One less Gartman fan north of the border

Dennis Gartman of the Gartman Letter appears to have a rather vocal critic in Fabrice Taylor at The Globe and Mail, this item appearing earlier today casting a dim view on all things Gartman, the lone exception being a style that is almost always engaging and entertaining.

Gartman fund needs less talk, more action
Dennis Gartman never shies away from declaring a bubble when he sees one, or thinks he does.

09-11-30_gartmanToday the bubble is in gold. Mind you, the bubble was in gold several months ago, too. If it was a bubble at $700 (U.S.), I suppose, it’s an even bigger bubble today. But that doesn’t prevent Mr. Gartman from owning gold. The man works in mysterious ways.

Vox rarely declares a bubble, but we make an exception today: The bubble is in Dennis Gartman. When you start calling Warren Buffett an “idiot” while you lose money for your own investors, you’re way too big for your britches.

Whether you’re just vaguely acquainted with his work or an avid reader, you must have asked yourself at one point if Mr. Gartman actually makes any money for himself or for his readers by trading. Until recently, there’s never been a reliable way to gauge. Now there is, and it’s not particularly impressive.

At first it sounded as though the Hulbert Financial Digest had taken on the task of tallying Gartman’s winners and losers, clearing through the performance haze that seems to come with most investment newsletters, but, that is not the case.

It seems that, earlier this year, Gartman started an investment fund whose performance is now subject to a much more thorough accounting than any staffer at Mark Hulbert’s operation could provide.

Launched last March, the Horizons AlphaPro Gartman ETF is managed by the man himself using the wisdom he dispenses in his newsletter.

The fund launch was well-timed, coming as it did just as stocks were about to start one of the greatest runs of all time. Mr. Gartman’s investors, though, are down. The units, sold to investors for $10 a few months ago, closed at $9.12 on Friday, giving the ETF a market cap of about $52.5-million.

But the market is up 30 per cent since the fund launched. What’s up with that? Mr. Gartman didn’t get back to me, but the people at Horizons AlphaPro tell me the fund is intended to be market neutral, meaning it won’t move with the market. Why? Because it’s long and short, and supposedly constructed in such a way that the market’s performance has no net effect on the returns. The only thing that does have an effect, in theory, is the manager’s skill. It may be early days, but Mr. Gartman’s performance has been found wanting.

He’s expected to return between 6 and 12 per cent regardless of the market. Eight months in, he’s nowhere near that.

Apparently, one of the fund’s big losers was a bet against Berkshire Hathaway that was made all the worse by the label “idiot” being applied to the legendary investor from Omaha.

While it was conceivable that Berkshire shares might sink over the summer during what turned out to be anything but a “sucker rally”, the potential upside to calling Warren Buffet an “idiot” completely escapes me.

ooo

Tim Iacono is a retired software engineer and writes the financial blog “The Mess That Greenspan Made” which chronicles the many and varied after-effects of the Greenspan term at the Federal Reserve. Tim is also the founder of the investment website “Iacono Research” that provides weekly updates to subscribers on the economy, natural resources, and financial markets.

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