Capital Allocators

By Ted Seides

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 Oct 10, 2019

Description

Meet the people who allocate vast pools of capital and the processes they employ. New episodes release on Monday's

Episode Date
a16z Podcast with Linda Xie and Jesse Walden - All About NFTS (Capital Allocators, EP.189)
58:46
In our continuing exploration of cryptocurrencies and blockchain technologies, headlines of late have turned to NFTs, or non-fungible tokens.  From NBA Top Shots to Beeple’s artwork, NFTs are the hottest use case in the crypto ecosystem.
 
My friends at a16z recently released an episode on their wildly popular a16z podcast called All About NFTs, featuring Linda Xie from Scalar Capital and Jesse Walden from Variant Fund, interviewed by Sonal Chokshi.  Their conversation covers the definition, use cases, myths, and future of NFTs. 
 
Each of Linda, Jesse, and Chris Dixon at a16z each recently wrote blogs posts that together provide terrific background and perspectives on the space.  You can find those posts alongside this episode at capitalallocators.com/a16znft.
 
With that, it is my pleasure to replay this episode, All About NFTs, available at a16z.com
 
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Apr 15, 2021
Yen Liow - The Quest for the Right Tail at Aravt Global (Capital Allocators, EP.188)
01:14:48
Yen Liow is the founder and Managing Partner of Aravt Global, a fundamental global equity firm based in New York that manages long-short and long only products. Yen founded Aravt after a long stint at famed family office Ziff Brothers Investments, where he was part of the team that managed a market, neutral long-short hedge fund in a culture of framework thinking and continuous improvement.
 
Our conversation covers Yen’s background, experience at ZBI, and lessons about process, competitive edge, and training. We then turn to his application of those lessons to Aravt Global. We discuss three right tail strategies for long positions, the challenges in owning compounders, the art of short selling, portfolio construction, game selection, drivers of success, and challenges going forward.
 
For those lovers of learning about the nuance of public equity investment strategies, you’re in for a real treat.
 
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Apr 12, 2021
Dominic Garcia – Risk-based Investing at New Mexico PERA (Capital Allocators, EP.187)
51:19
Dominic Garcia serves as Chief Investment Officer for the Public Employees Retirement Association of New Mexico (PERA), a $16 billion pension system that serves over 90,000 members and provides over $1.2 billion in annual benefits. Dominic is a native of New Mexico, began his allocator career at New Mexico PERA and returned to re-join the system in 2017 as CIO after nearly a decade at SWIB, the State of Wisconsin Investment Board.
 
Our conversation covers Dominic’s path to the helm at PERA, challenges of governance and compensation in public pensions, addressing underfunding with variable liabilities, and his risk-based investment approach that includes the separation of alpha and beta, overlays, and the selection of alpha managers across public equities, hedge funds, and private markets.  Dominic has three times been named in the 40 under 40 by industry publications, and you’ll soon hear why.
 
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Apr 05, 2021
Jeff Housenbold – Inside Softbank Vision Fund (Capital Allocators, EP.186)
01:03:41
Jeff Housenbold, a Managing Director for the last four years at Softbank Investment Advisors, where he led one of the six investment teams that deployed the $100 billion Softbank Vision Fund. Prior to joining Softbank, Jeff worked at sixteen companies, including eleven years as CEO of Shutterfly. four years in the early days of ebay, four as Special Industry Advisor to KKR, and one as Entrepreneur in Residence at Sutter Hill Ventures. He’s also served on the Boards of dozens of companies, including Caesars Entertainment, Memphis Meats, DoorDash, Compass, Opendoor, Wag, and Groupon.
 
Our conversation starts with Jeff’s true rags to riches story, and then turns to a whirlwind of lessons learned as an operator at ebay during its hypergrowth and Shutterfly overseeing a successful turnaround. We then dive into the Softbank Vision Fund, including the original investment thesis, sourcing ideas, valuation discipline, decision making in groups, portfolio structure, and results.
 
We close by talking about the SPAC market, capital market expectations, the characteristics of successful organizations, and succession planning.
 
Please enjoy the countless nuggets of wisdom in my conversation with Jeff Housenbold.
 
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Mar 29, 2021
Ted with Jenny Heller – Compounding Knowledge and Relationships (Capital Allocators, EP.185)
40:23
As we finish up book launch week, I thought I’d share this interview conducted by Jenny Heller, my friend, the 7th guest on the show, and the President and CIO of Brandywine Group Advisors.  We discuss the business of Capital Allocators, entrepreneurship, effectiveness, and investing – including a brief description of my most recent private equity fund investment.
 
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Mar 25, 2021
[REPLAY] - Jennifer Heller – Thinking it Through (Capital Allocators, EP.07)
53:55

Jenny Heller is the President and Chief Investment Officer of Brandywine Trust Group.  Brandywine formed 25 years ago to manage the capital for a small group of families that all share a long-term, multi-generational time horizon. Today, it oversees almost $9B for those same families, much of it from compounding over a quarter century. The Group invests flexibly across asset classes, with a focus on partnering with people who they believe have sustainable competitive advantages, share their long-term vision, and have highly aligned interests.  These elite managers often start with great ideas, but limited capital.

 Before taking the helm at Brandywine five years ago, Jenny worked at the Sloan Foundation, Stanford University Management Company, and Merrill Lynch in its investment banking program. She is a graduate of Williams College, where she serves on its Investment Advisory Committee, and Stanford Business School.

Our conversation starts with Jenny’s frustrating experiences with a non-profit micro finance in India and South Africa and turns to her career allocating money on behalf of non-profits and families. We touch on subtleties in picking managers for taxable investors, challenges in executing a long-term strategy, learning from mistakes, and mentorship. Jenny’s clear and deep thought process provides pearls of wisdom throughout our conversation.

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Mar 25, 2021
SPECIAL ANNOUNCEMENT: Launch of capitalallocators.com
01:31

I’m excited to share that we have launched our new website at capitalallocators.com or still, at the familiar capitalallocatorpodcast.com.

 

The new site makes it easier for you to engage with everything in the Capital Allocators Community - the podcast, premium content, events, and writing. Speaking of which, my new book, Capital Allocators: How the world’s elite money managers lead and invest, publishes tomorrow. Pick up a copy at Amazon or listen on Audible.

 

It’s now incredibly easy to sign up for our monthly mailing list and receive updates and our best reads and listens each month.  At that frequency, it’s just enough to stay in touch and not enough to flood your inbox.

From there, you can also join our growing community of premium subscribers, who have access to the library of transcripts and receive a weekly premium email that includes summaries of the show, updates on the business, invitations to member-only events, and my investment thoughts – all of it is designed to connect you further with guests on the show.

Thanks for listening, and I hope you enjoy this week’s two special episodes with me on the other side of the mic

 

Mar 22, 2021
Ted with Patrick O'Shaughnessy – Lessons from the World’s Elite Money Managers (Capital Allocators, EP.184)
56:36
My new book – Capital Allocators:  How the world’s elite money managers lead and invest – releases tomorrow. I’ve been on a bit of a podcast tour the last few weeks, appearing on some of my favorite shows. I thought it would be fun to share an interview about the book here, so I asked Patrick O’Shaughnessy to interview me for the show.
 
Our conversation covers the journey of the podcast itself and lessons from the book about interviewing, leadership and investing.
 
Pick up a copy at Amazon, and if you like what you read, there’s more behind the podcast and the book.
 
All listeners can sign up for our free mailing list and receive a compilation of the top quotes from each of the first 150 episodes of the show.
 
And for those interested in more, our premium content includes a weekly email, further connectivity to guests on the show, and a whole lot more.
 
Sign up for both at capitalallocatorspodcast.com.
 
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Mar 22, 2021
Crypto for Institutions 4: Ari Paul – Exploiting Inefficiencies in Crypto Trading (Capital Allocators, EP.183)
59:35
Ari Paul is the co-founder and chief investment officer of BlockTower Capital, a crypto and blockchain investment firm he started alongside Matthew Goetz in 2017 with backing from Andreesen Horowitz and Union Square Ventures. He started his career as a trader at Susquehanna International Group, and later found his way to the University of Chicago endowment as a portfolio manager, overseeing an internal hedge fund portfolio and assessing risk for the university’s $8 billion endowment.
 
Our conversation covers Ari’s early lessons in trading, discovery of crypto while at University of Chicago endowment, obstacles for institutional participation, and launch of BlockTower in 2017 as a result.  We discuss active management in the crypto markets, research and trading, portfolio construction, opportunities in NFTs and gaming, risks, and the exciting landscape over the coming years.
 
While this episode concludes our current mini-series, we’ve just scratched the surface on crypto, blockchain protocols, and institutional engagement in the space. In the coming months, we’ll dive deeper into the evolving ecosystem with more key participants and ideas.

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Mar 18, 2021
Crypto for Institutions 3:  Seth Ginns – Investing Beyond Bitcoin (Capital Allocators, EP.182)
01:04:48
Seth Ginns is Managing Partner and Head of Liquid Investments at CoinFund, which he joined a year ago after a seventeen-year run as a large cap growth equity research analyst at Jennison Associates.  While in that role, Seth began angel investing a decade ago and became an early investor in Coinbase, Bitcoin, and Ethereum, which eventually led to diving into the space full-time.
 
Our conversation widens the discussion of crypto investments beyond Bitcoin and Ethereum with discussions of base layer protocols, decentralized finance, and non-fungible tokens. We discuss Seth’s background, how he invests in these markets, and some of the key issues and risks investing in the space.
 
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Mar 15, 2021
Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181)
47:27
Michael Sonnenshein is the CEO of Grayscale Investments, which is the world’s largest digital currency asset manager with $40 billion under management.  Grayscale offers investors access and exposure to digital currencies in the familiar format of publicly traded vehicles.

Our conversation discusses the basics of how institutional investors can participate in cryptocurrency investing, including counterparties, custody, and on ramping. We discuss Grayscale’s suite of products, its selection process for new products, technology infrastructure development, service providers, trading dynamics, and institutional interest in the space.
 
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Mar 11, 2021
Crypto for Institutions 1:  Eric Peters – The Macro Case for Bitcoin (Capital Allocators, EP.180)
57:57
Eric Peters is the founder and CIO One River Asset Management, where he searches for high conviction strategies coming out of his team’s expertise trading and investing in thematic macro, volatility, systematic, and inflation strategies – each as it turns out, turned his focus on study bitcoin and cryptocurrencies.
 
Eric made news in November when he executed a $600 million purchase of bitcoin, then the largest public transaction to date. He has called bitcoin the most interesting macro trade he’s seen in thirty years in the business, and we kick off this mini series, Crypto for Institutions with his macro case for the digital asset.
 
Our conversation discusses the intrigue of Bitcoin as a form of money, how digital currencies will somewhat ironically increase the power of governments and the likely co-existence of bitcoin with government digital currencies in the future. The then turn to the development of institutional infrastructure for digital assets, Eric’s perspective on bitcoin as an investor and a trader, the reflexive nature of bitcoin supply, and the risks in the asset.  Lastly, we discuss the story of Eric’s big trade, the future of bitcoin, and institutional interest in the space.
 
Please enjoy my conversation with Eric Peters in this first of four episodes in the mini-series Crypto for Institutions.
 
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Mar 08, 2021
[REPLAY] - Chris Dixon – The Future of Blockchain at a16z (Capital Allocators, EP.172)
01:03:15
Chris Dixon is a General Partner at Andreesen Horowitz, where he focuses on the a16z Crypto Funds.  Before joining Andreesen in 2013, Chris co-founded, built and sold two technology companies and was a prolific seed investor, founding member of Founder Collective, and personal investor.  At various spots along the way, Chris was an investor in BuzzFeed, Uber, Venmo, Hotel Tonight, Coinbase, and Oculus, among many others.
 
Our conversation covers Chris’ early interest in computers and business, and lessons from starting companies and angel investing.  We then turn to his activities since joining Andreesen Horowitz, discussing new computing platforms, a brief history of centralized and decentralized computing, development of blockchain technologies, potential killer apps, token basics, and investor perception.
 
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Mar 08, 2021
Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179)
01:06:12
Alex Shahidi and Damien Bisserier are the Co-CIOs and of Evoke Wealth and ARIS Consulting, a $19 billion registered investment advisor they co-founded in 2014.  Alex came at the business from a long tenure advising portfolios at Merrill Lynch, and Damien joined after nine years at Bridgewater.
 
Our conversation covers their respective backgrounds, shared investment philosophy, and strategy of searching for uncorrelated returns across public markets, alpha strategies, and private markets. We discuss the risk parity approach to public markets, incorporating human behavior when calibrating risk, the sweet spot in hedge funds, uncorrelated private equity return streams, and investment process.
 
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Mar 01, 2021
Acting Chairman Rostin Behnam – CFTC Regulatory Perspectives on Crypto and Climate (Capital Allocators, EP.178)  
01:05:42

Rostin Behnam is the Acting Chairman of the Commodities Futures Trading Commission. He was nominated and approved by the prior administration in 2017 to serve as one of five Commissioners of the CFTC and in January, accepted the role as Acting Chairman.

The CFTC has a mission to promote the integrity, resilience, and vibrancy of the U.S. derivatives markets, working towards effective price discovery and risk management in fair and transparent markets. As a part of his role, Russ sponsors the CFTC’s Market Risk Advisory Committee.

Our conversation covers the history, function and process of the CFTC and the Acting Chair’s path to the seat. We then discuss his perspective on crypto assets and dive into an exhaustive policy piece published last fall by his Market Risk Advisory Committee entitled “Managing Climate Risk in the Financial System.” The document is positioned to become the leading regulatory policy manual on financial climate risk for the new administration.

Our conversation took place shortly before Russ rose to Acting Chairman and before the wild market volatility in recent weeks. We touched base about his perspective, but the situation is too fluid for a public response. Acting Chairman Behnam released brief statement about the silver markets that said, “The CFTC is closely monitoring recent activity in the silver markets. The Commission is communicating with fellow regulators, the exchanges, and stakeholders to address any potential threats to the integrity of the derivatives markets for silver, and remains vigilant in surveilling these markets for fraud and manipulation.” Stay tuned, as the subject may well be fodder for another conversation down the road.

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Feb 22, 2021
Jennifer Prosek – Business Development and Leadership in a Virtual World (Capital Allocators, EP.177)
45:43
Jennifer Prosek is the founder and CEO of Prosek Partners, a leading international public relations and financial communications consultancy and a popular past guest on the show.  In our first conversation, we discussed branding an asset management firm and many of Jen’s leadership nuggets of wisdom.  That conversation follows on the feed.
 
Our second conversation discusses the evolution of marketing and brand development in asset management and how the pandemic has accelerated trends already in place.  We discuss business development in a virtual world, including building a digital profile, developing a presentation style, handling significant world events, differentiating from others, and nailing the narrative. We end by turning to lessons Jen learned on internal communication and leadership through the health crisis.
 
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Feb 15, 2021
[REPLAY] Jen Prosek – Branding an Asset Management Firm (Capital Allocators, EP.81)
56:28

Jennifer Prosek is the founder and CEO of Prosek Partners, a leading international public relations and financial communications consultancy with offices in New York, London, Los Angeles and Connecticut. Prosek Partners ranks among the top 10 independent public relations firms in the U.S., and among the top financial communications consultancies.  The firm has been listed as an Inc. 5000 Fastest Growing Company for nine years running.  Jen is also a two-time author. 

Our conversation covers the foibles of professional marketing in asset management, building a brand, measuring a successful branding effort, managing the story of weak performance, and describing the differences in hedge fund and private equity branding.  We then turn to some of Jen’s fascinating observations learned from her experience, including raising entrepreneurial children, working with millennials and Gen Z staffers, and implementing the principals of ‘Just Ask’, behave with humanity, and not thinking in black and white.

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Feb 15, 2021
David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176)
01:06:30
David Baran and Kazuhiko Shibata are the co-founders of Symphony Financial Partners, a twenty-year old Asia-based manager of $1.3 billion in assets. Symphony focuses on deeply undervalued companies in Japan, with a long-bias, constructive engagement strategy to work closely alongside willing management teams to see intrinsic value reflected in the share price.
 
Our conversation covers their early careers in Japan, the country’s employee first, shareholder last culture, the resulting disconnect of corporate activity and share price, and the formation of Symphony to invest in the few companies willing to close the gap over time. We then walk through their investment process, including the challenges of taking advantage of what appears incredible value on paper, offering friendly advice as a key component of due diligence, conducting research, and structuring portfolios. We close with a discussion of corporate governance and the necessity of a long-term perspective to thrive in Japan.
 
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Feb 08, 2021
BONUS – Michael Mauboussin on the Decision Education Podcast
42:25

I am excited to share the first episode of a new podcast called The Decision Education Podcast.  It’s the brainchild of the Alliance for Decision Education, a non-profit on whose Advisory Board I serve, whose mission is founded on the belief that better decisions lead to better lives and a better society.

In the first season of the podcast, Dr. Joe Sweeney talks to experts and shares tips on all things related to decision making.  Today’s special episode is Joe’s interview with Michael Mauboussin, entitled Base Rates and Bees.

Please enjoy this introduction to The Decision Education podcast, which you can subscribe on your favorite podcast platform.

Feb 04, 2021
Private Equity Masters: Paul Salem – Providence Equity Partners (Capital Allocators, EP.175)
59:10
Today’s show is a preview of a mini-series coming in a few months, where I’ll be speaking with some of the preeminent leaders in private equity to learn more about what the continuing insatiable interest in the asset class is all about.
 
Paul Salem is a Senior Managing Director Emeritus at Providence Equity. Providence is a premier private equity and asset management firm focused on media, communications, education, software and services with $49 billion in asset commitments. Paul joined Providence when it was a $171 million media focused boutique in 1992 and became an integral part of the firm’s growth and success ever since until retiring a year ago. Paul considers himself the luckiest guy in the world, which you can hear more about in a TED talk he delivered a few years ago.
 
Our conversation covers Paul’s entry to the business, the benefits of specialization, Providence’s nice guy advantage, and the development of the firm over three decades.  We then turn to the competitive landscape for deals, value of operating partners, evolution of private equity, advice for allocators in the space, and life after stepping away from the business.
 
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Feb 01, 2021
Collette Chilton – Humility and Loyalty at Williams College (Capital Allocators, EP.174)
51:39
Collette Chilton is the CIO of Williams College where she has overseen its $3 billion since 2006. Collette is nothing short of a legend in the business. She has sat in a CIO seat since the early 1990s at the helm of public pension MassPrim and corporate pension Lucent before joining Williams. Institutional Investors bestowed its Lifetime Achievement Award on Collette in 2019, and Barron’s named her one of the 100 Most Influential Women in Finance in 2020.
 
Our conversation covers Collette’s career path and lessons learned before joining Williams. We then turn to her arrival at Williams in 2006 to a phone, a computer, and a legacy portfolio, Williams’ governance structure leveraging alumni advisors, asset allocation, manager selection, manager monitoring, hedge funds, venture capital, and navigating around popular managers.
 
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Jan 25, 2021
Fran Kinniry – The Comfort of Paradox at Vanguard Group (Capital Allocators, EP.173)
01:04:39

Fran Kinniry is a twenty-three year veteran at the Vanguard Group, where he’s led the teams that spearhead Vanguard’s research into new products. Fran helped Vanguard enter the direct advice business, developed Vanguard’s Advisor Alpha concept, started its Investment Strategy Group, and most recently heads Vanguard’s latest initiative investing in private equity.

Our conversation covers an overview of Vanguard business, Fran’s three roles over a quarter century at the firm, behavioral coaching, and the firm’s foray into private equity. We discuss the research process leading to the introduction of private equity, potential scale across institutional and retail clients, timing of the decision, fees, and manager selection.  We then close discussing Vanguard’s cooperative ownership model, compensation, and the future of index fund.

When the industry’s leading index fund manager known for low-cost investing steps into high-cost private equity after years of research that showed the benefits of the asset class, those calling for the abandonment of active management should take notice. Like all other practitioners in active management, Fran and Vanguard preach outcomes over costs.

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Jan 18, 2021
Chris Dixon – The Future of Blockchain at a16z (Capital Allocators, EP.172)
01:03:15
Chris Dixon is a General Partner at Andreesen Horowitz, where he focuses on the a16z Crypto Funds.  Before joining Andreesen in 2013, Chris co-founded, built and sold two technology companies and was a prolific seed investor, founding member of Founder Collective, and personal investor.  At various spots along the way, Chris was an investor in BuzzFeed, Uber, Venmo, Hotel Tonight, Coinbase, and Oculus, among many others.
 
Our conversation covers Chris’ early interest in computers and business, and lessons from starting companies and angel investing.  We then turn to his activities since joining Andreesen Horowitz, discussing new computing platforms, a brief history of centralized and decentralized computing, development of blockchain technologies, potential killer apps, token basics, and investor perception.
 
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Jan 11, 2021
James Clear – Mastering Habits (Capital Allocators, EP.171)
01:12:20
James Clear, author of last year’s New York Times bestseller Atomic Habits, which has already sold 3 million copies worldwide.  James also publishes a weekly email entitled 3-2-1 Thursday that works to deliver the most wisdom per word of any newsletter on the web. You can sign up at jamesclear.com
 
Our conversation covers James’ entrepreneurial missteps that led to writing, following what worked to focus on habits, and lessons to build a large audience.  We then turn to Atomic Habits, covering the definition of a habit, four steps to creating habits, importance of identity, obstacles to good habit formation, and the practical application of these principles in James’ life. We close with James’ New Years resolutions for 2021 and his advice for bringing yours to fruition.
 
