SEC Proposed Regulation Change 34-89290: Raising the reporting threshold

I want to raise this serious proposed change and tell you all why I am staunchly against it, and provide you with the information to let the SEC know that you are against it as well. The proposed change would raise the threshold for reporting institutional investment managers from $100 million to $3.5 billion. Why does this matter to us? To be an individual investor is not an easy task with all the help you can get, so how much harder will it be when you cannot follow the majority of fund managers out there.

I have spoken already of my philosophy on value investing and I closely watch the filings of investors of this school, most of whom would be exempt from filing under this proposed change. I have read books and articles about and from Guy Spiers, Mohnish Pabrai, Allen Meechum and many more great investors who would no longer be required to report their investments. I imagine they would see it as a boon, not having to deal with other investors knowing what they are up to. However, it hurts you and me greatly.

How long do you think it takes to turn this monster?
Image by David Mark from Pixabay

We don’t want to necessarily follow the big players at that $3.5 billion threshold and over because it takes away our great advantage over them. We can still use them when we can see their volume increasing to get an idea about where they are going (big waves accompany big ships), but that is only a part of how we find our targets. Everyone has their own methodology, but I think that one thing many of us research and rely on is what are the experts doing.

Two bad quarters away.

I don’t know about you all, but I don’t call the experts the mutual fund managers, I like to look at the independent and hedge fund managers because of the lack of constraints they are under. I’ve previously pointed out that large institutional investors are some poor soul who has been thrown into a fund after the last guy was fired and told to make a profit in 3 months. They live quarter to quarter because that’s all the time they have to make good. I don’t like to treat my investments as quarterly positions to use and dispose of. I want to build a portfolio that I can ride out for 5 years or more (preferably 10 years and in a perfect world hold forever).

The smaller fund managers and hedge fund managers (especially the great ones, I’m looking at you David Einhorn) have much greater latitude in their ability to not worry about the quarter and focus on the long term picture. I could make a list of all the great investors who we would lose visibility of, but that list isn’t what is important, it is the loss of this group as a whole that will affect the average investor.


The reason this regulation was put in place originally was to provide a more equal playing field. 80% of the market is tied up in these monster funds which can make the market move however they want to, it’s the 20% that we are in that has the challenge of navigating the market. How is taking away reporting going to help us? What is the possible benefit of this change? The SEC will tell you this is a natural response to the market growth.

I disagree strongly with this viewpoint. There are now more people than ever who are taking control of their finances and in a world of technology allowing for faster transactions and availability of information it is more imperative than ever that the small investor is given every advantage. These rules were established in a time where you had to write to get this information and having it was helpful, but not necessarily timely. This proposal would bring less clarity and essentially a fog of war to the movements of the market. This will set the individual investor back by two decades or more, while increasing the wealth gap.

We are more connected than ever

In a world where we are becoming more tuned in and globalized with concerns about the wealth disparity why would we do something to actively harm that? I do not mean this as a statement of my position on wealth disparity, I do not share my political positions here for a number of reasons. I simply want to use this subject as a measuring stick to the social barometer, as well as pointing out this will allow the wealthy and well capitalized to get richer while maneuvering themselves to stay below the threshold.

I’ll end my sermon here, but I encourage you take time and think about it. Check out the investors you like and follow or whose filings you read on the day they drop like I do. I imagine you will find like I have that the vast majority of them will no longer be accessible to you under this regulatory change. If you think you can write them and ask pretty please to get a copy of what they’re doing and receive a positive response my hat is off to you. I am 100% positive I would be told (politely) to go jump of a cliff. So I will implore you to take a small amount of your time in comparison to the increased research you would need to do, to go to the SEC website and write a comment asking them not to make this change.

If you want to know how to get there go to and go to the Regulation tab, go to Proposed Rules and you will find it in 34-89290, there is an option in the details that says Submit comments on S7-08-20. In the end it is your choice, but I hope you will stand with me and let the SEC know that we do not support this change. Every comment helps, thank you.

All the best,

Daddicus Rex

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