CONTRARIAN MONEY & INVESTING

By Hank Tucker Photograph by Guerin Blask for Forbes

Irrational Exuberance
66
CONTRARIAN • MONEY & INVESTING

Harris Kupperman’s PRAETORIAN CA PITA L seeks out hysteria in every corner

of the market, from bitcoin to natural gas.

O Occasionally the best

seed capital for a successful career in in-
vesting is lucky timing. In 1997, as a ju-
nior in high school, Harris Kupperman
began obsessing over the stock market as
the Asian financial crisis and then dot-
com mania dominated the headlines. By
the time he arrived at Tulane University
two years later, tech stocks had soared
nearly 200% since Netscape’s IPO in the
summer of 1995 and would double again
over the next few months. The future
hedge fund manager noticed that many of
these dot-coms ultimately crashed when
VC lockups expired and early investors
dumped their shares.
In early 2000, Kupperman, known to
his friends and peers as “Kuppy,” took the
$6,000 he had earned over the summer
cleaning pools on the North Shore of Long
Island and began buying put options—ef-
Double-Edged Sword
fectively shorting the stocks—of dot-
bombs like Commerce One and Foundry
Kupperman named his
firm Praetorian after Networks. When the bubble popped in
the bodyguards of the March 2000 and the Nasdaq fell 80%, he
Roman emperor, who
sometimes assassi- made a small fortune.
nated their ruler. He “I had a few thousand dollars in my ac-
wished to protect his
portfolio companies count at the beginning of the year, and at
but also serve as a the end of the year I had a few hundred
“latent threat.”
thousand,” boasts Kupperman, who is

FORBES.COM OCTOBER/NOVEMBER 2022

 How to Play It Company Ticker Market Cap Reason
Sprott Physical Uranium Trust UU.TO $3.0 billion Bullish bet on a future shift to nuclear power.
KUPPY’S CART
The St. Joe Company JOE $2.3 billion Low-tax Florida land play. Should grow 30% to 50%
Harris Kupperman
annually.
favors small- and
mid-cap value Builders FirstSource BLDR $9.6 billion Building materials as home construction
stocks. Here are his accommodates population growth.
top four holdings. Valaris VAL $4.2 billion Large oil driller to benefit from recovery in production.

68
now 41. “It opened my eyes to the potential that and coal-rich Mongolia would boom, so he
if you think harder than the other guy, you can took control of a dormant shell company trad-
Insider Info
CONTRARIAN • MONEY & INVESTING

make a lot of money.” ing in Canada, rechristened it Mongolia Growth

Two decades later, his Praetorian Capital has PANHANDLING Group and began investing in real estate in
$180 million under management and is up 593%, There’s lots to do Ulaanbaatar. Unfortunately, soon after Mongo-
along Florida’s
net of a 20% performance fee and 1.25% manage- Emerald Coast, lia Growth Group opened its offices in 2011, the
ment fee since it began taking in outside capital says Harris country’s government began to restrict foreign
in 2019. During both 2020 and 2021, his fund, Kupperman, who investment, and its economic growth slowed
spends a week or
which makes concentrated bets in only about a two there every to a crawl. Today the bulk of Mongolia Growth
dozen investments, returned more than 100%. summer. Here Group’s $2.5 million in revenue comes from a
are a few of his
Kupperman is a go-anywhere, event-driven in- favorite haunts.
data-driven newsletter called Kuppy’s Event
vestor who expects a fivefold return on his posi- Driven Monitor, which has nothing to do with
tions. He’s not afraid to trade manias even if he Mongolia and costs $400 per month.
thinks they have no intrinsic value. In late 2020 In 2019, he relaunched Praetorian with Wes
and early ’21, for example, he made a sixfold Cooper, an Ernst & Young alum, using mostly
profit in bitcoin. their own money. Their biggest positions today
“It’s a Ponzi scheme. It has no real function,” include physical uranium, which has endured a
he says. “But there are moments in time when in- WaterColor Inn 14-year bear market, and crude oil.
vesting in Ponzi schemes is perfectly good. When A family-friendly Energy’s outperformance has helped Prae-
four-star owned
they’re inflating, they’re very profitable to own.” by The St. Joe torian keep rising this year, up 9.1% through July
He believes bitcoin rises when the Fed injects Company (one of compared to the S&P 500’s 13.3% decline. But
Kupperman’s top
liquidity into the market, as it did in the early holdings), Santa
rising interest rates have hurt his stakes in hous-
days of the pandemic, and sinks when the cen- Rosa Beach’s ing stocks like The St. Joe Company, one of his
tral bank tightens. He bought bitcoin at about WaterColor Inn top positions since the fall of 2020 (see “Kuppy’s
has four pools and
$9,200 in the summer of 2020, and by the end of catered beach Cart,” above). St. Joe owns 170,000 acres in the
that year the cryptocurrency was the largest po- bonfires. “It’s the Florida Panhandle, and its revenue grew by 66%
sition in his portfolio. In March and April 2021, nicest hotel in in 2021. Shares tripled from $20 to $60 between
the Panhandle,”
as inflation began breaching the Fed’s stated Kupperman says. September 2020 and April 2022 but have since
2% goal, Kupperman decided the central bank’s retreated to $37.
Grayton Beach
easy-money policies had run their course, so he “Everyone’s freaking out about interest rates
This patch of sand
cashed out when bitcoin traded at $58,000, a ranks among and mortgages,” Kupperman says. “I don’t think
few months before it peaked at close to $70,000. America’s best. it’s going to change anything. In a year, interest
(It currently trades around $20,000.) “They let people rates will go down, but people from New York
who live in that
Other opportunistic pandemic buys were county drive on it will keep coming to Florida.”
small-cap natural gas and firearm stocks. Today so everyone drives Kupperman may be a Florida real estate bull,
their pickup on
he’s bullish on housing, rising interest rates be and sets up tents.
but he’s already moved Praetorian’s operations
damned, in places like Florida, which continue Everyone grills and to beachfront Rincón, Puerto Rico, which is
to attract residents leaving high-tax states. has a grand time.” even more tax-friendly. He’s mulling closing his
“About every 18 to 24 months, one industry AJ’s fund when it hits $250 million in assets. “I have
freaks out and you get to buy one industry cheap,” After some sun at friends that run billions, and they have more
Kupperman says. “That’s the story of my life. I’m Grayton Beach, money than me,” he says, “but I can’t spend all
head to this surf
patient—I wait until they completely lose their shack for some-
the money I’ve made already in my career.”
minds and then buy it.” thing stronger.
In 2003, Kupperman graduated from Tulane “There’s always
FINAL THOUGHT
a band playing.
with a degree in history, opened a hedge fund Everything else “I WOULD RATHER BE AN
and moved to Miami. His fund did reasonably closes at 9 o’clock,
so if you want
OPPORTUNIST AND FLOAT THAN
well, but in the wake of the financial crisis of GO TO THE BOTTOM WITH MY
entertainment
2008, he shuttered it. after 9, go to AJ’s.” PRINCIPLES AROUND MY NECK.”
In 2010 he became convinced that copper- —Stanley Baldwin

FORBES.COM OCTOBER/NOVEMBER 2022

Copyright of Forbes is the property of Forbes Inc. and its content may not be copied or
emailed to multiple sites or posted to a listserv without the copyright holder's express written
permission. However, users may print, download, or email articles for individual use.