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Jan 04, 2021
Ted Seides - Capital Allocators Year in Review (Capital Allocators, EP.170)
17:13

With a big thank you for your enthusiastic engagement with the show, Ted offers a year in review of the podcast and the business behind the podcast.  He closes with a countdown of the top episodes of 2020.

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Dec 28, 2020
[REPLAY] Rahul Moodgal - Master Fund Raiser (Capital Allocators, EP.87)
01:01:10

Rahul Moodgal has spent 20 years as a fund raiser across long only strategies, hedge funds, fund of funds, customized solutions, start-ups, and non-profits.  Collectively, Rahul has raised and helped raise $60 billion for firms since 2005.  He started his career in the industry at powerhouse TT International, and later joined The Children’s Investment Fund (TCI) where he led the marketing effort that raised $20 billion in just 3½ years.  Within TCI’s affiliate model, Rahul also was responsible for the largest India fund raise in history ($1 billion for TCI New Horizon Fund), and the largest sector fund launch in history ($1.1 billion for Algebris Investments).

Our conversation covers capital raising lessons learned from teaching, the value of transparency, the gold rush before 2008, the lean times afterwards, modern fee structures, the three key points to effective marketing, the three traits that will kill you, the two biggest issues start-up funds face, the best questions asked by leading allocators, and some of the worst horror stories in attempted capital raising. We close comparing by fund raising for charities and investment firms. 

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For more episodes go to CapitalAllocatorsPodcast.com/Podcast

Dec 28, 2020
[REPLAY] Dan Rasmussen – Private Equity Risk and Public Equity Opportunity at Verdad Advisers (First Meeting, EP.15)
01:02:11

Dan Rasmussen is the Founder and portfolio manager at Verdad Advisers, which he launched in 2014 to replicate the historical success of private equity in the public markets.  He’s an outspoken critic of the market’s enthusiasm for private equity, resulting from research he conducted in the business while working at Bain Capital.

Our conversation covers Dan’s early education in the Socratic method, research into why private equity works, current risk in the private equity and private credit markets, and the launch of Verdad to find private equity-like outcomes in the public markets.  We then turn to Verdad, including key lessons upon shifting to public equity investing, stock screens, portfolio construction, position sizing and the competitive advantage of capacity constraints.  Lastly, we touch on Verdad’s written research and preparing a portfolio for a recession.

If you like Dan’s thought process, you can sign up to receive his team’s weekly research at verdadcap.com/strategy.

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Dec 28, 2020
[REPLAY] Gregory Zuckerman – Decoding Renaissance Medallion (Capital Allocators, EP.119)
01:02:48

Gregory Zuckerman is a special writer at the Wall Street Journal and the author of five books, including his most recent, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution.  Greg joined the Journal in 1996 and writes about big financial trades, firms, and personalities.  He’s a three-time winner of the Gerald Loeb award, the highest honor in business journalism, and his work has included breaking the stories of the discord between Bill Gross and PIMCO, the London Whale trade, subprime mortgage collapse, and meltdown of hedge fund Amaranth in 2007.

Our conversation starts with Greg’s path to journalism, touches on the aftermath of his book The Greatest Trade Ever about John Paulson and the subprime meltdown. We then turn to his recent tome on Jim Simons and Renaissance, including the formation and evolution of the Medallion fund, precarious moments in its history, the human element of a quant shop, differences between Renaissance and other quant competitors, leadership, impacting the world with vast wealth, and why Renaissance has been so special.

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Dec 28, 2020
[REPLAY] James Aitken – Systemic Risk in a Crisis (Capital Allocators, EP.126)
41:31

In the midst of this unprecedented time, I thought it would be helpful to hear from James Aitken, the extraordinary macro strategist who specializes in understanding the functioning of the financial system.

I reached out to James with one key question in mind – are we facing a systemic risk outside of what we see happening to the economy and markets.  That conversation follows.

Please stay safe and healthy.

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Dec 28, 2020
[REPLAY] Morgan Housel – The Psychology of Money (Capital Allocators, EP.155)
01:04:41

Morgan Housel is a partner at Collaborative Fund and one of my favorite writers about investing. Morgan recently released his first book, The Psychology of Money, and I’ll go on record and predict it will be a best-seller in short order.

Our conversation starts with Morgan’s non-traditional education, his path to writing, and his process for writing each week. We then turn to the book and discuss some anecdotes about luck and risk, greed, compounding, patience, and tail events. We close with two of Morgan’s personal stories – one about his own investing and the other, which seems inconceivable as you listen, about his lifelong challenge with stuttering.

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Dec 28, 2020
[REPLAY] Annie Duke – How to Decide (Capital Allocators, EP.156)
01:36:33

Annie Duke, former professional poker player, decision-making expert, best-selling author, and regular guest on the show. Annie’s latest masterpiece is her book entitled How to Decide: Simple Tools for Making Better Choices, and it releases next week. How to Decide follows her best-seller Thinking in Bets, shifting from highlighting causes of bad decisions to discussing process for making better ones.

Our conversation covers the six steps to outline a comprehensive decision framework, factors that determine when to shorten that lengthy decision process, the power of negative thinking, decisions in groups, and work with Committees.

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Dec 28, 2020
André Perold – Pockets of Inefficiency at HighVista Strategies (Capital Allocators, EP.169)
56:32
André Perold, the Co-Managing Partner and Chief Investment Officer of HighVista Strategies, a $4B firm with roots in endowment-style investing that searches for inefficiencies across asset classes. André was the 2nd guest on the show, where we discussed his background as a renowned investment professor at HBS and the founding of HighVista.
 
Our second conversation covers the evolution of HighVista over the last few years. We discuss changes in the business and the firm’s response by focusing on inefficient markets. We then dive into examples of opportunities in biotech, private credit and litigation finance, and close with a perspective on active management and private markets.
 
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Dec 21, 2020
[REPLAY] André Perold – Academic Practitioner (Capital Allocators, EP.02)
49:27

André Perold is the Chief Investment Officer and Co-Managing Partner at HighVista Strategies, where for the last dozen years he has sat at the helm of a now $3 billion fund that takes a multi-asset class, endowment-like approach emphasizing broad diversification and risk management.

Over this period, André has definitively rebuffed the cliché that those who can’t do, teach. In his prior career, he spent over 30 years teaching at the HBS, where he is the George Gund Professor of Finance and Banking, Emeritus.

André had a distinguished career teaching investment management at Harvard and is a legendary master of the case study classroom. Just about everyone in the investment profession with Harvard Business School on their resume took a seat in his classroom at one point in time. André received numerous awards for teaching excellence, including being voted the School’s most outstanding professor in a Business Week student survey.

While at Harvard, André authored and co-authored 27 articles in financial journals, two books, and over 100 case studies, all relating to investment management, capital markets, and the financial system. He literally chronicled the development of modern finance as it occurred through is work at HBS.

Among his directorships and trustee roles over the years, André currently is a Board member at The Vanguard Group.

In this episode, we spend the first 11:30 talking about teaching at Harvard, and then turn to the practice of investing: the active vs. passive debate, a risk-based approach to asset allocation, and what makes investing so hard.  I found it fascinating hearing how André takes all of his academic experience and knowledge and applies it the practice of investing at HighVista. His wisdom and clarity of thought are second to none, and his soothing South African accent only adds to the allure.

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Dec 21, 2020
Diversity Equity & Inclusion 5: Daryn Dodson – Training and Action at Illumen Capital (Capital Allocators, EP.168)
57:05

Daryn Dodson is the founder of Illumen Capital, a venture fund of funds that seeks to invest in the best impact fund managers and takes them through a process to reduce implicit bias in their business and investing decisions.

Our conversation covers Daryn’s early experience with discrimination, work backing more than 1,000 entrepreneurs in post-Hurricane Katrina New Orleans, Board work at impact-focused Calvert Funds, and launch of Illumen. We discuss Illumen’s three pillars of academic research, investing in the thesis, and training managers across hiring, investing and Board selection – all with the aspiration to become better investors and take advantage of a huge inefficiency in capital allocation.

Please enjoy, my conversation with Daryn Dodson of Illumen Capital in this continuation of our mini-series on Diversity, Equity & Inclusion.

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Dec 14, 2020
Chamath Palihapitiya – The Social Capital Flywheel (Capital Allocators, EP.167)
01:04:31

Chamath Palihapitiya is the founder and CEO of Social Capital, where he invests in private businesses, public markets, and experiments with that objective of compounding capital at high rates so that he can advance humanity by solving the world’s hardest problems. Chamath previously was an early employee at Facebook, a prolific angel investor, and co-founder of the venture capital business that was the first version of Social Capital. He’s been in the press of late for raising and deploying a series of large SPACs and for his outspoken views.

Our conversation covers Chamath’s path to Facebook and Social Capital, his period of self-discovery, and the resulting Social Capital 2.0 to express his views of the world. From there, we dive into SC Emerging Managers, Social Capital’s newest program to back managers from diverse backgrounds. Lastly, we circle back to the purpose of Social Capital and how Chamath gets it all done.

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Dec 07, 2020
Ben Reiter – Over the Edge with the Houston Astros (Capital Allocators, EP.166)
47:56

Ben Reiter, longtime Sports Illustrated columnist, author of the NY Times best seller Astroball, and host and producer of The Edge, a documentary podcast about the scandal that tarnished the Houston Astros.
 
Ben joined me on the show two years ago to discuss Astroball, which chronicled the Astros rise from cellar dweller to World Series champion in the 3 years after he predicted it would happen on the cover of Sports Illustrated. What happened after was a shock to his system. His podcast is his post-mortem on the team and on his work.
 
Our conversation discusses what happened, Ben’s assessment of the team and his book, and his conclusions. In the end, Ben found that the Astros’ story is about much more than baseball. It’s about power, money, culture, and accountability. About a modern world where everyone is seeking an edge, and about who ultimately benefits from that world. It sure sounds familiar to our world of investing.
 
If the conversation peaks your interest, I strongly recommend having a listen to his podcast, The Edge.

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Nov 30, 2020
Joel Greenblatt – Common Sense for Value at Gotham Capital (Capital Allocators, EP.165)
01:11:38

Joel Greenblatt is a legendary value investor, founder of Gotham Capital, longtime teacher at Columbia Business School, and author of four investment books, the latest of which, Common Sense: The Investors’ Guide to Equality, Opportunity, and Growth recently hit the bookstands.

Our conversation takes a tour through Joel’s career. We cover his background, early success running a concentrated portfolio, closing of the fund to manage his own money, and re-opening with a more diversified approach. We discuss Joel’s timeless investment beliefs and along the way also discuss the Value Investors Club, seeding managers, and applying investment lessons to education.

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Nov 23, 2020
Shane Parrish – Learning to Learn at Farnam Street (Capital Allocators, EP.164)
01:03:24

Shane Parrish is the founder of Farnam Street, host of the Knowledge Project Podcast, and author of Brain Food, a weekly email full of timeless insight for business and life. His goal is to uncover the best of what other people have already figured out.

Our conversation covers Shane’s background, work in a three-letter-intelligence agency, and creation of Farnam Street. We then discuss the learning loop process and lessons from reading, interviewing and writing. Lastly, we discuss Shane’s application of those lessons to managing a team, investing, building relationships, and forming habits.

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Nov 16, 2020
Karyn Williams – Measuring Risk Practically at Hightree Advisors (Capital Allocators, EP.163)
01:00:31

Karyn Williams is the founder of Hightree Advisors, a new independent consultant that is helping organizations improve the effectiveness of their invested assets through practical quantitative metrics of risk. Karyn is an engineer by training, who previously was a partner at Wilshire Associates, CIO of Farmers Insurance Group, and head of client solutions at hedge fund Two Sigma

Our conversation covers the early days of financial engineering, taking lessons to portfolio analytics at Wilshire Associates, and discovering a disconnect in theory and practice with mean-variance optimization and the application of early factor models.

We then turn to Karyn’s applying risk frameworks and factors at Farmers Insurance, joining Two Sigma, and creating Hightree to help institutions measure risk practically.

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Nov 09, 2020
Mike Trigg – Defying the Fade at WCM (Capital Allocators, EP.162)
55:53

You may remember my popular first meeting from a few years ago with Paul Black of WCM, then a $25 billion asset manager in Laguna Beach, CA. Since then, WCM has gone up and to the right in every way, they sold a minority piece of the business to Natixis, continue to put big numbers on the board, and have grown to north of $66 billion, defying the fade of active management outflows.

My guest on today’s show is Mike Trigg, a partner and portfolio manager of WCM’s Focused International Growth strategy that comprises the majority of the firm’s assets. We discuss Mike’s background, arrival at WCM in 2005, near implosion of the firm shortly thereafter, and the rising of the international strategy from those ashes. We then dive in deeper to the core tenants of WCM’s approach, discussing how the firm analyzes widening moats and cultures tied to competitive advantage. Lastly, we talk about how WCM’s growth has impacted the firm.

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Nov 02, 2020
[REPLAY] Paul Black - Gratitude, Fun, and Growth Stocks (Capital Allocators, EP.51)
55:41

Paul Black is Co-CEO and portfolio manager at WCM Investment Management, a $26 billion manager of global equities that he joined when it was a $200 million boutique in 1989.  With so much of the institutional world, including my own training, focused on value investing, I was pleasantly surprised to learn about a large, high performing growth stock manager located in a non-descript building in Laguna Beach, California.

Our conversation starts with Paul’s trial-by-fire entry into the business and turns to growth stock investing, including defining a great growth company, searching for widening moats, assessing a culture tied to competitive advantage, creating a positive culture, learning from mistakes, identifying tailwinds, and protecting the downside.

Paul embodies the principals he preaches and offers some tasty food for thought.

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Show Notes

2:54 – How Paul got started in the business

4:52 – Lessons learned in the early years of his career

            5:56 – Common Stocks and Uncommon Profits and Other Writings

            6:01 – Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor

            6:05 – The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel

7:49 – What works about growth stock investing

9:01 – What constitutes a great growth company

13:47 – Defining and measuring a company’s competitive advantage

17:50 – How does he assess a company’s culture

            19:41 – The Culture Cycle: How to Shape the Unseen Force that Transforms Performance

20:26 – Questions that help assess company culture

21:57 – Any data to back up claims that companies with good cultures perform better over time

22:46 – Culture aligning with competitive advantage

24:30 – Looking at WCM’s moat and culture

31:23 – The landscape for active management

33:53 – Weathering tough periods for the firm

37:02 – How do they think about culture in other countries

39:01 – Why does growth stock investing work when the data shows otherwise

40:47 – What is he excited about in growth stocks

43:45 – Tailwinds at the sector level

45:10 – Downside protection in the portfolio

46:38 – Patterns of positive and negative allocator behavior

48:35 – How do they manage the change in the portfolio going from 200 million to 26 billion

49:53 – Closing questions

Nov 02, 2020
Marko Papic – Geopolitical Alpha at Clocktower Group (Capital Allocators, EP.161)
53:58

Marko Papic is the Chief Strategist at Clocktower Group, where he provides research on geopolitics, macroeconomics, and markets. Marko recently published Geopolitical Alpha: An Investment Framework for Predicting the Future, an imminently readable book with colorful examples of political analysis. Marko’s approach is akin to Moneyball for politics, challenging the orthodoxy of how others traditionally make investment decisions.

Our conversation covers Marko’s upbringing, the flaws of most political analysis, and his constraints-based framework. We then turn to the obvious political topic at hand – next week’s U.S. Presidential election. We discuss his views of different possible outcomes on the U.S. equity market, rates, tech stocks, China, private equity, ESG, Europe, and emerging markets.

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Oct 26, 2020
Carrie Thome – Nothing Ventured, Nothing Gained at WARF and beyond (Capital Allocators, EP.160)
56:04

Carrie Thome is the longtime former CIO at WARF, the Wisconsin Alumni Research Foundation, a $3 billion pool that arose from monetizing technologies developed at the University of Wisconsin. She recently left to start a venture capital firm called NVNG, or Nothing Ventured, Nothing Gained.

Our conversation covers Carrie’s Wisconsin roots, her early experience at SWIB, the State of Wisconsin pension fund, and investing at WARF over the last two decades.

We discuss WARF’s unique structure, technology transfer, and an all-weather portfolio for the Foundation, including separation of alpha and beta, portfolio construction, and manager selection. We then turn to Carrie’s new adventure NVNG, a venture capital firm seeking to bring the benefits of entrepreneurial activities in Wisconsin to local firms and national venture capitalists.

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Oct 19, 2020
Mathieu Chabran – Good Deals Have No Wheels at Tikehau Capital (First Meeting, EP.23)
57:36

Mathieu Chabran, a co-founder and Co-CIO of Tikehau Capital, a publicly listed alternative asset manager that oversees 25 billion Euros across private credit, real estate, private equity, and liquid strategies.

Our conversation tells the story of how Mathieu and his friend Antoine began with 4 million EU in 2004 and turned it into one of Europe’s alternative asset juggernauts in just 14 years. We cover the founding of Tikehau, the importance of alignment and having skin in the game, and having a diverse, multi-cultural team. We then turn to investing, and discuss why good deals have no wheels, the competitive landscape, sourcing, due diligence and decision-making processes, opportunities and risks, and lessons learned.

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Oct 12, 2020
Scott Wilson – Concentrated Investing at Washington University-St. Louis (Capital Allocators, EP. 159)
57:14

Scott Wilson is the CIO at Washington University of St. Louis, where he oversees a $10 billion endowment. Scott joined Wash U three years ago from Grinnell College, where he learned a completely different style of endowment investing than is practiced by others.

Our conversation covers Scott’s upbringing, early Wall Street career in equity research and derivatives across New York, London and Tokyo, and his leap to Grinnell. We then turn to his applying the Grinnell model at Wash U, transitioning an endowment model portfolio to a concentrated book. We touch on hedge funds and frontier markets and turn to the process of underwriting individual ideas and managers in the context of a concentrated endowment portfolio.

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Oct 05, 2020
Luke Ellis and Mario Therrien – Best Practices in Alternatives (Capital Allocators, EP.158)
58:50

Luke Ellis and Mario Therrien are long-time veterans of the hedge fund industry who hold the Chairman and Deputy Chairman seats of the SBAI, or Standards Board of Alternative Investments. The SBAI is an industry consortium that brings together managers and investors to set best practices for the alternative investment industry. In their day jobs, Luke is the CEO of Man Group, the largest publicly traded hedge fund company with $120 billion in assets, and Mario is the Head of Investment Funds and External Management at Canadian pension and insurance fund manager CDPQ, where he oversees $45 billion of funds managed externally.

Our conversation focuses on the activities of the SBAI, including its purpose, origin, members, and evolution. We cover how members of an industry driven by different interests came to agree on anything and what has transpired since its founding after the financial crisis. We then turn to the state of the hedge fund industry and discuss its structure, fees, and future.

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Sep 28, 2020
[REPLAY] Mario Therrien – The Canadian Pension Model (Capital Allocators, EP.12)
49:46

Mario Therrien is Senior Vice President of External Portfolio Management at Canadian asset manager Caisse de dépôt et placement du Québec (CDP). CDP oversees $270 billion Canadian ($200B in USD) for the pension funds in the province of Quebec. Mario joined CDP in the early 1990s after completing his Masters degree in Finance and has worked there ever since.

Mario started out at CDP managing a tactical asset allocation strategy, created an internal global macro hedge fund, and later built and managed the team responsible for investments in external public market funds. Starting from scratch, CDP oversees $20B of external manager allocations today. Mario's team serves as CDP’s ‘window to the world’ of markets, strategies, and managers across the globe.

Our conversation dives into the ‘Canadian pension model’ which has gained prominence in recent years for the strong performance by funds north of the U.S. border. The model incorporates internal management, risk control, partnership, and collaboration.  Drawing on a quarter century of experience, Mario shares his window into this little-known world of investment success.

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Sep 28, 2020
Paul Marshall – 10 ½ Lessons from 23 years at Marshall Wace (Capital Allocators, EP.157)
52:12

Sir Paul Marshall is a co-founder and Chairman of Marshall Wace Asst Management, which is Europe’s largest hedge fund overseeing $48 billion. The firm specializes in long-short equity management and notably combines fundamental investing with systematic and quantitative strategies. Paul recently authored the book 10 ½ Lessons from Experience: Perspectives on Fund Management, and the show completes a trifecta of consecutive book authors whose work I thoroughly enjoyed this summer.

Alongside his long history in the business, Paul has been deeply involved in philanthropy focused on education, and he was knighted for this work in 2016. And if that’s not quite enough, his son Winston is a band member of the popular folk rock band Mumford & Sons.

Our conversation covers Paul’s background. the history of Marshall Wace and the firm’s evolution. We touch on his thoughts about quantitative and qualitative investing and on internal and external fund management. And then we turn to his new book, covering lessons relating to market efficiency, skill, portfolio construction, shorting, man and machines, size, and careers.

