve understood it, it needs to get down to those four sentences."
"We have 50,000 stocks around the world. No one is ever gonna know 50,000 companies."
"A large number of those businesses, something like 90 or 95% or 98% of them, should go into the too hard pile."
"Buffett has a box on his desk with 'too hard' written on it."
"It's either outside my circle of competence or it's too hard — an exercise in honesty and humility."
Gavin Baker’s AI concern: investors using the same model may converge on the same interpretation—and it can still be wrong.
Gavin Baker, CIO of Atreides Management, explains:
"A breakdown in diversity is kind of what leads to bubbles and crashes."
"Everyone I know in public equity investing, retail or institutional, every piece of news immediately gets fed into Claude."
"It's probabilistic. There's probably not that much variation in the way it's interpreting this news."
"People talk about media fragmentation — how Walter Cronkite used to be the only voice of truth. Claude is kind of Walter Cronkite for the stock market."
"And everybody just believes whatever it says."
"It's really smart, but it's not always right. Its interpretation isn't always correct."
"The stock market is fundamentally a probabilistic Bayesian interpretation of the future."
Druckenmiller’s ‘curse of the reserve currency’: easy financing can let short-term policy mistakes accumulate.
Stanley Druckenmiller explains:
"The reserve currency is an unbelievable privilege. That privilege, while you have it, allows you, if you choose to do so, to run very myopic policies that don’t address the long term."
"Markets don't check you because you're being funded by outside sources."
"The fiscal recklessness, the monetary recklessness — no other country could have pulled that off."
"It's great while it lasts, but it enables you to keep digging and digging into a deeper hole until the consequences come to bear."
"It probably, to some extent, you do it enough, you lose the privilege, and then you only have the consequences."
"That's why I call it the curse of the reserve currency."
Chris Hohn on choosing public markets: companies generally keep their best businesses instead of selling them to private equity.
"In private markets it's very hard to execute a deal. You might go for years without doing a transaction."
"It's more process-oriented than investment analysis."
"Given my psychological makeup, which is impatient, I didn't have the patience for it."
"My aptitude is not really process, it's analysis."
"Companies don't sell the best businesses in the world to private equity generally. They keep them."
"Almost by definition, you were buying inferior businesses in private markets."
"Public markets had better quality businesses than you'd find in private."
"It’s much harder to be an entrepreneur in the private market than in the public markets."
Hedge Fund Clips retweeted
Peter brandt has traded futures for nearly 50 years, going back to his chicago board of trade days. He asked every successful pro trader he knows one question. The answer is always the same number:
"What percent of the trades in your entire career have accounted for at least 80% of your net profits? The answer every time is 20% or less."
"80% of your trades will basically scratch each other out. 20% of the trades will give you the profits you need to be net profitable."
"The key is to keep the losses that are among the 80% small enough so that the smaller profits that also sit in the 80% can let the 20% be your net profit and not be eroded by larger losses."
at least when you are running trend sort of models.
Warehouse company at 2% of liquidation value. $7M bought a third of it.
Mohnish Pabrai, founder of Pabrai Investment Funds, explains:
"In 2019 I visited a company in Istanbul: market cap $20M, liquidation value $800M."
"I said, 'Is it fraudulent? What are we looking at here?' He said no."
"12M sq ft of warehouses, 99% leased to Ikea, Carrefour, Amazon. 10-year leases, inflation indexed."
"A billion in value, 200M of debt — you end up with 800M. A real number I could hang my hat on."
"I thought I'd get $100K worth. I ended up buying a third of the company for $7M."
"Even if the other businesses were worth zero, I still had the 800M."
"It's gone up five or six times in the last two, three years in dollars."
"This never happened in my previous 28 years of investing, and won't happen again till I die."
Howard Marks on AI: it'll change the world, and most companies you're buying to play it end up worthless.
"AI will change the world. Most of the companies people are investing in to profit from AI will end up worthless."
"Change the world and investors making money are not the same thing."
