Friday, December 13, 2013

A Schadenfreude moment - Eric Sprott

This link was passed on to me by a vaguely famous newsletter writer who doesn't like offending the stars of the industry:

WSJ - gold drop is blow to prominent hedge fund manager Sprott.

(This seems to be paywalled sometimes and not paywalled other times - maybe WSJ lets you read one free article a month? Or maybe my employer has a subscription account with the WSJ? I dunno. If you google the title you can find partial reprints elsewhere.)

But here's a sad quote of sad sadness that's sad:

The flagship fund of prominent Canadian hedge-fund manager Eric Sprott has dropped more than 50% this year in what will likely be the third consecutive year of double-digit percentage losses, according to documents sent to investors.

Redemptions and weak performance have pushed down hedge-fund assets managed by Mr. Sprott to about $350 million from nearly $3 billion in 2008.

Ouch! That's a nearly 90% drop in AUM, much of which must have been driving the crash of the junior scene.

And, despite my normal ornery self, I'm willing to bet that this collapse in AUM has been reflected at all other junior miner funds - and even maybe the ports of junior scene mainstays like Sheldon Inwentash, or even that dude who blogs on the internet. How much of your own AUM is still in junior miners? With me right now it's zero.

And so what's happening to Sprott himself? The sad story of sad sadness gets even sadly sadder:

The poor results come with a personal cost: Mr. Sprott's investment company, Sprott Inc., which he founded in 1981, said last month that it is phasing him out of investment decisions.

By the end of next year, Mr. Sprott—who early in his career was a programmer for Merrill Lynch—will no longer directly make the firm's investment decisions, though he will remain chairman.

Sprott Chief Executive Officer Peter Grosskopf said that Mr. Sprott would also be handling "chief cheerleader duties."

Oh geez. A big-name goldbug is now tossed to the sidelines by his own fund, and relegated to "cheerleader"? Dudes, you're simply trying to piss him off here.

The company declined to make Mr. Sprott, 69 years old, available for comment.

Holy crap. This is like locking someone in the basement. They've locked Sprott in the basement, and will only let him out to dance around in a cheerleader outfit.

Mr. Sprott's losses exceed that and other precious-metals benchmarks, thanks in part to heavy exposure to volatile mining stocks and short exposure to international equities that have climbed this year, investor documents indicate.

Dafuq? The only way he could justify shorting international equities this year was if he thought there was imminent risk of global economic collapse. Which I guess is consonant with goldbug theory, but still - did he ever look at a chart? Did he ever notice that the market was going against him?

Did he ever listen to any news, or was he only paying attention to the Tea Party/Libertarian doomer echo chamber? Was he getting all his economic data from Max Keiser and Zerohedge?

It's one thing to be sure of yourself. It's another thing to remain sure as your port is annihilated. I mean, every clown on the Stockhouse boards has learned by now that if you're down large in a position, the best thing is to sell, take your losses, and stay on the sidelines until you see a reason to get back in. Is Eric Sprott a slower learner than Stockhouse posters?

It's one thing to be wrong. But it's a significantly dumber thing to stay wrong.

Unfortunately, the more arrogant and egotistical you are, the less likely you are to want to take a hit on your obviously wrong calls.

I wonder what Rick Rule thinks of his career change now?


  1. Who passed that link on to you again?

    I love how Gata spins things.. Eric Sprott, victim!

  2. Let's see Munk cryogenically frozen until Barrick stages a rebound to $25.00, Sprott sent to stack his last remaining silver and gold coins.

    We are getting there but there are still to many listed juniors to call a bottom yet and the shorts on the miners have yet to cover.

    2013 sucked, I can't wait to see how the next 365 days are going to suck for the miners.

    1. Hard to see a meaningful rebound without one in gold though.

  3. "chief cheerleader duties"

    This is embarrassing. The scorn was laid on pretty thick there. Could have gone easy by saying "PR", but decided to drop the hammer instead.