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Sep 21, 2020
Annie Duke – How to Decide (Capital Allocators, EP.156)
01:36:33

Annie Duke, former professional poker player, decision-making expert, best-selling author, and regular guest on the show. Annie’s latest masterpiece is her book entitled How to Decide: Simple Tools for Making Better Choices, and it releases next week. How to Decide follows her best-seller Thinking in Bets, shifting from highlighting causes of bad decisions to discussing process for making better ones.

Our conversation covers the six steps to outline a comprehensive decision framework, factors that determine when to shorten that lengthy decision process, the power of negative thinking, decisions in groups, and work with Committees.

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Sep 14, 2020
[REPLAY] Gary Klein with Paul Sonkin and Paul Johnson – Conducting Pre-Mortem Analysis (Capital Allocators, EP.109)
49:37

Gary Klein is a noted cognitive psychologist with an innate ability to see what others don’t. Over his 40-year career in the field, he’s pioneered the field of naturalistic decision making, the Pre-Mortem method of risk assessment, and the ShadowBox training approach. Gary is the author of five books and editor of three more, and most recently, founded Shadow Box, LLC in 2005 to train decision makers on his technique. You can learn all about Gary at gary-klein.com.

Paul and Paul, you may recall, were guests on the show discussing their book that I greatly enjoyed, Pitch the Perfect Investment. Both are former investors and professors of finance.

Together Gary, Paul and Paul co-authored a paper entitled Rendering a Powerful Tool Flaccid: The Misuse of Premortems on Wall Street. The paper is a detailed look at how properly conduct Pre-Mortem analysis.

Our conversation covers Gary’s background studying expertise with fighter pilots, tools to improve decision-making, including the Shadow Box technique, Cognitive After-Action Reviews, and Pre-Mortems. We then do a deep dive on Pre-Aortem analysis, including its history in the Air Force, what it is, how it works, when it falls short, and the benefits of reducing overconfidence, time efficiency, increasing candor, making groups smarter. We discuss views on other risk mitigation techniques as well, including devil’s advocates, red teams, risk assessment, and critiques.

I found the conversation an incredible door opener to one of the most effective and time-efficient sources of value in improving investment decision-making processes. I’m privileged and excited to share this conversation with you.

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Sep 14, 2020
[REPLAY] Annie Duke – Thinking More in Bets (Capital Allocators, EP.76)
46:41

My guest on today’s show once again is Annie Duke, decision-making expert, former world-famous poker player, and author of the best seller, Thinking in Bets.  I had a chance to interview Annie at The Investment Institute’s Fall Forum in Chapel Hill, North Carolina and the live interview follows. Special thanks to Andrea Szigethy and Donna Holly, founders of the Institute, for having Annie and me down for their terrific event.

Our conversation covers the challenge of separating signal from noise in making decisions, the formation and confirmation of beliefs, forming decision groups, communicating with teams, and mistakes Annie’s advisory clients have made after reading her book.  We close with some questions from the audience and end with two great poker stories of how Annie approached being a woman in the male-dominated poker world.  Annie’s irrepressible brain was on display this time around, covering a few of the same ideas from our last conversation and some new ones with different anecdotes along the way.

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Sep 14, 2020
[REPLAY] Annie Duke - Improving Decision Making [Capital Allocators, EP.39]
59:31

Annie Duke is a renown public speaker and decision strategist. For two decades, she was one of the top poker players in the world, including winning a World Series of Poker bracelet and the $2 million winner-take-all WSOP Tournament of Champions. Her study of the science of smart decision-making began with a National Science Foundation Fellowship, which she used study Cognitive Psychology at the University of Pennsylvania.  Among her charity work and television appearances, Annie was a runner-up to Joan Rivers on Celebrity Apprentice, during which she raised $700,000 for Refugees International. She is a natural teacher and storyteller with an active mind that constantly searches for accurate truth.

I highly recommend Annie’s new book, Thinking in Bets, which comes out this week. In her life after poker, she is a featured speaker, writes a newsletter and a blog, and advises companies on improving their decision-making process. Have a look at her website, annieduke.com, for more information.

Our conversation discusses Annie’s path from an Ivy League education to professional poker, the nature of a bet, how we form beliefs, why we make bad decisions, and what we can do to improve our decision-making process. Towards the end, we also talk about bankroll management, poker faces, and advice she would give the President on how to make better decisions.

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Sep 14, 2020
Morgan Housel – The Psychology of Money (Capital Allocators, EP.155)
01:04:41

Morgan Housel is a partner at Collaborative Fund and one of my favorite writers about investing. Morgan recently released his first book, The Psychology of Money, and I’ll go on record and predict it will be a best-seller in short order.

Our conversation starts with Morgan’s non-traditional education, his path to writing, and his process for writing each week. We then turn to the book and discuss some anecdotes about luck and risk, greed, compounding, patience, and tail events. We close with two of Morgan’s personal stories – one about his own investing and the other, which seems inconceivable as you listen, about his lifelong challenge with stuttering.

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Sep 07, 2020
EP.245 – Eva Goicochea

EP.245 – Eva Goicochea

Aug 31, 2020
Diversity, Equity & Inclusion 4: Joel Wittenberg – A Prescription for the Future (Capital Allocators, EP.154)
53:46

Joel Wittenberg is the chief investment officer and vice president of W.K. Kellogg Foundation, where he has managed the foundation's $8 billion in assets since 2009. The Kellogg Foundation is guided by the belief that all children should have an equal opportunity to thrive. In accordance with that mission, in 2007 its Board committed to be an effective anti-racist organization that promotes racial equity. Over the ensuing thirteen years, the organization has become a leader in applying research and taking effective action.

Our conversation touches on Joel’s background in the fixed income markets and the application of duration and convexity to allocating capital. We then turn to his work at the Foundation fostering racial equity. We discuss the importance of open conversations about race, Kellogg’s expanding equity program for majority-owned managers, emerging manager allocations and impact investments. Lastly, Joel shares his plans to broaden the expanding equity program to allocators and managers in the coming years.

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Aug 31, 2020
SPECIAL EPISODE – Introducing Invisible Forces Podcast
30:22

Today’s show is an episode of another podcast called Invisible Forces. It’s hosted by insiders at Jefferies, Shannon Murphy and Erin Shea, who dive into unseen influences that are dramatically changing the global economy.

Season 2 looks five years into the future to understand where we’ll live, how we’ll live, and what we’ll buy. What follows is the first episode of Season Two.

I hope you enjoy this show, and I suspect you will. If you like what you hear, search for Invisible Forces anywhere you listen to podcasts.

Aug 27, 2020
Diversity, Equity & Inclusion 3: Shundrawn Thomas – Leading the Way (Capital Allocators, EP.153)
01:03:30

Shundrawn Thomas, President of Northern Trust Asset Management, where he oversees the $900 billion organization. Shundrawn joined Northern Trust Corporation in 2004 and rose to the leadership team in 2008. Over the last 8 years, he has hired and promoted much of Northern Trust Asset Management’s executive team, whose fifteen members include nine women and minorities.

Shundrawn is deeply involved in diversity efforts across the industry and was named one of this year’s Most Influential Black Executives in Corporate America and previously one of the Most Powerful Blacks on Wall Street.

Our conversation covers Shundrawn’s early career and issues of race, the culture that drew him into to Northern Trust, and examples of unconscious bias. We turns to his values-based methodology to foster change across recruiting, mentorship, promotion, leadership and performance at Northern Trust, and we close with his perception of how the renewed interest in diversity provides an opportunity for businesses to take action.

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Aug 24, 2020
Diversity, Equity & Inclusion 2: Kim Lew – The Opportunity and Challenge (Capital Allocators, EP.152)
51:13

Kim Lew is the highly regarded Chief Investment Officer of Carnegie Corporation and a two-time former guest on the show.

Our conversation starts with Kim’s childhood and early career experience with conscious and subconscious bias. We then turn to her career as an allocator and cover the challenges and opportunities afforded by diversity across investment teams, manager selection, and running a fund. We close with a discussion of organizations supporting diversity and the challenges of making progress in a mature industry.

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Aug 17, 2020
[REPLAY] Kim Lew – The Carnegie Way (Capital Allocators, EP.52)
01:10:51

Kim Lew is the Vice President and CIO of Carnegie Corporation, where she is responsible for the investment and oversight of the Corporation’s $3.5 billion Foundation. Kim joined Carnegie in 2007 after spending a dozen years at the Ford Foundation. She is also a Trustee of Ariel Investments, the Board Chair of the Stevens Cooperative Schools, and a member of the investment committees of the Girl Scouts of America and the ACLU, and the steering committee of the Private Equity Women Investor Network. Last year, Institutional Investor awarded her Endowment & Foundation CIO of the year.

 

Our conversation covers the American dream story of Kim’s parents, Kim’s path to picking technology stocks and venture capital managers at Ford Foundation, two very different models of successful Foundation investing, blow-by-blow of the creation of an atypical Co-CIO seat at Carnegie, responsibilities that CIOs hate, idiosyncratic investments, committee meetings that foster long-term thinking, evolution of a farm team of managers, risk-taking in investing and life, and what to do when you turn 50 years old.

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Aug 17, 2020
Diversity, Equity & Inclusion 1: Jacob Walthour – A Blueprint for Diversity (Capital Allocators, EP.151)
01:07:57

Jake Walthour is the Co-Founder and CEO of Blueprint Capital Advisors, an alternative investment manager that advises, sources, and oversees portfolios of managers on behalf of institutional clients. Jake launched Blueprint after two decades of experience on Wall Street, including senior roles at investment consultants Aksia and Cliffwater, and at investment managers Cowen, Citadel, Moore Capital, and Morgan Stanley Asset Management. Black Enterprise Magazine recognized him as one of the Most Influence Blacks on Wall Street.

Our conversation discusses Jake’s path through investment banking to investment management, lessons from top alternative managers, and the business at Blueprint. Along the way, we address examples of structural and unconscious racial bias on Wall Street, points of sensitivity for Black professionals, and Blueprint’s current lawsuit alleging racial discrimination. Jake’s experience sheds terrific insight into some of the subtle problems causing Diversity and Inclusion challenges in finance.

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Aug 10, 2020
Matthew Granade – Inside Data Science at Point72 (First Meeting, EP.22)
49:06

Matthew Granade is Chief Market Intelligence Officer at Point72 and the Managing Partner of Point72 Ventures. Matthew oversees all proprietary research and data efforts at the firm, manages several of the internal systematic strategies, leads early stage venture investing, and recently launched Hyperscale, a new strategy that invests in AI-driven startups and connects them with operating companies to build model-driven businesses. Before joining Point72, Matthew started his investment career at Bridgewater and later was a co-founder of Domino Data Lab, a business that develops systems-of-record for enterprise data science teams across industries.

Our conversation covers Matthew’s work optimizing the research process at Bridgewater, creating Domino Data, and leaving the company to join Point72. We turn to his tackling research and data science at Point72, blending the power of computers and humans, and overseeing Point72 ventures and Hyperscale.

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Aug 03, 2020
Randall Stutman - Admired Leadership (Capital Allocators, EP.150)
01:05:19

Randall Stutman is founder and co-head of the Leadership Practice at CRA. and the Admired Leadership Institute. Randall is probably the top executive coach that you’ve never heard of before. He’s spent 30 years coaching and learning about the behaviors and routines of extraordinary leaders. To give you a sense, he was worked in the White House and the Olympics, with something like 2,000 senior executives and 400 CEOs, and in our world, the most senior executives at JPMorgan, Goldman Sachs, Morgan Stanley, and Blackstone. Randall is also well known among the titans in the hedge fund community, where he’s worked with many of the industry’s leading funds. And he’s done all of this entirely by word of mouth referral.

Randall was one of the first people I asked to come on the show three years ago, and he respectfully declined – at that point in time not wanting share the uncovered behaviors that drive his work. A few months ago, he and his partners launched Admired Leadership, an online course with short videos of 100 behaviors repeated by the most talented CEOs. The course is extraordinary. It’s so ridiculously good that I started sharing a link to it in my email signature as a gift to those who don’t know about it.

Our conversation covers Randall’s path to coaching and the coaching process. We cover behaviors common among hedge fund managers, the admired leadership course, and examples across inspiring others, decision making, time management, and elevating performance. We close with Randall’s thoughts on behaviors that allocators can identify in their manager research.

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Jul 27, 2020
Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149)
01:00:02

Taimur Hyat is the Chief Operating Officer at PGIM, a $1.3 trillion asset manager across public equity and fixed income, private credit, real estate and alternative strategies. Alongside President and CEO, David Hunt, Taimur distills insights from across PGIM’s portfolio teams and shares long-term views on the investment implications of global megatrends annually. Their most recent Megatrends piece, After the Great Lockdown, is the subject of our conversation.

We cover Taimur’s lessons from academic research in economics, management consulting, and Lehman Brothers through the financial crisis, PGIM’s business, and the Megatrends series. We then turn to the latest Megatrends piece and discuss the impact of the pandemic on supply chains, inventory management, weightless firms, commercial and residential real estate, remote work, and purposeful firms. We close with a discussion of investment opportunities coming out of the pandemic.

If you’re as intrigued as I was, you can see all the previous Megatrends reports at pgim.com.

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Jul 20, 2020
Adam Fisher – Blending Global Macro and Real Estate at Commonwealth Asset Management (First Meeting, EP.21)
01:00:48

Adam Fisher is the CIO of Commonwealth Asset Management, which he founded as Commonwealth Opportunity Capital in 2008 and re-launched in 2019 after a two-year interlude Soros Fund Management. Commonwealth manages both a global macro hedge fund and private real estate assets with a thematic bent. In getting there, Adam traded his bar mitzvah money, attended law school, and started real estate investment companies in the U.S. and Asia.

Our conversation covers Adam’s self-taught trading, early stumbles in private equity, and a one-off encounter with Richard Rainwater that led to his creating his first business. From there, we touch on thematic real estate investing, hedging his investments leading into the financial crisis, and pivoting back to trading alongside real estate investing thereafter. We discuss the challenges of traditional global macro businesses, the benefits of investing in one-off big ideas, the synergies across real estate and macro investing, interest rates, and Adam’s outlook on the markets and industry.

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Jul 13, 2020
Sustainable Investing 10: Hiro Mizuno – Changing the Game (Capital Allocators, EP.148)
01:00:26

Hiro Mizuno is the recently departed Executive Managing Director and Chief Investment Officer of GPIF, Japan’s $1.5 trillion Government Pension Investment Fund, which is the largest pool of institutional capital in the world. In taking the seat five years ago, Hiro sought to change how large asset owners go about investing capital.

Our conversation covers his differentiated thought process across drivers of return, the home country bias, implementation of investing, and structural alignment with active managers. We then talk about the Universal Ownership concept, stewardship of passively managed assets, evaluation of manager effectiveness, ESG integration in fixed income, and the current carbon footprint for GPIF and therefore for the global economy.

Hiro has made a serious dent in how asset owners, index fund managers, and companies consider sustainable investing principles and was the perfect guest to complete this mini series, Sustainable Investing: The Next Frontier.

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Jul 09, 2020
Sustainable Investing 9: Reuben Munger – Private Capital Perspective (Capital Allocators, EP.147)
53:10

Reuben Munger is the Managing Partner of Vision Ridge Capital, a private investment firm with over $1 billion in assets that focuses on sustainable real assets. Reuben started Vision Ridge in 2008 after a decade of value investing experience at The Baupost Group.

Our conversation discusses Reuben’s path and his approach to sustainable real asset investing in the private markets. We talk about his time at Baupost, transition from broad public market investing to focused venture impact investing personally, and the creation of Vision Ridge alongside Jeremy Grantham and Capricorn Investment Group. We then discuss Vision Ridge’s flexible investment strategy, creative structuring, portfolio construction, opportunities in power and mobility, competitive dynamics, team, and outlook.

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Jul 06, 2020
Sustainable Investing 8: Lauren Taylor Wolfe – Activist Perspective (Capital Allocators, EP.146)
49:11

Lauren Taylor Wolfe is co-founder and Managing Partner of Impactive Capital, an activist hedge fund that engages with companies to drive long-term sustainable returns. Impactive employs a breadth of tools common to activist strategies, working with management teams on capital allocation, operational initiatives and capital structure, and adds material ESG improvements as a key component of the long-term future success of its portfolio companies.

Our conversation covers Lauren’s early interest in investing, her path to founding Impactive, and investment philosophy. We touch on Impactive’s four key investment criteria, examples of ESG activism in a hotel, an auto dealer, and a waste water business, evolution of interest in sustainability from management teams, the value of long duration capital, and perspectives for women in the industry.

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Jul 02, 2020
Sustainable Investing 7: Tony Davis – Hedge Fund Perspective at Inherent Group (Capital Allocators, EP.145)
54:16

Tony Davis is the CEO and Chief Investment Officer of Inherent Group, a value-oriented hedge fund that invests across the capital structure and uses ESG factors to source and underwrite its investments. Prior to founding Inherent Group, Tony was co-founder, President and portfolio manager at Anchorage Capital, a multi-billion dollar hedge fund.

Our conversation covers Tony’s early career experience at Goldman Sachs, key lessons from twenty years at Anchorage Capital, his retirement and philanthropic work in impact investing that led to the formation of Inherent Group.  We then turn to his activities at Inherent, including his rationale for taking in outside capital, sourcing longs and shorts, incorporating E, S and G factors in underwriting, quantifying sustainability, constructing the portfolio, and engaging with portfolio companies.  We close with a few investment examples, potential opportunities in distressed debt, and tips for allocators researching ESG managers.

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Jun 29, 2020
Sustainable Investing 6: Richard Lawrence - ESG Integration at Overlook (Capital Allocators, EP.144)
45:48

Richard Lawrence is the Executive Chairman of Overlook Investments, a leading value-oriented investment firm in Asia that he founded in 1991. Richard was an early guest on the show telling Overlook’s story, and that conversation follows in the feed.

Over the years, Richard grew passionate about the environment and ESG principles, and quietly integrated them in Overlook’s research process starting a decade ago. Our conversation covers the ESG integration lens at Overlook. We discuss stories of early governance challenges in Asia and the development of modern finance technology, social issues related to the quality of businesses, and environmental considerations of excluding industries, reporting challenges, principles, and tradeoffs. We close with Richard’s philanthropic work on climate change and in the closing questions, his take on US-China relations.

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Jun 25, 2020
[REPLAY] Richard Lawrence – Compounding in Asia (Capital Allocators, EP.21)
59:06

Richard Lawrence is the Chairman and Executive Director of The Overlook Group, a $5 billion investment organization focused on Asian equities that Richard founded in 1991. Over the past quarter-century, Overlook developed and implemented disciplined investment and business philosophies that interconnected to drive extraordinary results for its partners. Overlook has compounded capital at an annualized 14.5%, outperforming its benchmark by an insane 9% per annum. But that’s not all, as Richard would proudly tell you himself, the capital weighted return of the average investor in Overlook is nearly identical to the time weighted return over any period of time – a rare feat in the money management industry. Indeed, today’s asset base is the result of $4 billion of investment gains on top of $1 billion in contributed capital.

Our conversation starts with a look at investing in Asia in Overlook’s early days and walks through the particulars of the approach Richard takes to investing and running his business, including attractive investment attributes, management integrity, portfolio construction, selling discipline, and China Yangtze Power - the only stock the firm supersized in an SPV in its history. We discuss Overlook’s long-held cap on subscriptions and periodic reductions in its management fee, two business philosophies that Richard believes have been key drivers of Overlook’s success.
If you enjoyed my conversation with Tom Russo, you won’t want to miss this one with Richard.

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Jun 25, 2020
Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143)
56:44

David Blood is co-founder and Senior Partner of Generation Investment Management, a pioneering sustainable investing firm he started with seven partners in 2004, including Vice President Al Gore.

Our conversation covers the importance of culture in organizations, building businesses at Goldman Sachs, and David’s fortuitous introduction to Al Gore. We turn to Generation’s investment philosophy, principles, and investment process, including its focus on desirable industries, great businesses, and integration of ESG factors in research. We close by looking out at the next 5-10 years and addressing the urgency of the initiatives to improve the climate and social injustice.

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Jun 22, 2020
Sustainable Investing 4: Emanuel Citron – Sourcing Sustainable Managers (Capital Allocators, EP.142)
47:23

Manny Citron is Managing Partner at Volery Capital, a private equity firm he co-founded in 2017 to invest in asset management businesses and companies that generate positive social and environmental impact. Manny and his team have canvassed a landscape of over one thousand sustainable investing focused funds and shares a glimpse of what that research discovered.

We discuss Manny’s path to founding Volery, mapping the universe of impact managers, identifying attractive manager characteristics and thematic opportunities, conducting due diligence, measuring impact, and adding value to portfolio companies. We then turn to investor interest in the space, risks, Volery’s backing of Renewable Resources Group, and the future of impact investing.

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Jun 18, 2020
Sustainable Investing 3: Bob Litterman – Pricing Climate Risk (Capital Allocators, EP.141)
54:06



Bob Litterman is a founding partner and Chairman of the Risk Committee at Kepos Capital. Prior to Kepos, he spent 23 years at Goldman Sachs, where his roles included heading the firm-wide risk function and the Quantitative Investment Strategies Group at GSAM. Bob was one of the original inductees into Risk Magazine’s Risk Management Hall of Fame and is well known for co-developing the Black-Litterman Global Asset Allocation model with the late Fisher Black.

