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$3.7 BILLION HEDGE FUND: There's a lot to be excited about under Trump, but nobody's talking about it

Donald Trump
Donald Trump

(President Donald Trump.AP)

You can add the $3.7 billion hedge fund Tourbillon Capital to the list of firms wary of betting on President Donald Trump's policies.

"The next four years will be filled with a very wide range of outcomes," Jason Karp, founder of Tourbillon Capital Partners, wrote in a February investor letter reviewed by Business Insider. "We can confidently say after hundreds of man hours of research that it is highly unpredictable and unknowable."

Karp said that making trades based on conviction over policy direction could lead to disasters like the one the investment world saw last year, "where many look genius and many look stupid because of a virtual coin toss."

He also quoted the French philosopher Voltaire: "Doubt is not a pleasant condition, but certainty is an absurd one."

There are causes for concern, but there are also a bunch of reasons to be optimistic, he said.

Karp added: "We think there is plenty to be worried — which most people have adequately addressed — and plenty to be excited about — which few give airtime to because being optimistic is not as intellectual as being bearish, and optimism creates too much cognitive dissonance if you have issues with Trump."

With a new regime touting different tax, fiscal and regulatory policies, "the opportunity set has markedly improved," he said. "First, we are noticing much opportunity for separating facts from rhetoric."

The Tourbillon Global Master Fund returned -9.2% last year after posting a -1.8% drop for the fourth quarter of 2016, according to the letter.

"This was the worst year in my 18-year career," Karp said, adding that most of the underperformance was attributable to the first quarter.

Karp said the firm's flagship fund posted an 8.1% return with a 13.5% net market exposure from the second quarter through the end of the year, making the period "one of our better three quarter alpha periods since inception."

The firm manages about $3.7 billion, according to a person familiar with the matter, who declined to be named because the information is private.

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