"Buffett said this about the internet in 2000: no doubt it'll produce a great increase in productivity. It's not clear it'll have a positive impact on profitability. Same with AI."
"When the naive investor takes the leap that the irresistible trend will produce sure profits, that's when you get into trouble."
"AI may eliminate half of entry-level jobs, more productive. But will it be more profitable? To whom will the savings accrue?"
"If companies compete to provide the AI service, maybe they compete on price to the point it's not profitable for them."
"All the savings could go to the consumer in lower prices. How AI turns into profits, I don't think anybody can say."
'We lost $4B... how's that for a big loss' - Ackman names Valeant Pharmaceuticals as the biggest loss of his career
"Biggest loss of my career is a company called Valeant Pharmaceuticals."
"We made an investment in a business that didn't meet our core principles."
"We ended up making a passive investment — up until this point we really didn't make passive investments."
"The company made a series of decisions that were disastrous, and then we stepped in to try to solve the problem."
"It was the first time I ever joined a board, and the mess was much larger than I realized from the outside — then I was kind of stuck."
"And we lost four billion dollars."
"How's that for a big loss? It's up there."
Hedge Fund Clips retweeted
Retail investors vs. hedge fund managers: who wins?
Ex-Tudor quant PM Tom Costello (20%/yr, 1.4% max drawdown) DEBATES Market Wizard Chris Camillo ($20K → $80M, tells you to expect 70% drawdowns).
Chris Camillo (@ChrisCamillo) turned $20K into ~$80M over 18 years, audited by Jack Schwager for Unknown Market Wizards at 77% annualized. Founded TickerTags, sold to Jefferies. Co-founder of Dumb Money.
Tom Costello (@tcoste110) ran money at Tudor, Moore Capital, and Caxton. Started as a quant on JPM's exotic swaps desk. Now CIO at Bedrock Digital Assets.
We cover:
- Why a 50% drawdown is "a career-ending event" for a PM and "completely rational" for a retail investor with a 20-year horizon
- Chris's case that everyone should have a levered, concentrated risk bucket, and expect a 70% drawdown in it
- Tom's pushback: "At least half of the aspiring engineering students who wanna be day traders are gonna go broke"
- Why hedge funds don't beat the S&P, and why that's a category error
- 3x leveraged S&P ETFs held for decades: ~1.85x market returns, and the futures roll cost buried inside
- The e.l.f. trade: one YouTube video, a full day sitting in a Walgreens, and every cosmetics analyst on Wall Street asleep
- Chris spent 5 years selling social data to the biggest funds. They couldn't institutionalize it because "the words keep changing"
- Vita Coco: a viral TikTok sound → the biggest quarter in company history → +34% on earnings
- Tom's bet: LLMs hand social arb to the quants. Chris: "there's still plenty of time"
- "I know very few day traders who ever made anything like real money"
- Why Chris gives the strategy away after an 18-year run
Highlights:
00:00 Intro
00:50 Who's better positioned to take risk: retail or hedge funds?
05:58 A message from ONYX
06:30 Why a 50% drawdown is rational for concentrated retail capital
08:57 Beta vs alpha: what two-and-twenty actually pays for
18:56 Should retail embrace 70% drawdowns? Bucketing risk capital
23:59 Can ordinary investors really compound 2–3x market returns?
30:08 Fair value, mistakes, and why 99% of day traders lose
35:32 Are 3x leveraged S&P ETFs a long-term buy?
43:31 Too big to fail: AI concentration and the case for leverage
46:06 Situational Awareness, crypto correlation, and overfit backtests
53:44 Social arb explained: Beacon Roofing, Hunger Games, Stranger Things
01:01:07 Is social arb crowded? Tiger Cubs, Ticker Tags, e.l.f.
01:07:42 Will Citadel and LLMs arb away TikTok alpha?
01:17:09 Incentives: why "hedge funds don't beat the S&P" is a category error
01:19:35 Why Chris shares social arb: $20K to $80M and the wealth gap
01:25:45 Closing: retail freedom vs institutional resources