After leaving Goldman in 2009, he became fascinated by the risk management problem posed by climate change, and that is the focus of this 3rd episode in Sustainable Investing, the Next Frontier.

Our conversation covers Bob’s background in quantitative research, applying risk management principles to address climate change, modeling the price of carbon emissions, and concluding that we must slam on the brakes immediately to address global warming. We then turn to his work on policy to implement his conviction and his activity in the public markets across the World Wildlife Fund’s stranded asset swap and research at Kepos to play a rapid adoption theme from the lens of a quant investor.

Jun 15, 2020
Sustainable Investing 2: Liqian Ma – Allocator Perspective (Capital Allocators, EP.140)
01:06:54

Liqian Ma is the Head of Impact Investing Research at Cambridge Associates. Liqian developed an early interest in the climate growing up in a coal-dependent city in China. He began focusing on sustainable investing over a decade ago and leads Cambridge Associates work with its 150 clients focused on the space.

Our conversation provides an allocator’s overview of sustainable investing. We start with Liqian’s path and turn to how interested investors go about creating and implementing sustainable investment strategies. Along the way, we touch on manager selection, portfolio integration, investment opportunities and risks, and the implementation of sustainable investing concepts across the rest of Cambridge Associates activities.

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Jun 11, 2020
Sustainable Investing 1: Wendy Cromwell – The $170 Trillion Opportunity (Capital Allocators, EP.139)
01:10:18

Wendy Cromwell is Vice-Chair of Wellington Management and the Director of Sustainable Investment at the firm. She joined Wellington out of business school 25 years ago and has been there ever since.

A year and a half ago, Wendy also became one of two asset managers on the 10 person Board of the UN PRI, or United Nations-supported Principles for Responsible Investment. PRI is the world’s leading proponent of responsible investment, canvassing 2,500 signatories globally across asset owners, asset managers and service providers. Their mission is to understand the investment implications of ESG factors and support the incorporation of those factors globally.

Our conversation discusses Wendy’s path within Wellington, the lingo of sustainable investment, market inefficiencies for an active manager in the space, implementation of sustainable investing across a large asset management firm, growth of interest in sustainable investing, integration of scientific climate research, rapidly rising interest and research in social considerations in companies, and developments on the come with carbon footprint, divestment, and regulation.

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Jun 08, 2020
[REPLAY] Jean Hynes – Inside Wellington Management (Capital Allocators, EP.82)
52:50

Jean Hynes is a Managing Partner at Wellington Management, where she one of three people responsible for the governance of Wellington’s storied partnership.  Jean also is the sector leader of the firm’s healthcare team that manages the Vanguard Healthcare Fund, three global healthcare hedge funds, and global healthcare sector portfolios. She joined Wellington after graduating from college in 1991 and has been at the firm ever since. 

Our conversation covers Wellington’s humanistic culture, its evolution from a U.S. value shop to a global federation of boutiques, talent recruitment, the successful merit-based partnership structure, and the Wellington of the future.  Along the way we touch on Jean’s progression from an administrative assistant to a Managing Partner, the healthcare team’s investment philosophy and process, a day in her work life, and topical issues of active vs. passive, public and private investing, and large vs. small firms.

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Jun 08, 2020
Clarke Futch – Healthcare Royalty Partners (First Meeting, EP.20)
58:04

Clarke Futch is a co-founder, Managing Partner and Chairman of the Investment Committee at Healthcare Royalty Partners, an investment firm that purchases royalties and uses debt-like instruments to generate non-correlated return streams from biopharmaceutical assets. The firm is a leader in the space and has invested over $3 billion in 70 investments since its founding 14 years ago.

Our conversation covers Clarke’s background in investment banking and path to pharmaceutical royalties in the earliest days of the business. We discuss the nature of the opportunity, the reason why it exists, and how it works, and the team in place at Healthcare Royalty Partners that makes it happen.

We then turn to the investment process, covering sourcing, screening criteria, due diligence, deal structure, portfolio construction, competitive landscape, risks, and opportunities in the current market.

Clarke offers an inside look at one of the more intriguing modern investment strategies with great insight and examples along the way.

Jun 01, 2020
Brett Jefferson – Inefficiencies in Structured Credit at Hildene Capital Management (First Meeting, EP.19)
01:12:51

Brett Jefferson is the President and Co-CIO of Hildene Capital Management, an asset manager he founded in 2008 that oversees $9 billion in structured credit strategies and was listed in Barron’s Top 100 Annual Hedge Funds ranking for six consecutive years.

Our conversation starts with Brett’s education, in which he majored in lacrosse and minored in school. We hit on the early days of CDOs, putting his knowledge to work at Marathon Asset Management, taking a break, and then starting Hildene in the aftermath of the GFC. We then turn to Hildene’s success in the inefficient market for bank trust preferred securities, its evolution from a founder-driven firm, success factors in the business, current opportunities and risks in CLOs, and Brett’s involvement in the Premier Lacrosse League founded by Paul Rabil, who discussed the league on Episode 95 that follows in the feed.

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May 25, 2020
[REPLAY] Paul Rabil - Lacrosse and Entrepreneurship (Capital Allocators, EP.95)
58:53

Paul Rabil is the co-founder and CEO of the Premier Lacrosse League or PLL, a new tour-based league of the top professional lacrosse players in the world that will debut on June 1st.  Paul was the #1 player in the draft for Major League Lacrosse in 2008 after winning a national championship at Johns Hopkins.  He is a 7-time Champion and 3-time MVP.  Alongside his on-the-field accomplishments, Paul is a passionate entrepreneur who was the first lacrosse player to earn $1 million in endorsements.

Our conversation covers Paul’s early interest in lacrosse, developing a social media fan following, the importance of sponsorship revenue for athletes, and the leverage athletes have over teams. We then turn to the formation of the PLL, including Paul’s attempt to purchase the MLL with a search fund, his shift in business model from private equity to venture capital, the tour-based model, operations, distribution, and the on-field product.  We close by discussing Suiting Up, Paul’s podcast where he interviews top professional athletes and coaches, and the Paul Rabil Foundation, which brings lacrosse to schools for children with learning differences.

Paul is as savvy off-the-field as his is skilled on it, and as the PLL takes off as I suspect it will, this conversation may well mark an important moment in time for this fascinating start-up league.

Tune in to NBC to watch the first games from Gillette Stadium in Foxboro, Massachusetts on the first weekend in June.

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May 25, 2020
Daylian Cain – Master Class in Negotiations (Capital Allocators, EP.138)
01:04:35

Daylian Cain is a Senior Lecturer in Negotiations and Ethics at the Yale University School of Management. His research focuses on “judgment and decision-making” and “behavioral business ethics.” In other words, he studies the reasons why smart people do dumb things. Daylian teaches a course in negotiations and we turned to that for the subject of this show.

Our conversation covers tactics for successful negotiating, things like preparing, deciding whether to ‘go first’, playing a weaker hand, asking for more, and gaining value from walking away. We close with current research in the field and in a closing question, tips on delivering effective constructive criticism.

This was the last conversation I recorded before the onset of shelter-in-place, and I’ve been chomping at the bit to put it out ever since.

Daylian refers to an online course he taught in April, and that sold out faster than he ever imagined. He’s put together a new online training program called Negotiating in Difficult Times that I’m excited to take.

The presale is now available, which you can access at negotiationmindgames.com.

He’s kindly offered a 20% discount to listeners of the show – just use the coupon code “allocators” when you sign up.

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May 18, 2020
Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137)
59:10

Larry Siegel is the Gary Brinson director of research at the CFA Institute Research Foundation and an independent consultant, writer and speaker. Before his “retirement”, he spent fifteen years as the head of research at the Ford Foundation and a dozen before that at Ibbotson Associates.

Our conversation starts with lessons Larry learned in his time as an allocator and turns to his recent paper describing the 10 Myths of investing, an allocator’s version of Byron Wien’s annual surprises. After walking through each, we touch on his recently released book “Fewer, Richer, Greener,” which offers a case for long-term prosperity and growth, even amidst the unexpectedly challenging times we’re currently facing.

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May 11, 2020
Daniel Adamson – Innovation from Asset Giants at Capital Constellation (EP.136)
01:03:56

Daniel Adamson is a Senior Managing Director at Wafra and the President of Capital Constellation, a joint venture between mega asset owners in Europe, North America and the Middle East that invests in the next generation of private equity managers.

Our conversation focuses on this innovative joint venture and how a group of large asset owners came together to scale their resources.  We touch on a host of issues relating to the formation and implementation of the business, the many possibilities that are arising from this novel setup, and the serious challenges in bringing it to fruition.  I suspect we’ll see more efforts by asset owners to disintermediate pieces of the investment value chain, although as you’ll hear, it’s a lot easier said than done.

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May 04, 2020
Tim McCusker – Advising Through a Crisis at NEPC (Capital Allocators, EP.135)
20:13

Tim McCusker is the Chief Investment Officer at consulting powerhouse NEPC, who serves 350 clients with total assets over $1.2 trillion. Tim joined me for the last of our special updates from the field during this unique and challenging period.

Our conversation touches on the separation of short-term and long-term strategies, different responses across hospitals, public funds, corporate funds and private clients, opportunities in credit, the state of private equity, due diligence conducted virtually, and long-lasting changes in workflow.

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Apr 30, 2020
[REPLAY] Tim McCusker – Consistency and Creativity as CIO at NEPC (Capital Allocators, EP. 80)
57:53

Tim McCusker is the Chief Investment Officer at NEPC, an investment consultant that advises on $1 trillion in assets on behalf of 400 institutional clients.  Tim oversees NEPC’s 50-person investment research team and leads investment strategy for the firm.  In each of 2014, 2015, and 2016, CIO Magazine recognized Tim as one of the world’s most influential consultants.

Our conversation covers NEPC’s client centric model, meeting the needs of a range of client types, forming and implementing capital market views, researching managers, sourcing in public and private assets, allocating to scarce capacity managers, and forming and leaning into the megatrends of artificial intelligence, income inequality, demographics, and shifting currency regimes.

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Apr 30, 2020
Michael Mervosh - Investing in Yourself During a Crisis (Capital Allocators, EP.134)
31:59

Michael Mervosh, clinical psychologist and founder of the Hero’s Journey Foundation. Michael joined me to talk about how people are managing their way through the crisis.

Our conversation covers the unexpected resonance of shelter-in-place, facing ordeals, valuing connection, and discovering creativity. We close with a simple tip to participate in something bigger than yourself, and a poetic word about kindness.

If you’d like to learn more about Michael and his work, in which I’ve been an active participant, check out herosjourneyfoundation.org/introduction, and have a listen to our previous conversation that follows on the feed.

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Apr 27, 2020
[REPLAY] Michael Mervosh – Invest in Yourself (Capital Allocators, EP.68)
01:12:05

Both times I was interviewed (by Khe Hy and Patrick O'Shaughnessy) and shared those conversations on Capital Allocators, I made reference to a special experience I’ve participated in for the last five years called the Hero’s Journey. The weeklong journey in the mountains of West Virginia provides a setting and platform for each participant to access their best self.

Michael Mervosh is the deeply insightful Executive Director of the Hero’s Journey Foundation, an organization he created that provides experiential learning opportunities for human development and transformation based on Joseph Campbell’s mythic hero’s journey. He has a passion and indescribable skill in enlivening the developmental process and fostering vitality, meaning and well-being in individuals, groups, and organizations. When not running programs or training others, Michael practices psychotherapy at the Nuin Center in Pittsburgh, where he has professionally resided for 25 years.

Our conversation took place in the mountains towards the end of this year’s journey and is quite different from those you may be accustomed to hearing on the show. We cover Michael’s path to creating the experience, the myth of the Hero, lessons in how the world actually works, the call to adventure, perfectionism, uncertainty, fear, and poetry.

If you’re intrigued, I strongly encourage you to check out herosjourneyfoundation.org. Spaces are limited for the annual summer Men’s and Women’s Journeys, so sign up for next year’s trip at the website or reach out to me.  I intend to be back on the mountain next year and hope to see you there.

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Book Links

Phillip Shepherd, New Self, New World: Recovering Our Senses in the Twenty-First Century

Joseph Campbell, The Hero with a Thousand Faces

Jack Kornfeld, After the Ecstasy, the Laundry: How the Heart Grows Wise on the Spiritual Path

Joseph Jastrab, Sacred Manhood Sacred Earth: A Vision Quest into the Wilderness of a Man's Heart

Apr 27, 2020
Andrew Golden – Navigating Princeton’s Endowment Through (Another) Crisis (Capital Allocators, EP.133)
31:27

Andy Golden is the President of PRINCO, where he has overseen the management of Princeton University’s $25 billion endowment since 1995. He was an early guest on the show and came back to discuss steering the ship in this tricky time.

Our conversation covers communicating remotely, adding value incrementally in volatile markets, managing time, considering liquidity, and playing offense.

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Apr 23, 2020
[REPLAY] Andrew Golden - Princeton University's Chief Investing Tiger (Capital Allocators, EP.13)
01:12:42

After getting some great feedback from the replay of my conversation with Scott Malpass, I am going to repeat some gems from the past every few months. This week I picked out my conversation with Andy Golden, the venerable head of Princeton’s 24 billion dollar endowment. It’s another master class in endowment management from a seasoned veteran.

Andy Golden is the President of Princeton University’s Investment Management Company (PRINCO). Having grown from $3B at the time of his arrival in 1995 to $22.5B today, PRINCO has been among the highest performing endowments in the world. Andy came to PRINCO from Duke Management Company, where he was an Investment Director, and received his formative training in the business working for David Swensen at the Yale University Investments Office. Andy currently serves on the fund Advisory Boards of several well-known private equity and venture capital managers, including Bain Capital, General Catalyst Partners, and Greylock Partners. He was a founding member of the Investors’ Committee of the President’s Working Group on Financial Markets and serves as a Trustee of the Princeton Area Community Foundation and Rutgers Preparatory School. Andy holds a B.A. in Philosophy from Duke University and an M.P.P.M. from the Yale School of Management.

Our conversation discusses Princeton’s endowment two decades ago and today, including its strategic advantages as an institution, shifts in thinking about asset allocation, decision making, team development, and partnership with managers. Andy’s long tenure in his seat, insight, and wisdom provides a treasure trove of information about how a top endowment manager practices his craft, and his subtle wit always keeps things light.

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Apr 23, 2020
Annie Duke – Decision Making in a Crisis (Capital Allocators, EP.132)
38:08

My friend Brian Portnoy recently put together a Zoom call where he and Jonathan Novy interviewed Annie Duke about decision making in the crisis.

Brian was a long-time fund investor and has authored two books in the field of behavioral finance. He and I discussed his second book, The Geometry of Wealth, on Episode 57 that follows on the feed.  He is currently a financial wellness consultant for advisors, corporations, and industry associations.

Jonathan is a financial advisor at Ritholtz Wealth Management, a prominent and fast-growing RIA.

And Annie is a regular on the show.  She’s a poker legend, decision-making theorist and best selling author.  And, she’s releasing a new book later this year entitled How To Decide, but that’s subject matter for another show down the road

What follows is the segment of their call pertaining to the crisis.  They discuss the difference between complicated and complex decisions, the tradeoff between time and certainty when making decisions, the process of preparing clients to make good investment decisions today, and decision-making education for children.

Please enjoy Brian and Jonathan’s conversation with Annie Duke.

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Apr 20, 2020
[REPLAY] Annie Duke - Improving Decision Making [Capital Allocators, EP.39]
01:00:16

Annie Duke is a renown public speaker and decision strategist. For two decades, she was one of the top poker players in the world, including winning a World Series of Poker bracelet and the $2 million winner-take-all WSOP Tournament of Champions. Her study of the science of smart decision-making began with a National Science Foundation Fellowship, which she used study Cognitive Psychology at the University of Pennsylvania.  Among her charity work and television appearances, Annie was a runner-up to Joan Rivers on Celebrity Apprentice, during which she raised $700,000 for Refugees International. She is a natural teacher and storyteller with an active mind that constantly searches for accurate truth.

I highly recommend Annie’s new book, Thinking in Bets, which comes out this week. In her life after poker, she is a featured speaker, writes a newsletter and a blog, and advises companies on improving their decision-making process. Have a look at her website, annieduke.com, for more information.

Our conversation discusses Annie’s path from an Ivy League education to professional poker, the nature of a bet, how we form beliefs, why we make bad decisions, and what we can do to improve our decision-making process. Towards the end, we also talk about bankroll management, poker faces, and advice she would give the President on how to make better decisions.

 

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Show Notes

2:30 – Annie’s path through the poker world 

6:05 – Her transition into teaching and the lesson of tilt 

11:57 – How do you apply the concepts of betting and gambling broadly to decision making 

13:35 – What is it about the science of the brain that prevents us from making good decisions

            14:17 – Stumbling on Happiness

            14:19 – Dan Gilbert Ted Talk

            15:44 – Kluge: The Haphazard Evolution of the Human Mind 

18:50 – Motivated reasoning 

21:10 – Is there anything we can do to fix our decision-making biases (wanna bet) 

28:05 – Other devices to improve our decision-making 

32:29 – Value of a decision group

            33:16 – Superforecasting: The Art and Science of Prediction

34:00 – Mertonian Norms, CUDOS 

40:27 – Mental time travel (Marty McFly from Back to the Future)

            42:55 – Jerry Seinfeld – Night Guy vs Morning Guy 

44:55 – Applying these tools and the parallels between poker and investing 

48:59 – Reading poker faces

            49:21 – Joe Navarro books

            49:34 – Joe Navarro Psychology Today 

52:50 – What advice would Annie give President Trump in terms of improving his decision-making process 

53:52 – Favorite sports moment 

55:45 – What teaching from Annie’s parents has most stayed with her 

56:08 – What information does Annie read that a lot of people might not know about that is valuable

            56:18 – The Greatest Show on Earth: The Evidence for Evolution

            56:19 – Why Evolution Is True

56:58 – What life lesson does Annie wish she knew earlier in life

58:28 – Looking ahead, what advice would Annie give herself today from a ripe old age

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Apr 20, 2020
[REPLAY] Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57)
01:00:26

Brian Portnoy Brian is currently the Director of Investment Education at $100B investment solutions provider Virtus Investment Partners, where he strives to simplify the complex world of money in an effort to help investors make better decisions and lead a joyful life. For the past two decades, he has held senior investment, research, and strategy roles in the hedge fund and mutual fund industries at Chicago Equity Partners, Mesirow Financial, and Morningstar. 

Brian is the author of “The Investor’s Paradox,” a book about manager selection rooted in choice theory.  His second book, “The Geometry of Wealth” hits electronic and physical bookstores this week.

Our conversation covers Brian’s experience in manager research and lessons learned, choice theory and managing expectations, differences between institutional investment and private wealth management, distinction between seeking wealth and trying to get rich, his terrific new book, and why volatility is risk. Brian’s insightful take on investing and his journey from the complex to the simple is full of investment nuggets of gold.

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Apr 20, 2020
[REPLAY] Annie Duke – Thinking More in Bets (Capital Allocators, EP.76)
47:26

My guest on today’s show once again is Annie Duke, decision-making expert, former world-famous poker player, and author of the best seller, Thinking in Bets.  I had a chance to interview Annie at The Investment Institute’s Fall Forum in Chapel Hill, North Carolina and the live interview follows. Special thanks to Andrea Szigethy and Donna Holly, founders of the Institute, for having Annie and me down for their terrific event.

Our conversation covers the challenge of separating signal from noise in making decisions, the formation and confirmation of beliefs, forming decision groups, communicating with teams, and mistakes Annie’s advisory clients have made after reading her book.  We close with some questions from the audience and end with two great poker stories of how Annie approached being a woman in the male-dominated poker world.  Annie’s irrepressible brain was on display this time around, covering a few of the same ideas from our last conversation and some new ones with different anecdotes along the way.

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Apr 20, 2020
Sandra Robertson – Calibrating Oxford’s Portfolio in a Crisis (Capital Allocators, EP.131)
14:31

Sandra Robertson, OU Endowment Management’s esteemed CEO and CIO, rejoined me for an update on how she and her team have been navigating the markets.

It’s quick and chock full of wisdom, including her priorities, calibration of the portfolio, assessment of opportunities, and shopping list in a time that she renders too late to sell and too early to buy.

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Apr 16, 2020
Sandra Robertson – Oxford’s Queen of Endowment Management (Capital Allocators, EP.130)
01:01:55

Sandra Robertson is the CEO and Chief Investment Officer of OU Endowment Management Ltd, a subsidiary company of the University of Oxford that manages the 4 billion GBP Oxford Endowment Fund. Simply put, she is one of the most respected endowment managers in the world.

Our conversation covers Sandra’s start at the Wellcome Trust in the mid-90s, her arrival at Oxford in 2007, Oxford’s investing lens across inefficiencies, talent and themes, decision making, behavior and actions in volatile markets, private equity fees and alignment, and ESG.

