Keith McCullough is nothing if not committed. or better or worse, I l die here, he says in reference to Hedgeye Danger Management, the independent funding analysis agency he based in 2008. “Sink or swim, that what we now have.”
McCullough sees himself as combating for the little guy over entrenched pursuits. He tends to describe his Stamford, Connecticut-based agency, which sells funding recommendation to institutions and individuals, in antagonistic phrases: towards traditional Wall Avenue analysis, in opposition to financial media, in opposition to just about every market pundit.
In turn, McCullough attracts antagonism. A former hedge fund supervisor, he is essentially known in certain segments of the monetary media for his social media feuds with certain segments of the financial media: CNBC Jim Cramer and Steve Liesman, their former colleague Ron Insana, weblog ZeroHedge, Bloomberg Joe Weisenthal, hedge fund manager Doug Kass and prospective-customer-turned-critic Carmine Pirone, to call just a few. (The fight with Pirone escalated to the point where McCullough sued him for defamation.)
By way of all of it, McCullough has been called a self-promoter, a fraud, a charlatan and the P.T. Barnum of finance. But he is convinced that he is proper, and that his critics are some combination of lifeless mistaken and jealous.
It’s that conviction — along with McCullough frustration with CNBC, the place he used to be a frequent guest — that led him to give attention to building his own methods to 涪ell the truth first within the best codecs. /p>
Hedgeye now has an internet video channel geared toward particular person buyers, and has employed producers away from CNBC to run it. An outgrowth of labor the company has been doing since 2010, the movies’ mixture of mass-viewers enchantment and excessive-level sources, McCullough says, s our ESPN獙ng of finance. /p>
The Hedgeye CEO likens the company’s approach to that of Fox soccer commentator and former Dallas Cowboys quarterback Troy Aikman, who explains technique on digital camera for a mass viewers, then in the privateness of the locker room assumes the position of confidant and mentor to current gamers.
窔 assume what I have is more that pro-to-professional, buy it or promote it dialogue with institutional purchasers, McCullough instructed The Huffington Submit.
One in every of Hedgeye’s every day movies.
Polemics are part of the furniture at Hedgeye. Though much of the workplace appears to be like like normal-challenge Connecticut finance — where young males in dress shirts and Vineyard Vines fleece vests sit at white desks and stare at a number of screens — the space also features a Republican-themed conference room full with club chairs, a cowhide ottoman, an antler chandelier, a silver-plated AK-47 desk lamp and portraits of GOP leaders from Lincoln to Nixon. (There’s a Democrat room as nicely.)
The tone of the agency’s evaluation is brash and conversational. The morning research observe is probably alone in the industry in combining Bayesian evaluation, hashtags like #globalslowing and #deflation and image macro memes. And Hedgeye is likely the only analysis agency that employs its own cartoonist.
A Hedgeye cartoon on falling U.S. government bond yields.
A Hedgeye chart displaying U.S. utilities’ efficiency towards the S&P 500 in 2014.
Those that watch Hedgeye’s video channel or pay to subscribe to its research won’t hear the advice most retail traders need. They will not get someone calmly and cheaply telling them to commerce much less, ignore just about all short-term investing advice and simply buy low-cost index funds. As an alternative, McCullough thinks it’s his job to tell retail traders who commerce ceaselessly how to do it better, and to assist establishments increase investment returns.
凡e e branded ourselves as being Mac versus Computer, McCullough says. The Laptop in his analogy stands for each traditional Wall Street analysis, which he calls 竷onflicted, compromised and constrained, and the financial media. Hedgeye is the Mac.
The primary thing that attracts individuals to Hedgeye, though, is McCullough himself.
Jim, I’m formally warning u – unblock or all the pieces u say might be audited by Hedgeye Threat Mgt police @jimcramer
Keith McCullough (@KeithMcCullough) June 14, 2013
@rinsana @CGasparino yeah, u had been within the room – when i walked out, I stated to the guys, Ronnie better have inside info b/c he is f’n clueless
Keith McCullough (@KeithMcCullough) November 7, 2014
Talking with McCullough, it clear he enjoys being a Twitter pugilist.
返eah, I led Yale in points. However I additionally led Yale in penalty minutes, he says, referencing the days when he was the captain of his faculty hockey crew. hat who I am. He energetic and direct, sometimes laughing boisterously at his personal jokes and insights.
An fairness hedge fund supervisor who has a really small possession stake in Hedgeye described McCullough slightly in a different way.
窏e bombastic, but it tactical. He doing it to get consideration for Hedgeye, and hopefully that results in more subscriptions, stated the investor, who asked to stay anonymous. Two different hedge funds and the seed fund 500 Startups even have small stakes in the company.
McCullough thinks Hedgeye’s critics within the monetary media overlook his capability to attract subscribers and discuss to massive gamers. That is as a result of the critics usually come across Hedgeye via “our fundamental advertising channel,” Twitter, the place they encounter McCullough at his most antagonistic.
“Generally when I on the ice punching you, I look a little more just like the individual that they need me to be, which is simply one other mendacity Wall Road scumbag, which is false, he says, including that traders who get to know him find out he is “self-effacing to a fault. /p>
Even if that’s true, McCullough certainly isn’t shy when he thinks he’s right.
窔nvestigative analysis and investigative journalism, what the distinction? We e trying to get to the same level, he says, evaluating Hedgeye aggressive brief calls in opposition to vitality firms Kinder Morgan and Linn Power to Ida Tarbell crusade against Normal Oil. Although Kinder Morgan inventory is up about sixteen p.c since Hedgeye bearish name in September 2013, the bet towards Linn has labored out higher for McCullough. Linn is down about 70 p.c since Hedgeye March 2013 brief call on the again of an SEC investigation into the company accounting practices.
McCullough can also be happy with his prescient name earlier in 2014 that bond yields would fall, a prediction that was out of the mainstream at the time.
He has had large misses too. In 2010, he predicted that the Federal Reserve quantitative easing program could, over an undefined time period, result in the collapse of the U.S. economy. To date, after all, it has not. A detailed evaluation of his 2013 recommendations confirmed that if you traded solely on Hedgeye strategies, you would have made simply 0.3382 percent. In distinction, the S&P 500 was up 31 % that year.
However McCullough says his buy and sell indicators shouldn be used to create a portfolio.
The portfolio he at present recommends is fifty two percent in cash and just 6 % stocks, an asset allocation that goes beyond conservative and into territory a financial doomsday prepper would respect. But even that’s not McCullough at his most extreme: In 2012, he really helpful a one hundred percent cash portfolio.
The Hedgeye CEO is unperturbed by criticism about the standard of his product or how he presents it. He believes he has always precisely represented Hedgeye. 凡e have never said we are a hedge fund, he says in response to allegations that language in his actual-time alert product implied he was making trades, rather than recommending them. 窔 mainly the journalist of the purchase-side, he adds.
Unbiased analysis is a enterprise which has at all times appeared almost on the verge of being about to break by way of, however it’s never actually been able to stay. McCullough thinks Hedgeye mix of single-inventory analysis, macroeconomic evaluation and daily alerts will be different. here no prime to this, by way of our capacity to grow content material, he says.
Hedgeye currently has 23 analysts and 57 workers in whole. The company says revenues grew about 25 percent to more than $12 million final year. McCullough sees these dollars as a vindication of his views.