The Official Pitch The PM Newsletter No. 1
NVDA Webinar - Understanding the Bear Debate. What’s Priced-in Now?
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ASK ME ANYTHING - #2
Friday April 4, 2025
Q: What do you think of Tariffs?
A: Generally bad for the global economy. Most economists would agree. Likely just posturing, and not something I’m equipped to bet on.
Color: At a market neutral fund you’d typically assess exposure, perhaps by creating a custom tariff factor, and either hedge it (my preference) or lean into it as a macro call. Estimating this risk is difficult and positioning factors like hedge fund holdings or short interest z scores can end up mattering more than direct fundamentals like who imports versus who does not. If a thesis depends heavily on macro or tariff dynamics I tend to pass. I focus on free cash flow, valuation, and margin of safety without the need to apply a QE or policy overlay. If my thesis relies on macro or tariff's I do not play. I now focus on FCF and valuation, margin of safety and do not have to make decisions with a QE overlay.
Q: What are you doing with NVDA?
A: I sold puts to generate some income at this level and left the core position unchanged.
Color: Still cautious in the medium term. GPU supply and demand feels extended, AI customer economics are unclear given weak use case ROI, and customer capex appears to be decelerating. That said, sub 20x forward P/E makes it a tough name to ignore.
Q: Is $60 MM A lot to draw?
A: It’s a large number, but not necessarily unusual for a sizable book.
Color: No (back to this, ha). It is a big headline number but somewhat "normal" for a large book. If a team (6-10 people) is running $2-$3B a $60 MM draw can be within the "normal" VaR (1 standard deviation). It is still very unpleasant to go through and takes a lot of discipline, leadership and mental fortitude to come out of. I have seen PM's freeze at -$10 MM and other go from -$30 MM back to +$70 MM. Roughly speaking, a book that size can move $10 MM+ a day.
My two cents:
"It's not the size of the dog in the fight, its the size of the fight in the dog"
Mentally prepare that you will have a draw and you will keep turning over new ideas to come out of it. And develop a solid process so that you can trust the process when the scoreboard says otherwise for a couple innings.
⚠️ Not Investment Advice. Do Not Trade Options Without a Professional Advisor
ASK ME ANYTHING - #1
Monday March 30, 2025
Q: Does a draw mean the portfolio manager was down $60 MM?
A: Not necessarily. In most cases, a draw is measured from peak to trough within a calendar year.
Color: The team may have been up $30 MM earlier in the year and later down $30 MM, resulting in a total draw of $60 MM without a full-year loss of that amount.
Q: Is $50 MM considered above-market for a move between hedge funds?
A: It is a lot! Congrats. Certainly reflects a strong conviction in the talent being acquired.
Color: These numbers have grown as AUM has increased. There aren’t many PMs out there who can really move the needle. Think of this as talent M&A. The hiring firm is betting on a business with expected future cash flow that justifies the upfront spend. These kinds of deals are for individuals with a serious track record and the ability to build and lead teams.
Q: Is $50 MM the real number? Is it cash?
A: The exact details are unclear. I am only referencing what was shared in the article.
Color: Comp packages in this world can be made up of a bunch of things. You might see a match of deferred, a signing bonus, a better payout for a period (like 30 percent instead of 20), and some softer things like flexibility to hire or different risk limits. It’s all negotiated.
Q: Why would someone leave Citadel for another multi-manager?
A: The most common reason is likely a more competitive pay package. Other potential factors include increased flexibility around coverage, risk parameters, or the desire for a fresh start after a challenging year. A 21-month sit-out period can also be appealing for someone looking to reset.
Color: I haven’t worked at BAM, so I can’t speak to what it’s like there. But I’ve definitely seen PMs move both ways. I can say Citadel is a phenomenal place to build a career. You’re surrounded by top-tier talent, you get help recruiting, there’s plenty of capital, and there’s a strong culture of process and mentorship. They care about more than just your PnL.
Q: Is it unusual for those numbers to be disclosed?
A: The reporting of buyout figures is not unprecedented, but it is rare to see past performance figures, such as a draw, shared publicly.
Color: Not sure how these numbers get out. It could be people on the team or folks at other firms involved in the process. It’s the journalist’s job to dig in and verify interesting info. I was surprised to see the $60 MM draw mentioned. PMs have left after being down before, and PnL can shift fast in this game.
My only knowledge of the matter is from the public article. These are general industry comments and do not pertain to any individual firm.
Latest Variant View Checklist Episode : NVDA
In this episode, Doug and Gil candidly debate where Nvidia is in the GPU cycle, how Nvidia came to dominate the advanced chip market and what the road map looks like for advanced chip supply and demand. Gil outlines the current state of the industry for GPU chips that is in short supply and how the behavior of some key customers, like Microsoft, might be shifting to focus on returns over growth.
With hyperscalers looking to develop their own chips, the conversation raises an important question—who will step in to sustain Nvidia’s growth if its biggest buyers start pulling back? Gil lays out his case that Nvidia’s rapid expansion is slowing, with a potential revenue decline in CY 2026 that could lead to a lower valuation multiple. This discussion challenges the market’s expectations and explores what could be next for Nvidia. (See episode for D.A. Davidson disclosures.)
EP 004 NVDA: As Good As It Gets
About Us
“My goal, as Charlie would say, ‘is to try to be useful.’”
Doug Garber
Pitch The PM is the Professional Investor's Podcast that provides a deep-dive into a stock's investment case using the Variant View Investment Checklist. It is an open exploration of the research process in real time using high-conviction ideas from top PM’s and Analysts. Join the journey as Doug fills out his Buffett advised, 20-slot lifetime punch card. We learn and laugh together.
The Variant View Investment Checklist is the process that combines:
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Studying the great investors like Buffett, Munger, Lynch & Greenblatt,
and the latest AI tools to improve idea velocity, accuracy and conviction.
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Westport Alpha Group is a family office consortium of like minded finance professionals. Individuals may engage in Special Purpose Vehicle’s (SPV’s), Separately Managed Accounts (SMA’s) or act as an Independent Sponsor for a private company or in a public company take-private. This is not a solicitation to sell/buy any security or engage in any services. This is not an attempt to form a group.
Pitch The PM is hosted by Doug Garber, a former Citadel Analyst and Millennium Senior Portfolio Manager. Doug was initially trained at Citadel by a former SAC/Point 72 Analyst who worked directly for Steve Cohen before becoming a PM at Citadel. Doug was ranked as a top five analyst while at Citadel’s Surveyor Capital and was the only one to receive that designation twice during his tenure. He managed a multi-sector, multi-strategy team at Millennium under Katahdin Capital. Prior to his buy-side career, Doug worked in sell-side equity research honing modeling and primary research skills. Doug is currently the CIO and DoR at the Westport Alpha Group.
Doug graduated from Tulane University with a BSM and Master of Finance. He was selected to participate in the Darwin Fenner Student Managed Endowment Fund that utilized quantitative factors to outperform its benchmark and be an Investment Research Manager in the Burkenroad Reports “Stocks Under Rocks” equity research program. Doug has a passion for iterating on the investment process and a quirky sense of humor. He lives in Westport, CT with his wife, Lexi, and three kids. When he is not reading a 10-K, you can find him coaching youth soccer, inverted on his yoga mat or on an eFoil looking for Zuck.
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