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Apr 13, 2020
Steve Nelson – Assisting Private Equity Allocators Through Turbulent Times at ILPA (Capital Allocators, EP.129)
30:11

Steve Nelson is CEO of the Institutional Limited Partners Association or ILPA, a non-profit that engages, empowers and connects limited partners (LPs) to maximize their performance. It has over 500 member institutions that represent $2 trillion in private assets under management or approximately 50% of the global institutional market.  ILPA is the only global organization dedicated exclusively to advancing the interests of LPs and their beneficiaries through best-in-class education, research, advocacy, and events.

Our conversation covers Steve’s twenty years at Cambridge Associates leading to his time at ILPA, the mission of ILPA and the ways it achieves that mission.  We then turn to the most important needs of private asset allocators before this crisis, their focus during this challenging period of time, and the current status of capital calls, position marks, subscription lines, communication between managers and clients, impacting investing, and the outlook for ILPA’s efforts going forward.

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Apr 09, 2020
Eric Peters – Trading and Evolution at One River (First Meeting, EP.18)
49:50

Eric Peters is the founder and CIO One River Asset Management, an investment manager dedicated to delivering high conviction absolute-return strategies, where each individual strategy comes out of the team’s expertise in thematic macro, volatility, systematic, and inflation trading/investing. Eric has been a long-time trader and writes a widely dispersed email called Weekend Notes, in which he shares macro insights through colorful anecdotes.

Our conversation starts with Eric’s early exposure to trading, macro blow-ups, and the formation and activities of One River. We then turn to the current environment and get his sobering thoughts on what has transpired and what the turmoil will mean for private equity and asset allocation going forward.

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Apr 06, 2020
Mark Baumgartner – Allocating in a Crisis at IAS (Capital Allocators, EP.128)
26:16

Mark Baumgartner is the CIO of the Institute for Advanced Study, where he oversees a $1 billion portfolio. I reached out to Mark in this rapidly changing environment to get his take on how he’s navigating these rough seas. He was kind to spare a few moments to share his thoughts.

Our conversation covers Mark’s framework for approaching this crisis, communicating with his team, orienting to the environment, communicating with managers, filtering and prioritizing the opportunity set, and taking action.

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Apr 02, 2020
[REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77)
56:17

Mark Baumgartner is the CIO of the Institute for Advance Study, where he oversees a $1 billion portfolio that seeks to achieve just median returns but with significantly less risk. Prior to joining IAS, Mark had stints at the Ford Foundation overseeing risk, at Morgan Stanley’s Alternative Investment Partners, at both quantitative and qualitative hedge funds, and as a management consultant. Oh, and he studied to be a rocket scientist before that.

Our conversation covers Mark’s path to IAS and the principles of luck, risk, and uncertainty on that path. We discuss the IAS portfolio, one catered to achieve a low risk profile, and how he has stayed the course when that structure hasn’t been rewarded by markets. We talk about identifying managers that fit into his approach and different metrics of defining risk at both the manager and portfolio levels. 

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Apr 02, 2020
[REPLAY] Jen Prosek – Branding an Asset Management Firm (Capital Allocators, EP.81)
56:30

Jennifer Prosek is the founder and CEO of Prosek Partners, a leading international public relations and financial communications consultancy with offices in New York, London, Los Angeles and Connecticut. Prosek Partners ranks among the top 10 independent public relations firms in the U.S., and among the top financial communications consultancies. The firm has been listed as an Inc. 5000 Fastest Growing Company for nine years running. Jen is also a two-time author.

Our conversation covers the foibles of professional marketing in asset management, building a brand, measuring a successful branding effort, managing the story of weak performance, and describing the differences in hedge fund and private equity branding. We then turn to some of Jen’s fascinating observations learned from her experience, including raising entrepreneurial children, working with millennials and Gen Z staffers, and implementing the principals of ‘Just Ask’, behave with humanity, and not thinking in black and white. 

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Apr 02, 2020
Ben Inker – Value Investing at GMO (First Meeting, EP.17)
01:22:51

Ben Inker is the head of the Asset Allocation team at GMO, a $60 billion asset manager known for its value bias under founder Jeremy Grantham.  Ben joined GMO right out of college nearly thirty years ago and has been there ever since.

Our conversation starts with Ben’s early investment lessons from renown economics professors at Yale and how that led him to GMO upon graduation.  We discuss his framework for thinking about investing and the struggles of value investing over the last decade, including the impact of global dominators, technology, and interest rates.  We then turn to the case for value today, the challenges of value going forward, and the characteristics Ben sees in allocators’ successes and mistakes. Lastly, our conversation took place a few weeks ago, but the world’s changed a lot since then. I reached back out to Ben late last week to get his current thoughts on the market.

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Mar 30, 2020
Michael Mauboussin – Consilient Observations in a Crisis (Capital Allocators, EP.127)
45:00

Michael Mauboussin is the Head of Consilient Research at Counterpoint Global and fortunately, a regular guest on the show. Michael is an astute researcher of behavior, decision-making and complex systems, and I reached out to him to get his reasoned temperature on the current climate.

We discussed frameworks for making a good decision in turbulent markets, monitoring stress, assessing valuation, and determining where to look for opportunities. We then touch on Michael’s current research and detour to our inevitable topic of sports.

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Mar 23, 2020
[REPLAY] Michael Mauboussin – Who’s on the Other Side (Capital Allocators, EP.99)
57:10

Michael Mauboussin is the well-known investment strategist currently plying his wares at Blue Mountain Capital. He joined me for the second time to discuss his new research entitled “Who’s on the Other Side?”

Our conversation dives into the work, discussing how investors can focus on process over outcome, the four types of investment edges, behavioral traits of single and group portfolio managers, portfolio position weighting, informational edges available from paying attention and complexity, the principal-agent issues that create cycles and opportunities during dislocations, the growth of private markets, and implementing his research. We close with a discussion of data analytics in the game of lacrosse.

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Mar 23, 2020
[REPLAY] Michael Mauboussin – Active Challenges, Rational Decisions and Team Dynamics (Capital Allocators, EP.36)
01:11:25

Michael Mauboussin currently is the Director of Research at BlueMountain Capital, a multi-billion dollar hedge fund and asset manager. He spent the majority of his professional career thinking and writing about decision making, behavior and complex systems, with long stints at Credit Suisse and nearly a decade alongside Bill Miller at Legg Mason. Michael has been an Adjust Professor at Columbia Business School for 24 years.

Our conversation covers Michael’s early career, the paradox of skill, academic research more favorable to active management, decision-making, optimal size and composition of teams, unsettling features in the market, data analysis in sports, career risk, the Santa Fe Institute, and Michael’s new research on the horizon.

Every time I speak to Michael I come away thinking better and feeling smarter, and this time was no exception.

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Mar 23, 2020
James Aitken – Systemic Risk in a Crisis (Capital Allocators, EP.126)
41:31

In the midst of this unprecedented time, I thought it would be helpful to hear from James Aitken, the extraordinary macro strategist who specializes in understanding the functioning of the financial system.

I reached out to James with one key question in mind – are we facing a systemic risk outside of what we see happening to the economy and markets.  That conversation follows.

Please stay safe and healthy.

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Mar 18, 2020
Greg Fleming – Building and Running Rockefeller Capital Management (Capital Allocators, EP.125)
01:03:30

Greg Fleming is the founding CEO of Rockefeller Capital Management, where he took the helm of a storied family office in 2018 to build and serve other families and institutions as well. Prior to taking on this challenge, Greg was the President of Morgan Stanley Wealth Management and Morgan Stanley Investment Management and before that spent seventeen years at Merrill Lynch, culminating in serving as President and Chief Operating Officer from 2007-2009.

Our conversation walks through some of Greg’s career path, including highlights from the financial crisis, and the Rockefeller Capital Management business and strategy.  We hit on ESG investing, serving clients, and leadership. And I couldn’t help asking Greg about his relationship with Yankee great Derek Jeter.

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Mar 16, 2020
Christie Hamilton – Tweeting on Allocation at Children’s Health (Capital Allocators, EP.124)
53:16

Christie Hamilton is the Head of Investments at the $2 billion Children’s Health Medical Center of Dallas.  She’s perhaps the most well-followed institutional allocator on Twitter, under the handle @ROIChristie.

Our conversation covers Christie’s career path, experience with Twitter, and the investment process at Children’s, covering the mission, strategy, manager selection, opportunities and risks.  In our closing questions, you won’t want to miss Christie’s list of investment pet peeves and life lessons learned.

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Mar 09, 2020
Mike Mauzé - Escape Velocity for CPG Brands at VMG Partners (First Meeting, EP.16)
49:59

Mike Mauzé is the General Partner at VMG Partners, which is one of those little known, closed capacity private equity firms that a small number of top institutions have loyally invested with since its founding 15 years ago.  VMG manages $2 billion focused solely on building iconic consumer brands and has an astonishing record of delivering a 45% IRR to its LPs since inception.

Our conversation covers Mike’s path from banking to private equity investing, VMG’s thesis in the CPG space, its investment criteria, sourcing, work with portfolio companies, assessment of brands and exit strategy.  We then discuss the firm’s decision-making process, how it built a business with a core group of loyal LPs, and the globalization of brands and work in China.

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Mar 02, 2020
Doug Phillips – Middle of the Fairway at the University of Rochester (Capital Allocators, EP.123)
58:56

Doug Phillips is the CIO of the University of Rochester, where he has overseen the school’s $2.6 billion endowment for twenty years.  Doug’s two-decade tenure at Rochester constitutes only the back half of his work in the endowment world, as he previously managed Williams College’s endowment for fourteen years and started his career in the early eighties at Princeton.

Our conversation covers the history of Rochester’s endowment, the University’s broad stakeholders, asset allocation, manager sourcing, research process, investment committee, assessment of past decisions, and efforts to be a good partner to managers.  We then dive into each asset class, touching on traditional equity, hedge funds, real assets, private equity and venture capital.

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Feb 24, 2020
Dan Rasmussen – Private Equity Risk and Public Equity Opportunity at Verdad Advisers (First Meeting, EP.15)
01:02:11

Dan Rasmussen is the Founder and portfolio manager at Verdad Advisers, which he launched in 2014 to replicate the historical success of private equity in the public markets.  He’s an outspoken critic of the market’s enthusiasm for private equity, resulting from research he conducted in the business while working at Bain Capital.

Our conversation covers Dan’s early education in the Socratic method, research into why private equity works, current risk in the private equity and private credit markets, and the launch of Verdad to find private equity-like outcomes in the public markets.  We then turn to Verdad, including key lessons upon shifting to public equity investing, stock screens, portfolio construction, position sizing and the competitive advantage of capacity constraints.  Lastly, we touch on Verdad’s written research and preparing a portfolio for a recession.

If you like Dan’s thought process, you can sign up to receive his team’s weekly research at verdadcap.com/strategy.

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Feb 17, 2020
SPECIAL ANNOUNCEMENT – CAPITAL ALLOCATORS LIVE!
01:16

I’m excited to announce Capital Allocators LIVE!, a live event that will take place in NYC on June 18th.

I’ll host a series of live podcasts with Michael Mauboussin, Morgan Housel, Andre Perold, Atomic Habits author James Clear, and Annie Duke.

You can hear us live and sit alongside a bunch of other past guests on the show as well.

Founder’s Class Tickets and Golden Tickets are now available.

Founder’s Class Members will receive a discounted price for the event and the same price for all future LIVE! events.  There are just 50 Founder’s Class Memberships available for those early birds catching the worm.

Golden Tickets are also available, and those include the event and a special dinner afterwards with Annie, James, Morgan and me for those 25 Golden Ticket holders.

Hop onto capitalallocatorspodcast.com and buy your tickets today!

Feb 10, 2020
James Aitken – Tour Around the World from a Small Island (Capital Allocators, EP.122)
01:06:14

James Aitken is the Founder and Managing Partner of Aitken Advisors, a one-man macroeconomic research boutique based in Wimbledon, England from where he pens his weekly “Notes from a Small Island” and consults approximately one hundred of the most influential pools of capital in the world.

After a wildly popular show two years ago, James came back for another doozy. Our conversation covers the ESG tsunami and the impact fund flows will create on business economics, politics, and investments, the dynamics of Brexit and incumbent Investment opportunities, China’s evolving economic plan, and the tenuous plumbing of the US financial system.

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Feb 10, 2020
Peter Kraus - Widening the Aperture on Alpha (First Meeting, EP.14)
01:14:06

Peter Kraus is the Chairman and CEO of Aperture Investors, a $5 billion asset manager he founded after a storied four-decade career on Wall Street, including heading the Investment Management Division at Goldman Sachs and serving as Chairman and CEO of AllianceBernstein. Throughout his career, Peter has been a vocal proponent of pay-for-performance compensation models and the need for trust between active managers and their clients.

He ultimately decided that a successful culture of performance-linked fees that properly aligns the manager and client could only occur in a new firm built from scratch. He teamed up with Italian insurance company Generali to launch Aperture in 2018.

Our conversation covers Peter’s career at Goldman Sachs and AllianceBernstein, the structural problem of incentives in the asset management industry, and Peter’s attempt to disrupt that structure. We then discuss his process for selecting managers on Aperture’s platform, including screening, due diligence, and the nuances in idea generation, track record, value system, and managing teams.

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Feb 03, 2020
Ted Seides – A Rational Reminder (Capital Allocators, EP.121)
46:18

Last year, I appeared on the Rational Reminder podcast, a show hosted by Cameron Passmore and Ben Felix of PWL Capital, a terrific Ottawa, Canada-based wealth manager that focuses on low cost, passive investing.

We discussed the depth of the institutional investment research process, hedge funds, alternatives for individuals, index fund investing around the world, lessons from the big Bet, and a few other fun topics.

Cameron and Ben are thoughtful investors and offer high-quality content through their podcast.  I’d encourage you to have a listen.

Please enjoy Cameron and Ben’s interview with me.

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Jan 27, 2020
Beezer Clarkson – Sapphire Gem of Early Stage Venture (Capital Allocators, EP.120)
57:47

Beezer Clarkson is Managing Director at Sapphire Ventures where she is responsible for the management of Sapphire’s fund investments in early stage venture funds globally.  Her career through direct and fund investing has left her with unusually deep knowledge and insights in the space.

Our conversation starts with Beezer’s meandering career and turns to her work at Sapphire, including its structure and unique relationship with SAP, Series A investing, winnowing through a massive funnel of fund opportunities, the due diligence process and re-underwriting process, implications of companies staying private longer, and #OpenLP, a public forum to hear the voice of VC LPs that Beezer created with past podcast guest Chris Douvos.

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Jan 20, 2020
Gregory Zuckerman – Decoding Renaissance Medallion (Capital Allocators, EP.119)
01:02:48

Gregory Zuckerman is a special writer at the Wall Street Journal and the author of five books, including his most recent, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution.  Greg joined the Journal in 1996 and writes about big financial trades, firms, and personalities.  He’s a three-time winner of the Gerald Loeb award, the highest honor in business journalism, and his work has included breaking the stories of the discord between Bill Gross and PIMCO, the London Whale trade, subprime mortgage collapse, and meltdown of hedge fund Amaranth in 2007.

Our conversation starts with Greg’s path to journalism, touches on the aftermath of his book The Greatest Trade Ever about John Paulson and the subprime meltdown. We then turn to his recent tome on Jim Simons and Renaissance, including the formation and evolution of the Medallion fund, precarious moments in its history, the human element of a quant shop, differences between Renaissance and other quant competitors, leadership, impacting the world with vast wealth, and why Renaissance has been so special.

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Jan 06, 2020
The Best of 2019 (Capital Allocators, EP.118)
04:26

Our annual rundown of the most downloaded shows of 2019.  Wishing you a new year filled with wealth, health, and joy.

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Dec 30, 2019
Dr. Sarel Vorster – Conducting Brain Surgery (Capital Allocators, EP.117)
54:06

Dr. Sarel Vorster is a practicing neuro surgeon at the Cleveland Clinic, where he performs procedures on the brain and spinal cord. Sarel has a cross-disciplinary interest in the effect of stress and risk on cognition and decision-making.  He attended Yale to study for an MBA at the ripe age of 50 to pursue that interest.

Our conversation covers the process of conducting surgery, offering an thorough example in a high stakes field. We discuss communicating with patients, making the decision to operate, preparing, using checklists, assessing outcomes, managing risk in a life or death situation, managing a team, improving skills, coping with stress, and seeing similarities between surgery and finance.

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Dec 23, 2019
Neal Triplett and Kim Lew – Issues of Management at Duke and Carnegie (Capital Allocators, EP.116)
38:01

Neal Triplett is the CIO of DUMAC, the organization that oversees Duke University’s $19 billion endowment, and Kim Lew is the CIO of the Carnegie Corporation, where she manages the $3.5 billion foundation created by Andrew Carnegie. A few weeks ago, Institutional Investor named Kim its CIO of the Year.  She also appeared on the show last year in Episode 52, which is replayed after this one on the feed. I had the chance to interview Neal and Kim at the 2019 TIFF Annual Investment Forum.  Neal and Kim are Board members of TIFF, a non-profit organization founded in 1991 as The Investment Fund for Foundations, that today manages $7.5 billion on behalf of only other non-profit pools of capital.

Our conversation covers a number of topics relating to Neal and Kim’s respective day jobs, including the evolving of their investment approach, integrating macroeconomic risk, defining their own competitive advantage, managing a team, countering behavioral biases, using data in manager evaluation, and tackling the most challenging part of their jobs.

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Dec 16, 2019
Kip McDaniel – How to Get an Allocator’s Attention (Capital Allocators, EP.115)
57:48

Kip McDaniel is the Chief Content Officer and Editor-in-Chief at Institutional Investor.  In the early days of Capital Allocators, Kip joined me to share his insights about the CIOs he covers as a journalist. You can find that show in the feed right after this one.

This time, we got together to talk about II’s business and the lessons he’s learned in producing content for allocators.  We cover the four key characteristics of a well-written story, the increasing use of PR firms by asset managers, and the essential importance and tricks of the trade of effectively packaging content. Kip stays true to his roots as a storyteller and offers a few great ones here again.

On the intro, I recorded Please enjoy twice - use the second one (Please enjoy my second conversation with Kip McDaniel)

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Dec 09, 2019
[REPLAY] Kip McDaniel – CIO Whisperer (Capital Allocators, EP.20)
01:07:22

Kip McDaniel is the Chief Content Officer and Editorial Director at Institutional Investor.  Prior to joining II a year ago, Kip spent seven years as the Founding Editor and Editor-in-Chief of CIO Magazine, a media platform that led him to interview 2,000 Chief Investment Officers across every type of asset base around the world. Kip is a graduate of Harvard College, received a Master’s at Cambridge University, and was an elite crew rower, culminating in bringing home bronze medals for Team Canada in two World Championships.

Kip is inordinately well-liked in the community, and I had a hunch I would learn a lot from getting his perspective on the people who make capital allocation happen. Suffice it to say, I wasn’t disappointed.

Our conversation starts with an inside look at Chief Investment Officers – how Kip finds them, ranks them, and discovers what makes them tick. Over the back half of the discussion, we turn to the lessons he’s learned about investment success, incentives, fads, and issues that permeate capital allocation. Kip’s modus operandi is story-telling, and this conversation is chock full of good ones.

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Dec 09, 2019
Anne Martin - Pulling the Oars as CIO of Wesleyan University (Capital Allocators, EP.114)
53:24

Anne Martin is the Chief Investment Officer for Wesleyan University, where she manages the school's $1 billion endowment. Anne's career started in the tech world and shifted to endowment management at Yale's famed investments office. She took over at Wesleyan a decade ago, as one of a handful of Yale Investment alumns serving other institutions.

Our conversation covers Anne's path from competitive rowing to the tech world and a fortuitous connection with David Swensen. We cover the transferable skills from private equity to endowment management, key lessons learned at Yale, experience taking on a "start-up" at Wesleyan, application of knowledge to a smaller pool of capital, development of a team and a portfolio, perspectives on natural resources and venture capital, and Wesleyan's competitive advantage as an allocator.

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Dec 02, 2019
Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13)
53:29

Drew Dickson is the founder of Albert Bridge Capital, and CIO of the Alpha Europe funds, where he manages $350 million in European equities.

Our conversation covers Drew’s early career across the Chicago school, Fidelity and Och-Ziff, and his perch in Europe. We then go through Albert Bridge’s investment process, portfolio construction, assessment of risk-reward, and client communication through blogging and tweeting. All told, Drew offers a deep dive on how to blend fundamental research and behavioral finance in taking on the stock market.

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Nov 25, 2019
Steve Rattner – Overseeing Michael Bloomberg’s Family Office (Capital Allocators, EP.113)
53:40

Steve Rattner is the Chairman and CEO of Willett Advisors, which invests former New York Mayor Michael Bloomberg’s personal and philanthropic assets. Steve’s career has ranged from a journalist for the New York Times to investment banking at Lehman Brothers, Morgan Stanley and Lazard Freres, to founding private equity firm Quadrangle Group, and lastly to serving in the Obama Administration as head of the successful restructure of the automobile industry after the financial crisis. He returned to oversee Willett Advisors after his work in the government.

Our conversations starts with a quick tour through each of Steve’s careers, and then turns to his work investing the assets of Michael Bloomberg’s family office, including selecting an investment model, building a team of specialists, using internal management to supplement external managers, and thinking through private equity, hedge funds, public equity, and the manager selection process. We close with Steve’s perspectives on China and his ongoing engagement in politics.

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Nov 18, 2019
Jason Karp – From Hedge Funds to Health and Wellness at HumanCo (First Meeting, EP.12)
01:08:03

Jason Karp is the Founder and CEO of HumanCo, a mission-driven, disruptive holding company focused on investing in healthier living. Before diving into this endeavor, Jason had a very successful twenty-year career in the hedge fund industry, culminating in a six-year run as founder of Tourbillon Capital.

Our conversation covers Jason’s career in hedge funds across quant research, quantamental investing, and entrepreneurship.  Along the way, we touch on lessons derived from checklists, poker, and chess, and discuss Jason’s sobering take on the hedge fund industry today.

We then turn to changes in his life, including moving from NYC to Austin and focusing on his lifelong passion for health and wellness. We discuss Jason’s autoimmune disease, testing the limits of human performance, and the sickness that led to the creation of Hu Kitchen with his wife and brother-in-law.

Lastly, we discuss the formation of HumanCo, a holding company investing in food and consumables that create clean solutions to common problems using only the highest quality ingredients. We cover the attractive attributes of consumable businesses, use of data and AI to source companies and improve inventory management, efficiency of a holding company structure, incubating companies, leveraging data science, and an example in the cannabis space to work on the controversy surrounding vaporization.

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Nov 11, 2019
Dawn Fitzpatrick – Multi-Faceted Investing at Soros Fund Management (Capital Allocators, EP.112)
52:28

Dawn Fitzpatrick is the Chief Investment Officer at Soros Fund Management, where she manages $25 billion in Soros family and philanthropic assets. Dawn started her career as a trader at O’Connor and went on to serve as the global head and CIO of O’Connor. In 2016, UBS Asset Management promoted her to Global Head of Equities, Multi-Asset and O’Connor, where she oversaw more than $500 billion in assets. Dawn regularly appears on lists of the most powerful women in finance, most recently getting named to the 2018 Worth Power 100.

Our conversation starts with Dawn’s development in the industry from trading in option pits to navigating the Global Financial Crisis at O’Connor and leadership roles at UBS. We then turn to her taking the helm at Soros Fund Management, including creating a long-term strategy tied to the needs of the Foundation, building in short and medium-term targets to allow flexibility, blending internal and external management, connecting the dots across asset classes, sharing perspectives on public markets, private credit and private equity and measuring and managing risk.

Dawn contends that Soros has a uniquely attractive platform for the right type of leading investors to apply their trade, and I would agree. If you’re a manager interested in having a look, reach out to Brenda Formes at Brenda.Formes@soros.com

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Nov 04, 2019
Ash Fontana – Investing in Artificial Intelligence at Zetta Ventures (First Meeting, EP.11)
01:08:20

My guest on today’s First Meeting is Ash Fontana, a Managing Director at Zetta Ventures, a venture capital firm that backs Artificial Intelligence companies with B2B business models.  The firm invests in early-stage companies with unique data sets and models, and rolls up their sleeves to help founders by using a playbook Zetta created specifically for AI companies.  Ash started his career as an entrepreneur and investor, and before joining Zetta started and built the money side of AngelList alongside Naval Ravikant.

Our conversation covers Ash’s background, Zetta’s thesis, team, and strategy, and turns to Zetta’s sourcing, due diligence, decision making, portfolio construction, working for portfolio companies, and investment examples.  Along the way, we cover the evolution of AI, assessing data sets, misperceptions about AI, competing with the tech giants, and the future of investing in the space.

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Oct 28, 2019
Ana Marshall – Applied Direct Investing at the William and Flora Hewlett Foundation (Capital Allocators, EP.111)
52:59

Ana Marshall is the Vice President and Chief Investment Officer for The William and Flora Hewlett Foundation, where she oversees a $10.5 billion pool of capital. Ana joined Hewlett in 2004 after spending eighteen years as a direct investor in high yield credit, emerging market debt, and international equities.

Our conversation covers Ana’s lifelong passion for investing, joining the “super buy side,” conducting company meetings to inform the manager selection and allocation process, portfolio structure, manager selection, monitoring and measuring risk, perspectives on peers, internal dynamics, and working through a big mistake.

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Oct 21, 2019
Jay Girotto – Farmland Opportunity (First Meeting, EP.10)
38:10

Jay Girotto is the President of Farmland Opportunity, a $400 million investment manager that provides direct ownership of high quality, consistently productive row crop farmland in the U.S.  Like many managers in traditional asset classes, Farmland Opportunity searches for inefficient transactions, value-added improvements, and an aligned structure to maximize the benefits of farmland for the long-term.

Our conversation covers Jay’s path from software engineer to farmland investor and discusses the attractive features of the asset class, including macro characteristics of uncorrelated returns and inflation hedging, and micro features of supply-demand imbalances, labor-intensive sourcing, unprofessional operations, and land value appreciation.  We then turn to Farmland Opportunity’s strategy in the area incorporating a specific regional focus, operational partners, aligned incentives, risk assessment and exit strategies.

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Oct 14, 2019
Jonathan Tepper - Variant Perception of Capitalism (Capital Allocators, EP.110)
53:54

Jonathan Tepper is the founder of Variant Perception, an economic research group that works with institutional managers, hedge funds, and allocators to provide objective and comprehensive data to form actionable ideas from leading indicators and emerging trends. He is also the author of three books, the most recent of which, The Myth of Capitalism: Monopolies and the Death of Competition, received widespread acclaim earlier this year.

Our conversation covers Jonathan's unusual upbringing, learning about currencies from Big Macs, building economic and liquidity forecasting models, and catering Variant Perception's research to investors. We then turn to The Myth of Capitalism, discussing the history, causes, and ramifications of the absence of competition in U.S. industries, natural and unnatural monopolies, examples in the tech giants, funeral home operators, airports, and hospitals, and what can be done to counter this negative trend.

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Oct 07, 2019
Joe Lonsdale – Entrepreneurship and 8VC (First Meeting, EP.09)
29:35

Joe Lonsdale is a founding partner at 8VC, a leading venture capital firm that partners with top founders and entrepreneurs to build lasting technology platforms.  He began working at Peter Thiel’s PayPal while Joe was an undergraduate at Stanford, and upon graduation became an early executive at Thiel’s Clarium Capital, which became a multi-billion dollar global macro hedge fund.

From within Clarium, Joe went on to become a co-founder of Palantir, and later founded Addepar and OpenGov. After operating this series of successful start-ups, he turned to early stage venture investing for himself and then as a founding partner of Formation 8, the precursor to 8VC.  In 2016 and 2017, Joe was the youngest member of the Forbes 100 Midas List.

Our conversation begins with Joe’s dive into entrepreneurship out of school, the founding of Palantir and Addepar and his shift from operator to venture capitalist.  We discuss the venture landscape, 8VC’s competitive advantage, building new companies within 8VC, price competition for deals, the due diligence process, adding value to portfolio companies, and new ideas on the horizon in venture investing.

Although we were pressed for time, Joe packs the conversation with great nuggets of wisdom from his incredible success.

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Sep 30, 2019
Gary Klein with Paul Sonkin and Paul Johnson – Conducting Pre-Mortem Analysis (Capital Allocators, EP.109)
49:37

Gary Klein is a noted cognitive psychologist with an innate ability to see what others don’t. Over his 40-year career in the field, he’s pioneered the field of naturalistic decision making, the Pre-Mortem method of risk assessment, and the ShadowBox training approach. Gary is the author of five books and editor of three more, and most recently, founded Shadow Box, LLC in 2005 to train decision makers on his technique. You can learn all about Gary at gary-klein.com.

Paul and Paul, you may recall, were guests on the show discussing their book that I greatly enjoyed, Pitch the Perfect Investment. Both are former investors and professors of finance.

Together Gary, Paul and Paul co-authored a paper entitled Rendering a Powerful Tool Flaccid: The Misuse of Premortems on Wall Street. The paper is a detailed look at how properly conduct Pre-Mortem analysis.

Our conversation covers Gary’s background studying expertise with fighter pilots, tools to improve decision-making, including the Shadow Box technique, Cognitive After-Action Reviews, and Pre-Mortems. We then do a deep dive on Pre-Aortem analysis, including its history in the Air Force, what it is, how it works, when it falls short, and the benefits of reducing overconfidence, time efficiency, increasing candor, making groups smarter. We discuss views on other risk mitigation techniques as well, including devil’s advocates, red teams, risk assessment, and critiques.

I found the conversation an incredible door opener to one of the most effective and time-efficient sources of value in improving investment decision-making processes. I’m privileged and excited to share this conversation with you.

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Sep 23, 2019
[REPLAY] Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32)
58:22

Paul Sonkin and Paul Johnson are investors, professors, and co-authors of Pitch the Perfect Investment.  Paul Sonkin is an analyst and portfolio manager at GAMCO Investors and has researched small, micro, and nanocap companies for a quarter century. He taught for 16 years at Columbia Business School. Paul Johnson runs advisory firm Nicusa Investment Advisors, and previously was a top-ranked sell side analyst, hedge fund manager, and an investment banker across 35 years.  He also taught 2,000 students across 40 classes at Columbia Business School and Fordham University, and has received a host of awards for his prowess in the classroom.

Their recently released book is the first I’ve come across that reverse engineers a portfolio manager’s thought process. It starts with crystal clear first principles of business analysis and covers everything an analyst needs to know to identify a great stock. Then, Paul and Paul describe how portfolio managers assess ideas. Their framework is targeted for analysts starting their careers in the field, but seasoned portfolio managers and allocators both will also learn a lot about communication with their teams from the clear descriptions and colorful examples in the book.

Our conversation covers the concept of the book, the wisdom of crowds, getting an ‘edge’, the four questions every portfolio manager needs to answer, and the role of creativity in investing. These gifted professors offer clear terminology for investment first principals and along the way offer a renewed appreciation for how difficult it is to beat the markets.

For more episodes, go to capitalallocatorspodcast.com/podcast

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Sep 23, 2019
Michael Schwimer - Sports Betting at JAMBOS (First Meeting, EP.08)
37:44

Michael Schwimer is the CEO of Big League Advance (BLA) and JAMBOS.  Last year, I sat down with Michael and discussed his playing career and the formation of BLA.  That conversation, which you can listen to on the feed right after this one, has been the most downloaded episode of Capital Allocators.

Our second conversation starts with an update on BLA, the private equity fund that takes stakes in the future earnings of minor league baseball players.  We touch on the implementation of the strategy and the development of the BLA sports analytics team since last year.

We then discuss other ideas Michael brainstormed with his team to deploy their unparalleled horsepower in sports analytics.  That exercise led to the formation of a new sports betting service called JAMBOS.  We walk through the business of predicting the outcome of sporting events, the disruption of tout subscription services for sports betting through transparency and accountability, and the potential impact of predicting game outcomes on the future of sports and sports entertainment.  You can find out more about the service at www.jambospicks.com.

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Sep 16, 2019
[REPLAY] Michael Schwimer – Moneyball as an Investment Strategy (Capital Allocators, EP.72)
55:19

Michael Schwimer is the CEO of Big League Advance, a company that makes investments in Minor League baseball players in exchange for an agreed-upon percentage of their future earnings.  Before founding BLA, Michael was a professional baseball player, working his way through the minors and reaching the majors as a pitcher for the Philadelphia Phillies.  A shoulder injury left him pondering what to do next, which led to the creation of BLA. 

Our conversation discusses Michael’s career as a player, the difficult life of Minor Leaguers, and his mission to improve their fortunes.  We discuss his passion for statistics, application of Sabremetrics, and development of a team of All-Stars in the game of sports analytics.  We close with a look into the future of BLA and Michael’s prediction for this year’s World Series Champion.  Whether his bet proves right or wrong, Michael’s rationale exemplifies second order thinking through the lens of data analytics that is never far from his mind.

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Sep 16, 2019
Matt Whineray – Leading New Zealand Super Fund (Capital Allocators, EP.108)
01:00:45

Matt Whineray is the CEO of New Zealand Superannuation Fund or Super Fund, one of the highest performing, most innovative and well-regarded large-scale investment allocators in the world. The New Zealand government created the Super Fund in 2001 to help defray the costs of retirees in the country in the decades to come. Matt joined the organization in 2008 and became the CEO in 2018 and oversees NZ$42 billion.

Our conversation starts with Matt’s background and the creation and objectives of the Super Fund. We then walk through the Super Fund’s investment philosophy, which is guided by four competitive advantages or endowments and nine investment beliefs. From there, we dive into the implementation of the strategy, covering the risk allocation process, reference portfolio or benchmark of liquid assets, long-term risk budget and medium-term tactical targets across five risk baskets. We discuss the difference between these risk allocations and a traditional asset class structure, hybrid structure employing internal and external managers, internal strategic tilting program, structure of the team, current perspectives on asset classes, ESG, scaling activities to support upcoming inflows, and culture.

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Sep 09, 2019
Scott Kupor - Andreessen Horowitz (First Meeting EP.07)
01:03:55

Scott Kupor is the managing partner at Andreessen Horowitz, also known as a16z for the 16 letters between the A in Andreessen and the z in Horowitz. Scott is responsible for all operational aspects of running the firm. He joined Andreessen at its inception in 2009 and has overseen its rapid growth from three employees and $300 million under management to 150 employees managing in excess of $10 billion.

Scott has served on a number of industry-related Boards, including as Chairman of the Board of the National Venture Capital Association, and he currently sits on four non-profit Investment Committees. A few months ago, Scott published the national bestselling book, Secrets of Sand Hill Road: Venture Capital and How to Get It,https://amzn.to/2GX5O9M


Our conversation is a full-blown overview of one of the leading venture capital firms and the dynamics at play in the venture industry. We cover Scott's shift from finance to an operating role, and from an individual producer to a manager, the formation of a16z, its founder-centric investment model, building services to increase their portfolio companies chance of success, sourcing investment ideas, conducting due diligence, making decisions, the competitive environment, Board seats, changes in the venture industry, the cardinal sins of venture investing, new frontiers for venture investment, how venture capitalists manage their own money, and the purpose of writing his book.

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Sep 02, 2019
Eric Ries – Lean Start-Ups and the Long-Term Stock Exchange (Capital Allocators, EP.107)
50:13

Eric Ries is the founder and CEO of LTSE, the company that is affiliated with the SEC-approved Long-Term Stock Exchange, which seeks to build a new relationship between companies that are built to last and the stakeholders who believe in them. Eric is an entrepreneur who created the Lean Startup methodology and wrote the New York Times bestseller The Lean Startup. He was named by Fortune to its 2018 "40 Under 40."

Our conversation covers Eric’s early startup experience, the core principles of a Lean Startup, his path to creating LTSE, key components of its business philosophy, value proposition, and business model, and the application of Lean Startup principles to building this business.

LTSE’s mission is extraordinarily important to improve investment outcomes in public markets for all of our benefit. I encourage you to join the LTSE’s Long-Term Investor Coalition on its website ltse.com or by emailing ltic@ltse.com, and ask questions of companies and managers you meet with to keep this movement top of mind.

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Aug 26, 2019
David Druley – Structure into Action at Cambridge Associates (Capital Allocators, EP. 106)
47:02

David Druley is the CEO of Cambridge Associates, a global investment firm that works with premier institutional investors and family offices to manage custom investment portfolios that aim to generate outperformance so they can maximize their impact on the world. David works with Cambridge’s leaders to set and execute the firm’s strategy, enhance its capabilities, and evolve its processes. David brings a quarter-century of investment experience to the role, including a 16-year tenure at Cambridge.

Our conversation covers David’s path from value investing to Cambridge Associates, including a key early career lesson in calibrating risk tolerance. We discuss the history of Cambridge Associates, key characteristics of generating great investment returns, the manager selection process, and David’s take on co-investments, long-only managers, hedge funds, fixed income, innovation, and future opportunities and challenges for the business.

The discussion offers a nice compliment to my earlier conversation with Margaret Chen, who oversees Cambridge Associates’ OCIO business.  You can find that conversation replayed right after this one on the feed.

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Aug 19, 2019
REPLAY - Margaret Chen – Leadership and Outsourcing the Investment Office (Capital Allocators, EP.35)
51:37
Margaret Chen is the Head of CA Capital Management, Cambridge Associates’ $20 billion Outsourced Chief Investment Officer (OCIO) business. She has spent twenty years at Cambridge Associates, which was her first and only stop in the investment business after getting started in the working world as a management consultant at Coopers & Lybrand Consulting.
 
Our conversation covers Margaret’s career path, her evolution from a consultant to a principal, the value proposition of an OCIO, measuring performance, and the tension between being the same and being different for clients. Margaret has the ear of almost everyone in our field, and brings incredible perspective to addressing the key issues allocators face.
 
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Aug 19, 2019
Michael Novogratz – Galaxy Digital (First Meeting, EP.06)
51:38

Mike Novogratz is the CEO of Galaxy Digital, a merchant bank with a balance sheet to invest that seeks to serve as the bridge between the crypto and institutional investment worlds. Mike is well-known speculator who started his career at Goldman Sachs and later managed Fortress’ multi-billion dollar hedge fund, the Drawbridge Global Macro Fund. He’s notably made and lost a few fortunes in his career, most recently riding bitcoin up starting in 2013, almost all the way down in 2017, and back up again this year.

Our conversation covers Mike’s background as a wrestler and helicopter pilot, his development from salesman to trader, the art of speculation, his initial interest in Bitcoin, the business of Galaxy Digital, the development of the crypto ecosystem use cases in privacy, payments and video games, and obstacles to institutional adoption of crypto and blockchain assets. We close by discussing how Mike invests his family office assets and his engagement with criminal justice reform.

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Aug 12, 2019
Paul Black -  WCM Investment Management (First Meeting, EP.05)
57:38

My guest on today’s first meeting is Paul Black of WCM Investment Management.  This show is a replay of our conversation on Capital Allocators last year, and has been one of the most listened to conversations with a manager on the show.  At the time, WCM managed $26 billion and since then they’ve continued to perform and grow.  Today, WCM oversees $40 billion and earlier this year announced the sale of a minority stake in their business to Natixis Investment Managers.

Paul Black is portfolio manager and Co-CEO of WCM Investment Management, a $26 billion manager of global equities that he joined when it was a $200 million boutique in 1989.  His early career included positions at Wells Fargo Bank and Bank of America.

Our conversation starts with Paul’s trial-by-fire entry into the business and turns to growth stock investing, including defining a great growth company, searching for widening moats, assessing a culture tied to competitive advantage, creating a positive culture, learning from mistakes, identifying tailwinds, and protecting the downside.

Paul embodies the principals he preaches and offers some tasty food for thought.

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Aug 05, 2019
Jon Harris – Investing in People at AIM (Capital Allocators, EP.105)
01:00:33

Jon Harris is the CEO of Alternative Investment Management, a twenty-year-old investment firm that started as a family office and has evolved into managing $1 billion in hedge fund and private equity strategies on behalf of a range of fascinating business and investment executives. 

Our conversation starts with the formation of AIM and its people-based investment approach.  We discuss building a network to source and diligence managers, filtering the universe of prospects, understanding the motivations of managers, conducting reference checks, and using the information they gather. We then turn to AIM’s private equity strategy, including selecting managers, the misalignment of interests in co-investments, and the death by a thousand cuts of hidden fees.  We close talking about the continued purpose of hedgeD funds, due diligence tricks, preparing for unexpected risk, managing time, and philanthropy.

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Jul 29, 2019
André Bourbonnais – Blackrock Long-Term Private Capital (First Meeting, EP.04)
42:50

André Bourbonnais is a Managing Director at Blackrock and Global Head of its newly launched Long-Term Private Capital business, a multi-billion dollar permanent capital private equity fund.  André brought thirty years of private market transaction and management experience to the role, most recently as CEO and Chief Investment Officer of PSP Investments, the $110 billion Montreal-based Canadian pension fund.  He previously served as Senior Managing Director and Global Head of Private Investments at the Canada Pension Plan Investment Board (CPPIB), where he was responsible for over $65 billion in private market assets, the largest program of its kind globally.

Our conversation talks about the creation of Blackrock’s innovative private equity fund starting with a clean sheet of paper.  We discuss the traditional private equity playbook, the changes in financial structure, business strategy, and return drivers that can occur with permanent capital, the structure of the fund, deal origination, a new ownership playbook, the re-underwriting process, sell decisions, portfolio construction, and managing a team whose careers will be shorter than the duration of the fund.

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Jul 22, 2019
Richard Lawrence – Overlook Investments Group (First Meeting, EP.03)
01:00:16

My guest on today’s First Meeting is Richard Lawrence of Overlook Investments Group, one of the top managers of Asian equities.  The conversation that follows is a replay of an early episode on Capital Allocators and one of the inspirations for the First Meeting concept. 

Richard Lawrence is the Chairman and Executive Director of The Overlook Group, a $5 billion investment organization focused on Asian equities that Richard founded in 1991. Over the past quarter-century, Overlook developed and implemented disciplined investment and business philosophies that interconnected to drive extraordinary results for its partners. Overlook has compounded capital at an annualized 14.5%, outperforming its benchmark by an insane 9% per annum. But that’s not all, as Richard would proudly tell you himself, the capital weighted return of the average investor in Overlook is nearly identical to the time weighted return over any period of time – a rare feat in the money management industry. Indeed, today’s asset base is the result of $4 billion of investment gains on top of $1 billion in contributed capital.

Our conversation starts with a look at investing in Asia in Overlook’s early days and walks through the particulars of the approach Richard takes to investing and running his business, including attractive investment attributes, management integrity, portfolio construction, selling discipline, and China Yangtze Power - the only stock the firm supersized in an SPV in its history. We discuss Overlook’s long-held cap on subscriptions and periodic reductions in its management fee, two business philosophies that Richard believes have been key drivers of Overlook’s success.

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Jul 15, 2019
Ash Williams – Florida SBA’s Reigning Chief (Capital Allocator, EP.104)
01:18:03

Ash Williams is the Executive Director and CIO of the Florida State Board of Administration, where he oversees $200 billion in assets for the State of Florida including one of the largest public pension funds in the U.S.  He is as highly regarded as they come, and among other accolades, received a Lifetime Achievement Award from CIO Magazine in 2017.

Ash began his career serving the State of Florida as a staff assistant to two House speakers, as Chief of Staff to a former Governor and Comptroller of the State, and as Executive Director of the SBA. He left for a decade on Wall Street and returned after the global financial crisis to help resurrect the state’s assets.

Our conversation covers Ash’s early experience in Florida legislature, the SBA in the 1990s, moving from the public sector to Wall Street, and returning in the thick of the financial crisis.  We discuss many aspects of managing a large pools of assets, including a six-year effort to modernize the compensation scheme, asset allocation, blending active and passive managers and internal and external fund management, managing around political interests, communicating expectations and transparency, character, proxy voting, private equity, hedge funds, and the process of selecting managers.

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Jul 08, 2019
Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103)
01:19:54

Sam Sicilia is the Chief Investment Officer of HostPlus, Australia’s AUZ 37 billion ($25B USD) Superannuation Fund.  Sam joined HostPlus in 2008 after a storied career in academia and the finance industry stretching back to the early 1990s. During that time, he held senior roles, both in Australia and internationally, consulting at Russell Investments, managing assets at Bank of Ireland, and consulting with Frontier Investment Consulting and Towers Perrin.

Our conversation starts with Sam’s mathematics training and turns to his work over the last decade at HostPlus, covering the Fund’s long time horizon, his strategy to take advantage of that horizon, infrastructure investing for downside protection, private equity, venture capital in Australia, public equity focusing on people, hedge funds as a liquidity buffer, and working with a Board.

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Jul 01, 2019
Martin Whittaker – JUST Capital (First Meeting, EP.02)
46:56

Martin Whittaker is the founding CEO of JUST Capital, a non-profit created by a group of concerned, influential leaders, including Deepak Chopra and Paul Tudor Jones.  JUST Capital is an independent research organization thanks ranks companies on the issues Americans care about most, with a mission to build a more just marketplace that better reflects the true priorities of the American people. Last year, it launched the JUST ETF in partnership with Goldman Sachs Asset Management.

Our conversation covers with Martin’s history of following the money that ultimately led to his position at JUST, defining a “just company”, engaging the public in the polling process, engaging companies in the results, applications of the research including the JUST ETF, common characteristics of companies that rank highly, the impact of the polls on companies, application to private companies, and new initiatives.

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Jun 24, 2019
Jon Wertheim – Sports and… (Capital Allocators, EP. 102)
42:52

Jon Wertheim is a sports journalist and author who has a passion for psychology and economics.  He is the Executive Editor at Sports Illustrated, where he has been a full-time staff member since 1996. Jon also is a contributing correspondent on 60 Minutes and an analyst for the Tennis Channel at the four Majors.  He is the author of ten books including Stokes of Genius about the Federer-Nadal rivalry, the New York Times bestsellerScorecasting, and more recently, This Is Your Brain on Sports

Our conversation spans across sports, behavior and decision making, discussing Jon’s path to a career in sports journalism, insider perspective on tennis, role of luck, cycles in basketball strategy, loss aversion, job preservation, omission bias, sports gambling, the business of sports, and lessons from interviewing.

Jon moves with ease across sports, investing and psychology, and the parallels with his anecdotes and the world of investing are both entertaining and readily apparent.

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Jun 17, 2019
Capital Allocators Presents: First Meeting with Ted Seides
01:41

I'm excited to announce the launch of a spinoff of capital allocators called first meeting. First meeting episodes will be conversations with leading investment managers across asset classes. First meeting will seek to catalyze a step change improvement in the due diligence process by sharing conversations that replicate a first meeting and allocator might have with the manager. We’ll help both managers and allocators save time from repeating the same meeting over and over again, create scale in transparency, and increase the efficiency of communication.

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Jun 10, 2019
Patrick O’Shaughnessy – O'Shaughnessy Asset Management (First Meeting, EP.01)
01:14:31

Patrick O’Shaughnessy is the CEO of O’Shaughnessy Asset Management, the host of the Invest Like the Best podcast, and a great friend.  Patrick’s podcast and widely read monthly mailing list of books, available at investorfieldguide.com, have made him a celebrity of sorts in the investing world. Those familiar with his voice will already know how wide his curious mind travels, but I image far fewer know much about his daily investing activities.

Our conversation begins with Patrick’s early start in the business and discovered passion for research. We turn to investing at OSAM, covering four core quantitative factors, how those factors work, the research process to dive deeper into each factor and explore new ones, machine learning, differentiated portfolio construction, and the impact of quants on the market.  We then turn to Patrick’s experience as a podcaster, discussing his conceptual learning loop, lessons from interviewing, and the ways he has applied lessons from the podcast to OSAM’s asset management business. We close by discussing investing in external managers, including a great nugget on probing quantitative strategies.

Patrick and I both finished this conversation feeling that we had just scratched the surface, which might be fodder for a Part B down the road.  Regardless, I’m indebted to Patrick for being the catalyst behind the creation of Capital Allocators two years ago, and it was my great pleasure to get him on the other side of the microphone.

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Jun 10, 2019
Khe Hy – Radical Shift from Investing to Purpose (Capital Allocators, EP.101)
51:31

Khe Hy rose to be one of the youngest Managing Directors at Blackrock’s hedge fund of funds business. In his 30s he left the industry to explore what would come next. His path led to creating the RadReads blog and coaching about facing fears and insecurities attached to the relationship of psychology and money. Khe has since been dubbed the “Oprah for Millenials” by CNN and “Wall Street Guru” by Bloomberg.

Our conversation starts with Khe’s career on Wall Street evaluating mortgage derivative hedge fund strategies, reaching his lifelong career goals, and then leaving it behind. Ky discusses his path and asks questions that provoke an exploration of the value of money, including the power of asking “Why?”, what to do if you won the lottery, how much to leave behind for your children, the marginal utility of money, and lessons on staying the course on an entrepreneurial path.

Khe’s real-time journey tackles issues that many in our profession face when they take a moment to reflect on their lives. The lessons reminded me of my conversation with HBS Professor Tom DeLong, which I’ve replayed on the feed. 

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Jun 03, 2019
REPLAY - Thomas DeLong – Authentic Leadership (Capital Allocators, EP.18)
56:01

Tom DeLong is a renown expert in organizational behavior, leadership, and human development of high performance professionals, the so called “soft skills” often dismissed in the asset management business. After starting an academic career under the wing of Stephen Covey, Tom found himself recruited by John Mack to work alongside him to develop a positive culture at Morgan Stanley. After eight years in the trenches, he returned to academia as a professor at Harvard Business School, where he has remained the past twenty years.

Unlike most of us, Tom’s resume and achievements are unusually difficult to locate online or elsewhere. It was a sign of things to come in our fascinating conversation, which is simultaneously a master class in authentic leadership and a live case study in self-exploration with Tom as his own protagonist. Tom is exactly the type of person he has studied, and strives to be the type of leader he promotes.

We discuss the meaning of work, the importance of feedback, the ways high performing professionals derail themselves, the difference between your image and your essence, the omnipresence of insecurity in high achievers, and some techniques to foster deeper conversation in relationships.

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Jun 03, 2019
REPLAY - David "Bull" Gurfein - Interdisciplinary Lessons from the Marines (Capital Allocators, EP.10)
01:13:26

David Gurfein is a decorated Marine Corps Combat veteran whose nickname “Bull” fits the bill. Enlisting at age 17, Bull drove tanks and was an honor graduate from Officer Candidate School while attending Syracuse University. Upon graduation from college, he accepted a commission as a Marine 2nd Lieutenant. Over the subsequent eleven years, Bull served as a combat Infantry Officer, leading Marines in the jungles of Panama, the deserts of Saudi Arabia and Kuwait, and on the fence-line at Guantanamo Bay, Cuba. He left active duty to earn his MBA at Harvard in 2000, where he was Co-President of his class.

Bull started a business career after graduate school; however, when the U.S. was attacked on 9/11, Bull voluntarily returned to active duty. He saw combat action in Afghanistan and Iraq, and served as a Congressional Liaison for the Supreme Allied Commander, Europe, and the Special Operations Command.

With a daughter on the way and 25 years of service under his belt, Bull retired as a Lieutenant Colonel. Since then, he has applied his leadership and management experience to the business world, focusing on organizational design and business development. His leadership training program, entitled WHOOPASS, has positively impacted start-ups and Fortune 500 companies alike.

Oh, and he took a break from that in 2016 to run for U.S. Congress.

Our conversation discusses principles of leadership, management, and resource allocation, alongside colorful stories of success and failure. Bull's frameworks have clear applicability to anyone overseeing an investment process.

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May 27, 2019
Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100)
01:05:16

Tim Recker is the CIO of the $2.4 billion James Irvine Foundation.  He joined the foundation in 2016 after spending a decade in private equity and real assets for the University of California Regents, four years overseeing Alternatives at the Michigan Retirement System, and his early years at GE Asset Management

Our conversation covers Tim’s career path, the culture and structure at GE and Michigan Retirement, and co-investments at UC Regents. We then turn to the intricacies of managing a highly concentrated portfolio of managers at Irvine, including effective governance. flexibility, team structure, due diligence, and decision making. We close with Tim’s perspectives on hedge funds, real estate and fixed income, and the tradeoffs in preparing for a downturn.

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May 20, 2019
Michael Mauboussin – Who’s on the Other Side (Capital Allocators, EP.99)
57:55

Michael Mauboussin is the well-known investment strategist currently plying his wares at Blue Mountain Capital.  He joined me for the second time to discuss his new research entitled “Who’s on the Other Side?” 

Our conversation dives into the work, discussing how investors can focus on process over outcome, the four types of investment edges, behavioral traits of single and group portfolio managers, portfolio position weighting, informational edges available from paying attention and complexity, the principal-agent issues that create cycles and opportunities during dislocations, the growth of private markets, and implementing his research.  We close with a discussion of data analytics in the game of lacrosse.

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May 13, 2019
REPLAY - Michael Mauboussin – Active Challenges, Rational Decisions and Team Dynamics (Capital Allocators, EP.36)
01:11:25

Michael Mauboussin currently is the Director of Research at BlueMountain Capital, a multi-billion dollar hedge fund and asset manager.  He spent the majority of his professional career thinking and writing about decision making, behavior and complex systems, with long stints at Credit Suisse and nearly a decade alongside Bill Miller at Legg Mason.  Michael has been an Adjust Professor at Columbia Business School for 24 years.

Our conversation covers Michael’s early career, the paradox of skill, academic research more favorable to active management, decision-making, optimal size and composition of teams, unsettling features in the market, data analysis in sports, career risk, the Santa Fe Institute, and Michael’s new research on the horizon.

Every time I speak to Michael I come away thinking better and feeling smarter, and this time was no exception.

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May 13, 2019
Jon Hirtle – The Pioneer of OCIO (Capital Allocators, EP.98)
56:31

Jon Hirtle is the Executive Chairman at Hirtle, Callaghan & Co., a $20 billion Outsourced CIO business he founded in 1988.  Hirtle Callaghan retains the distinction of initiating the OCIO model that is flourishing in the market today.

Our conversation covers leadership lessons from Jon’s experience in the Marines and at Goldman Sachs, the genesis of the idea to create Hirtle Callaghan, the structure, culture, philosophy and execution of their investing, Jon’s outlook on emerging markets, the economy, private equity, and credit, and the concept of governance alpha. Jon has a gift for distilling the investment process into understandable frameworks and analogies that we all can use to communicate with our many constituents.

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May 06, 2019
Matt Levine – Money Stuff (Capital Allocators, EP.97)
40:07

Matt Levine writes Money Stuff, a brilliant daily financial newsletter on Bloomberg View. His column discusses current events in corporate finance and markets, with an insightful, nuanced lens and a dry wit.  As Matt describes it in his bio, he writes about the financial industry on the internet, and on the Bloomberg terminal, which is sort of like the internet but oranger. 

If you receive my monthly email, you’ll already know that I’m a huge fan of Matt’s and that Money Stuff has become my go to source of business news.

Our conversation covers Matt’s path to journalism through law school and investment banking, his daily routine, and some of his favorite writing topics, including why everything is securities fraud, stock buybacks, the CDS market, index funds, private markets, quantitative investing, and beating benchmarks.

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Apr 29, 2019
REPLAY - Michael Mervosh – Invest in Yourself (Capital Allocators, EP.68)
01:12:05

Both times I was interviewed (by Khe Hy and Patrick O'Shaughnessy) and shared those conversations on Capital Allocators, I made reference to a special experience I’ve participated in for the last five years called the Hero’s Journey. The weeklong journey in the mountains of West Virginia provides a setting and platform for each participant to access their best self.

Michael Mervosh is the deeply insightful Executive Director of the Hero’s Journey Foundation, an organization he created that provides experiential learning opportunities for human development and transformation based on Joseph Campbell’s mythic hero’s journey. He has a passion and indescribable skill in enlivening the developmental process and fostering vitality, meaning and well-being in individuals, groups, and organizations. When not running programs or training others, Michael practices psychotherapy at the Nuin Center in Pittsburgh, where he has professionally resided for 25 years.

Our conversation took place in the mountains towards the end of this year’s journey and is quite different from those you may be accustomed to hearing on the show. We cover Michael’s path to creating the experience, the myth of the Hero, lessons in how the world actually works, the call to adventure, perfectionism, uncertainty, fear, and poetry.

If you’re intrigued, I strongly encourage you to check out herosjourneyfoundation.org. Spaces are limited for the annual summer Men’s and Women’s Journeys, so sign up for next year’s trip at the website or reach out to me.  I intend to be back on the mountain next year and hope to see you there.

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Apr 29, 2019
David Zorub - The Path to a Hedge Fund Launch (Capital Allocators, EP.96)
48:23

David Zorub is the founder of Parsifal Capital, a new hedge fund he is launching later this year.  Before founding Parsifal, Dave spent fifteen years in research and portfolio management at hedge funds and another few in investment banking and private equity. 

I interviewed David recently at Columbia University’s Student Investment Management Conference and that conversation follows. We cover his career path and his insights into the philosophy and structure of a hedge fund business and investment portfolio. It’s not easy starting a hedge fund these days, and those eager to try will get a sense of the challenges ahead by listening to an experienced investor who’s making a go of it.

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Apr 22, 2019
Paul Rabil - Lacrosse and Entrepreneurship (Capital Allocators, EP.95)
58:53

Paul Rabil is the co-founder and CEO of the Premier Lacrosse League or PLL, a new tour-based league of the top professional lacrosse players in the world that will debut on June 1st.  Paul was the #1 player in the draft for Major League Lacrosse in 2008 after winning a national championship at Johns Hopkins.  He is a 7-time Champion and 3-time MVP.  Alongside his on-the-field accomplishments, Paul is a passionate entrepreneur who was the first lacrosse player to earn $1 million in endorsements.

Our conversation covers Paul’s early interest in lacrosse, developing a social media fan following, the importance of sponsorship revenue for athletes, and the leverage athletes have over teams. We then turn to the formation of the PLL, including Paul’s attempt to purchase the MLL with a search fund, his shift in business model from private equity to venture capital, the tour-based model, operations, distribution, and the on-field product.  We close by discussing Suiting Up, Paul’s podcast where he interviews top professional athletes and coaches, and the Paul Rabil Foundation, which brings lacrosse to schools for children with learning differences.

Paul is as savvy off-the-field as his is skilled on it, and as the PLL takes off as I suspect it will, this conversation may well mark an important moment in time for this fascinating start-up league.

Tune in to NBC to watch the first games from Gillette Stadium in Foxboro, Massachusetts on the first weekend in June.

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Apr 15, 2019
Ted Seides – Interviewing and Manager Meetings (Capital Allocators, EP.94)
46:20

A few months ago, Marcel van de Hoef interviewed me on his podcast, The Meeting Strategist.  He created Meeting Strategist to help senior professionals across industries think more strategically about business conversations and improve their listening, questioning and meeting skills. 

With his permission, I’ve shared that discussion on this week’s show.  You can learn more about his work at meetingstrategist.org.

Our conversation starts with my background and covers my communications with Warren Buffett, characteristics of successful active managers, manager meeting structure, culture assessment, tools for effective listening, lessons I learned from David Swensen, and my preparation and conducting of podcast interviews.

Please enjoy my thoughts on interviewing and manager meetings, with Marcel van de Hoef asking the questions.

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Apr 08, 2019
REPLAY - Ted Seides - Deep Dive into Hedge Funds (Capital Allocators, EP.34)
01:17:05

I’ve received several emails over the last bunch of months asking for my take on the investing world and the topics we cover on the show. Fortunately, I’ve had a chance to appear as a guest on a few other podcasts, and thought I would share some of those conversations from time to time.

About a year and a half ago, Patrick O’Shaughnessy interviewed me to discuss the book I wrote on his amazing podcast, Invest Like the Best. The discussion quickly turned to a deep dive on hedge funds - past, present and future.

We subsequently recorded two other conversations.  For the first, I asked him to interview me about the Buffett Bet. You can find that conversation on Episode 5. In the second, Patrick interviewed me alongside our friend and star micro private equity investor, Brent Beshore. You can find that entertaining conversation at Invest Like the Best, Episode 30.

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Apr 08, 2019
REPLAY - Ted Seides - It’s Not About the Money (EP.45)
58:15

 

Last fall, I sat down with a fellow former hedge fund of funds professional Khe Hy, who left the business a few years ago and has developed a fascinating media platform around introspection, self-awareness, and self-development. Certainly a set of characteristics we don’t normally associate with folks in the asset management business.

Khe interviewed me about my career path and some lessons I’ve learned about people, business, and life. With his permission, I am sharing the conversation to allow you to learn more about the perspective that I bring to the conversations on Capital Allocators.

If you like the subject matter, I’d encourage you to check out Khe’s podcast, entitled Rad Awakenings, available on iTunes or his website, radreads.co.

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Show Notes

1:53 – Ted’s time with Dave Swensen

2:40 – How did Ted get the job not knowing about stocks

3:56 – The start of Ted’s time at Protégé

5:27 – How did Ted view the world as someone picking managers vs someone picking stocks

9:01 – Early days at Protégé

10:36 – Attributes that Ted tried to unpack about individuals

13:18 – Understanding a team’s intrinsic vs extrinsic motivations

15:03 – How much of investing is about true skill vs being on the right side of a market trend

17:06 – What did Ted learn about greed during the bull market run of the early 2000’s

20:00 – The ego, envy and entitlement of financial professionals

22:36 – The potential to hit a high-water mark and never feeling satisfied

28:20 – Loving what you do despite the financial windfall

32:50 – Would Ted have the same passion for the markets if he hit the proverbial lottery

34:36 – The feeling of financial survival and what would happen if Ted didn’t have it

            37:24 – Citizen Schools

38:41 – How to stop caring about other people’s perception of you

40:46 – Most underrated attribute of Ted that he has discovered in his reinvention

41:53 – Times Ted’s resilience was tested

            43:08 – Ted on Invest Like the Best Podcast

            43:10 – Hero's Journey Foundation

45:02 – What does higher education and first jobs look like for the next generation given the digital changes in society

49:20 – Do millennials have less upward mobility then past generations

            49:43 – The Premium Mediocre Life of Maya Millennial

52:09 – Follow and learn more about Ted at capitalallocatorspodcast.com

57:41 – Closing questions with special guest interviewers

 

Apr 08, 2019
Dan Ariely – Investing in Irrationality (Capital Allocators, EP.93)
01:10:20

Dan Ariely is a renowned behavioral economist, author, entrepreneur, and investor.  He is the James B. Duke Professor of Psychology and Behavioral Economics at Duke University and a founding member of the Center for Advanced Hindsight.  Dan is the author of six books, most of which have the word “Irrationality” in the title and has a weekly column in the The Wall Street Journal called “Ask Ariely.” Dan’s TED Talks have been downloaded more than 10 million times.

Dan also is a Founding Partner of Irrational Capital, an investment firm that identifies and quantifies the nuanced relationship between companies and their employees, and invests in human capital factors that are linked to long-term stock price performance.  Last month, Irrational Capital announced a strategic partnership with Jeff Ubben’s ValueAct Capital, a firm that shares their belief in the importance of the impact of corporate culture on long-term enterprise value.

Our conversation starts with Dan’s journey studying pain and intuition and turns to applications of his research in the corporate setting.  We discuss his research process, measurement of human capital, applying experiments to an investment strategy, employee motivation and compensation schemes as investment factors, and constructing a portfolio of factors based purely on human capital.  We close by touching on Dan’s projects in government and with start-ups.

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Apr 01, 2019
Jordi Visser – Next Generation of Manager Allocation (Capital Allocators, EP.92)
01:20:25

Jordi Visser is the President & CIO of $1.7 billion Weiss Multi-Strategy Advisers, an asset management firm with a 40-year history of focusing on innovative investment processes and cutting edge thought leadership. 

Our conversation covers Jordi’s decade of learning at Morgan Stanley, and then turns to a deep dive on all aspects of Weiss’ equity market neutral, multi-manager process, including the importance of data visualization to risk management, behavioral alpha, improving portfolio manager performance, blending macro insights with a multi-manager team, factor-based replication, hiring managers, ranking managers, and knowing when to move on.  We then discuss issues with the use of analytics outside of public equities, pending problem caused by high corporate leverage, opportunities in biotech and healthcare, the future of the hedge fund industry, and positioning an asset manager for the future.

Jordi leads a rigorous approach to identifying, assessing, and improving an internal multi-manager team using data analytics.  The transparency and tools he employs are a few steps ahead of where most allocators find themselves today, and as such, his insights can shine a light on the path where all allocators can develop going forward.

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Mar 25, 2019
Manny Friedman – EJF on Economic Opportunity Zones (EP.91)
44:07

Manny Friedman is the founder of EJF Capital.  Manny discussed his background and his nuanced take on markets last July in Episode 61 of the podcast. In that conversation, he mentioned a new regulation in the U.S. that created an area of investing called Economic Opportunity Zones.  I started learning about Economic Opportunity Zones from Manny and dove in for my day job.  Since then, more and more eyes are viewing investments in Opportunity Zones, and I asked Manny to sit down with me to share his perspective.

Our conversation covers the governments broad, bipartisan effort to reallocate capital to underinvested areas of the country, how tax incentives will potentially unlock trillions of dollars of unrealized capital gains, the future attraction of Economic Opportunity Zones to nontaxable and ESG investors, the ways in which the program could fall short of its lofty goals, and specific examples of how a virtuous circle can get created and make a meaningful dent in the economic divide in the United States

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Mar 18, 2019
REPLAY - Manny Friedman – Non-Linear Financial Systems (Capital Allocators, EP.61)
51:32

Manny Friedman is the CEO of EJF Capital, a firm he co-founded in 2005 that manages $9 billion with a focus on the financial services industry. Manny started EJF after his retirement from Friedman, Billings, Ramsey Group, Inc., a company he co-founded in 1989 and served as Co-Chairman and Co-Chief Executive Officer. 

Our conversation looks back at Manny’s lifelong passion for investing, the globalization of markets, and the financial crisis, and then looks forward at the newly created economic opportunity zones, long-term impact of government stimulus, stranded assets created by technological change, regulation, and philanthropy.

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Mar 18, 2019
Thomas Russo – All About Google (Capital Allocators, EP.90)
41:28

Tom Russo is the Managing Member of Garnder Russo & Gardner. Last week, Tom talked in detail about his holding in Berkshire Hathaway.  This week, we continue the conversation with his new holding in Google.

Our conversation covers buying Google now, comparing the company to Facebook, future growth opportunities starting from a large base, competition from Amazon, Google X’s long-term moonshots, and related stories in Tom’s portfolio companies Philip Morris and Nestle.

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Mar 11, 2019
Thomas Russo – All About Berkshire Hathaway (Capital Allocators, EP.89)
55:53

Tom Russo is the Managing Member of Gardner Russo & Gardner.  Tom and I sat down in Episode 16 to discuss his background and investment strategy in what was one of the most popular episodes on the show.  He oversees $13B in a global value strategy focused on family-operated public companies.

Our second conversation is a two-part episode for this week and next.  First, we talk solely about his holding in Berkshire Hathaway, a stock he first bought 38 years ago.

The conversation covers Tom’s initial purchase of Berkshire, company meetings, reaffirming his thesis and search for disconfirming information, the genius of Warren Buffett, research on Mitek, cross-fertilization of Berkshire’s CEOs, the subdivisions of insurance, public market investments and regulated businesses, valuation, compensation, Berkshire after Warren, and Tom’s sell discipline.

We close with a teaser for next week’s episode, as Tom reveals the name of the first significant stock he’s bought for his clients in eight years.

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Mar 04, 2019
REPLAY (EP.16) Thomas Russo – Buy and Hold...and Then What
59:41

Tom Russo is the Managing Member of Gardner Russo & Gardner, where he manages $11 billion in a long only, global value strategy. Tom buys the stock of global consumer businesses with great brands and holds them for a really long time. He looks for businesses with a capacity to reinvest free cash flow and a capacity to suffer through short-term pain in order to achieve long-term gain. Tom started his investment career at the Sequoia Fund in New York, where he worked from 1984 to 1988. His first partnership, Semper Vic Partners, has compounded at 14.6% per year for 33 years, besting the S&P 500 by 3.6% per annum.

Tom is a graduate of Dartmouth College (B.A., 1977), and Stanford Business and Law Schools (JD/MBA, 1984). He has served on Dean's Advisory Council for Stanford Law School, Dartmouth College's President's Leadership Council, and the Advisory Board for the Heilbrunn Center for Graham & Dodd Investing at Columbia Business School, as well as on the boards of the Winston Churchill Foundation of the U.S., Facing History and Ourselves, and Storm King Art Center.

Our conversation covers how Tom created an investment strategy by personalizing early lessons from Warren Buffett, the capacity to re-invest, the capacity to suffer, and what it takes to own a stock for decades.  Tom’s time horizon and fortitude as an investor parallels those of institutions with permanent capital. Listeners will get a fresh perspective on what it means to be a long-term investor

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Mar 04, 2019
Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88)
58:58

Matt Botein is the Co-Founder and Managing Partner of Gallatin Point Capital, a $1.5 billion private investment company he founded after departing from BlackRock, where he had served as the Chief Investment Officer and Co-Head of the firm’s $160 billion Alternatives business.  Before sitting atop that lofty perch, Matt formed a bank after the financial crisis, was a Managing Director at hedge fund Highfields Capital and a private equity Principal at Blackstone.

Our conversation starts with Matt’s early career experience, touching on differences in public and private investing and forming new financial companies after periods of crisis. We then turn to his reconnection with Larry Fink, who in short order tapped Matt to run BlackRock’s giant Alternatives business.  We discuss his unusually graceful exit from BlackRock, flexible investment approach at Gallatin Point, and perspective from meeting a wide array of large pools of institutional capital globally.  We finish with his take on the opportunities and challenges for private equity, headwinds for hedge funds, and real assets for his personal portfolio.

Back when Matt and I were in school together, he was renowned for taking an occasional snooze in class, getting cold called by the professor, and waking up only to offer the most plugged in and articulate answer anyone could have imagined.  I suspected tapping into his brilliant mind would provide lots of food for thought, and he certainly didn’t disappoint.

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Feb 25, 2019
Rahul Moodgal - Master Fund Raiser (Capital Allocators, EP.87)
01:01:10

Rahul Moodgal has spent 20 years as a fund raiser across long only strategies, hedge funds, fund of funds, customized solutions, start-ups, and non-profits.  Collectively, Rahul has raised and helped raise $60 billion for firms since 2005.  He started his career in the industry at powerhouse TT International, and later joined The Children’s Investment Fund (TCI) where he led the marketing effort that raised $20 billion in just 3½ years.  Within TCI’s affiliate model, Rahul also was responsible for the largest India fund raise in history ($1 billion for TCI New Horizon Fund), and the largest sector fund launch in history ($1.1 billion for Algebris Investments).

Our conversation covers capital raising lessons learned from teaching, the value of transparency, the gold rush before 2008, the lean times afterwards, modern fee structures, the three key points to effective marketing, the three traits that will kill you, the two biggest issues start-up funds face, the best questions asked by leading allocators, and some of the worst horror stories in attempted capital raising. We close comparing by fund raising for charities and investment firms. 

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Feb 18, 2019
Chris Ailman – CalSTRS’ Venerable CIO (Capital Allocators, EP.86)
01:13:59

Chris Ailman is the chief investment officer of the $220 billion pool for California State Teachers' Retirement System (CalSTRS). He joined CalSTRS back in 2000 after 4 years as CIO of the Washington State Investment Board and 11 years as CIO of the Sacramento Country Employees Retirement System.  Chris is a legend in the business and the list of accolades for his work is longer that the list of my podcast episodes.

Our conversation dives in with the flawed business model of government running a money management firm, looming retirement crisis, and challenges of governance and communication with a rotating Board.  We then turn to the inner workings CalSTRS, including the use of internal and external managers, managing a long-term asset allocation cruise ship, inflation sensitive investments, risk mitigating strategies, private equity for a huge pool of capital, the innovation lab, ES and G, and building influence among large asset owners.

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Feb 11, 2019
Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85)
54:56

Steve Kuhn is a retired hedge fund manager.  He spent two decades in the industry, specializing in mortgage-backed securities at Cargill, Citadel, Goldman Sachs, and Pine River.  In his last stint in the business until his retirement in 2016, Steve was a Partner and Portfolio Manager at then $14 billion Pine River Capital Management and was one of the hedge fund industry’s most widely known fixed income traders.

Our conversation covers parlaying a passion for playing games into a two-decade Wall Street career, spending time productively when your investing specialty is out of favor, stepping away from the money game, presenting the evidence-based case for active manager alpha, talking the state of the hedge fund industry, managing his own money, engaging in philanthropy, and proposing the IDEAL immigration model.

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Feb 04, 2019
Donna Snider – Inside the Investment Process at the Kresge Foundation (Capital Allocators, EP.84)
48:44

Donna Snider is a Managing Director at the $4 billion Kresge Foundation, where she has worked for ten years as one of three senior team members under Chief Investment Officer Rob Manilla.  Last summer, Institutional Investor named Donna the number one ranked Most Wanted CIO of the future.

Our conversation starts with Donna sharing the cross fertilization of bringing her sell side trading experience to a Foundation and on the flip side learning manager selection from her very first data point. We then turn to the inner workings of the Foundation investment program from the perspective of a long-tenured senior team member, including the nitty gritty details of the internal investment process, the tricky decision process that goes into adding a manager or taking one out of the portfolio, the management of overlays and internal trades, the different roles of a CIO and senior investment team member, current challenges in venture capital, value investing, hedge funds, and emerging markets, and the politics of getting named a Most Wanted future CIO.

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Jan 28, 2019
Ron Biscardi – Putting Hedge Funds in Context (Capital Allocators, EP.83)
40:12

Ron Biscardi is the Co-Founder and CEO of Context Capital Partners and a Partner and Board Member of Context Summits.  Ron sits at the intersection of buyers and sellers for small funds, and actively invests as a provider of acceleration capital.  

Our conversation covers Ron’s path from an engineer to an asset management entrepreneur, the challenges and opportunities of investing in small hedge funds, the disconnect with the perception of hedge funds in the media and the reality that occurs at the Context Summit, the interests of single-family offices, and new investment opportunities on the horizon. 

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Jan 21, 2019
Jean Hynes – Inside Wellington Management (Capital Allocators, EP.82)
52:50

Jean Hynes is a Managing Partner at Wellington Management, where she one of three people responsible for the governance of Wellington’s storied partnership.  Jean also is the sector leader of the firm’s healthcare team that manages the Vanguard Healthcare Fund, three global healthcare hedge funds, and global healthcare sector portfolios. She joined Wellington after graduating from college in 1991 and has been at the firm ever since. 

Our conversation covers Wellington’s humanistic culture, its evolution from a U.S. value shop to a global federation of boutiques, talent recruitment, the successful merit-based partnership structure, and the Wellington of the future.  Along the way we touch on Jean’s progression from an administrative assistant to a Managing Partner, the healthcare team’s investment philosophy and process, a day in her work life, and topical issues of active vs. passive, public and private investing, and large vs. small firms.

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Jan 14, 2019
Jen Prosek – Branding an Asset Management Firm (Capital Allocators, EP.81)
56:28

Jennifer Prosek is the founder and CEO of Prosek Partners, a leading international public relations and financial communications consultancy with offices in New York, London, Los Angeles and Connecticut. Prosek Partners ranks among the top 10 independent public relations firms in the U.S., and among the top financial communications consultancies.  The firm has been listed as an Inc. 5000 Fastest Growing Company for nine years running.  Jen is also a two-time author. 

Our conversation covers the foibles of professional marketing in asset management, building a brand, measuring a successful branding effort, managing the story of weak performance, and describing the differences in hedge fund and private equity branding.  We then turn to some of Jen’s fascinating observations learned from her experience, including raising entrepreneurial children, working with millennials and Gen Z staffers, and implementing the principals of ‘Just Ask’, behave with humanity, and not thinking in black and white.

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Jan 07, 2019
Top 10 Episodes of Capital Allocators in 2018
02:33

Please enjoy this countdown of the top 10 most downloaded episodes of Capital Allocators in 2018 (and top 5 most downloaded episodes featuring CIOs).

If you have any ideas and can make introductions to guests who might crack next year's top 10, please send the my way. 

Wishing you a happy, healthy, and prosperous New Year.

Dec 31, 2018
Tim McCusker – Consistency and Creativity as CIO at NEPC (Capital Allocators, EP. 80)
57:53

Tim McCusker is the Chief Investment Officer at NEPC, an investment consultant that advises on $1 trillion in assets on behalf of 400 institutional clients.  Tim oversees NEPC’s 50-person investment research team and leads investment strategy for the firm.  In each of 2014, 2015, and 2016, CIO Magazine recognized Tim as one of the world’s most influential consultants.

Our conversation covers NEPC’s client centric model, meeting the needs of a range of client types, forming and implementing capital market views, researching managers, sourcing in public and private assets, allocating to scarce capacity managers, and forming and leaning into the megatrends of artificial intelligence, income inequality, demographics, and shifting currency regimes.

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Dec 17, 2018
Brent Beshore - Micro Buyout Adventur.es (Capital Allocators, EP.79)
01:08:25

Brent Beshore is the founder and CEO of Adventur.es, an investment firm that buys small family-owned businesses with the intention of holding them indefinitely.  After launching a few businesses out of college, Brent developed a distinct investment strategy and style. Earlier this year, he raised outside capital for the first time in a permanent capital vehicle, and I am a happy investor in the fund.

Brent regularly shares his insights on business and investing through his widely distributed letters on his website and commentary on Twitter. And just last week, he released his first book, The Messy Marketplace:  Selling Your Business in a World of Imperfect Buyers.  It’s a fantastic instructional guide that covers everything from emotional expectations to the fine print in documentation.

Our conversation covers Brent’s childhood interest in business, early mistakes, structural differences in his strategy from traditional private equity, search funds and fundless sponsors, sourcing deals, conducting due diligence, understanding valuation, negotiating, raising a first-time permanent capital vehicle, entering the ranks of professionals, and his new book.

Brent is unusually insightful about investing in general and deeply knowledgeable about the niche he occupies.

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Dec 10, 2018
Tom Bushey – Launching a Hedge Fund (Capital Allocators EP.78)
48:39

Tom Bushey is the founder of Sunderland Capital, a Boston-based hedge fund he started in 2016.  Tom graduated from the Wharton School as an undergraduate, and worked as an investment banker at Credit Suisse First Boston, private equity analyst at Thayer Capital, hedge fund analyst at Millenium and Mayo Capital, and portfolio manager at Blackrock before trying his hand on his own.  Even with that stellar resume, the road to success running an asset management business has plenty of obstacles along the way.

Our conversation tells Tom’s story of what happened through his career and launch process.  He shares an inside look from a manager’s perspective of what it takes to get a fund off the ground. 

As an important aside and disclaimer, I’ve known Tom for a while and have advised him for the last two years.  I happen to like him a lot, both personally and professionally, but you should know I have a small vested interest in his success.

Dec 03, 2018
Mark Baumgartner – Luck, Risk and Uncertainty at the Institute for Advanced Study (Capital Allocators, EP.77)
56:17

Mark Baumgartner is the CIO of the Institute for Advanced Study, where he oversees a $1 billion portfolio that seeks to achieve just median returns but with significantly less risk.  Prior to joining IAS, Mark had stints at the Ford Foundation overseeing risk, at Morgan Stanley’s Alternative Investment Partners, at both quantitative and qualitative hedge funds, and as a management consultant.  Oh, and he studied to be a rocket scientist before that.
 
Our conversation covers Mark’s path to IAS and the principles of luck, risk, and uncertainty on that path. We discuss the IAS portfolio, one catered to achieve a low risk profile, and how he has stayed the course when that structure hasn’t been rewarded by markets.  We talk about identifying managers that fit into his approach and different metrics of defining risk at both the manager and portfolio levels.

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Nov 26, 2018
Annie Duke – Thinking More in Bets (Capital Allocators, EP.76)
47:26

My guest on today’s show once again is Annie Duke, decision-making expert, former world-famous poker player, and author of the best seller, Thinking in Bets.  I had a chance to interview Annie at The Investment Institute’s Fall Forum in Chapel Hill, North Carolina and the live interview follows. Special thanks to Andrea Szigethy and Donna Holly, founders of the Institute, for having Annie and me down for their terrific event.

Our conversation covers the challenge of separating signal from noise in making decisions, the formation and confirmation of beliefs, forming decision groups, communicating with teams, and mistakes Annie’s advisory clients have made after reading her book.  We close with some questions from the audience and end with two great poker stories of how Annie approached being a woman in the male-dominated poker world.  Annie’s irrepressible brain was on display this time around, covering a few of the same ideas from our last conversation and some new ones with different anecdotes along the way.

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Nov 19, 2018
Michael Lombardi – Leadership Through Football (Capital Allocators, EP.75)
51:37

Michael Lombardi is a thirty-year veteran of professional football, including as a General Manager and a three-time Super Bowl winning executive.  He is the author of the fantastic recently released bookGridiron Genius, A Master Class in Winning Championships and Building Dynasties in the NFL. The book is a tour de force of applied leadership through his learnings working alongside football greats Bill Walsh, Al Davis, and Bill Belichick.  Since stepping aside from the front office to write his book, Michael appears as a commentator on television, hosts the top-ten sports podcast, GM Street, and speaks to businesses about leadership and teamwork.

Our conversation covers his early passion for football, the contrasting leadership styles of Bill Walsh and Al Davis, the magic of Bill Belichick, the four areas of leadership, the science and art of scouting, and where the front office breaks down.

Michael embodies the style of leader that he describes, and his lessons are applicable to investment and business leaders alike.

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Nov 12, 2018
Jeffrey Solomon - Grief and Goodness in Squirrel Hill (SPECIAL EPISODE)
33:06

Last week, the senseless and tragic events at the Tree of Life Synagogue in Pittsburgh left me and many others asking questions about our world today.

This one hit a little closer to home for me than the many other equally terrible events that have occurred because my mother grew up in Squirrel Hill. Our family is a generation removed and not closely connected to the town anymore, but my friends Andy Fisher and Jeff Solomon very much are.

Andy is the President of CIM Investment Management in Pittsburgh, where he has worked for a quarter-century and oversees $1.4 billion. He was born and raised in Squirrel Hill and lives a few blocks from the Tree of Life Synagogue.  Andy sent me an email last Monday with a clip from an interview that our mutual friend Jeff conducted on MSNBC.

Jeff is the CEO of Cowen Group and is a proud Pittsburgh and Squirrel Hill native.  He was also the guest on the 9th Episode of Capital Allocators, and you can find a replay right after this special episode.

I sat down with Jeff last Wednesday to talk about his experience in the initial days of these tragic events.  That conversation follows.

I want to offer a special thanks to Andy for the thread that led to this episode, and offer prayers and healing to Andy, Jeff, their family and friends directly impacted in Squirrel Hill, and to everyone I don’t know wherever acts of hated have impacted their lives.

Nov 05, 2018
REPLAY - Jeffrey Solomon – Vision, Tenacity, and Empathy (Capital Allocators, EP.09)
54:22

Jeffrey Solomon is the President of publicly listed Cowen Group (TK: COWN), a financial services company focused on supporting and providing active management to the marketplace. After graduating from the University of Pennsylvania in 1988, Jeff deferred an acting career with a brief respite on Wall Street, but he hasn’t looked back since. In 1994, he joined Peter Cohen, then the former head of investment bank Shearson Lehman Brothers, to form money management firm Ramius Advisors. Ramius grew to become one of the largest hedge funds in the world, and in 2009 merged with boutique investment bank Cowen Group.

Following the merger, Jeff switched over to the investment bank side of the business and today serves as its Chief Executive Officer, where he embodies the firm’s core values of vision, tenacity and empathy.

Our conversation starts with a passionate description of Pittsburgh sports, and flows to how active managers succeed in the 1990s and need to evolve to succeed today. We discuss the importance of empathy in the investment business, and touch on how Jeff’s summer camp experience as a kid informs how he manages people today. His answers to my closing questions are just amazing. If you’re short on time, fast forward to the 51stminute of the show. You’ll miss plenty along the way, but you don’t want to miss these.

Please enjoy my conversation with Jeff Solomon.

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Nov 05, 2018
Karl Scheer – Competing Sensibly as CIO of the University of Cincinnati (EP.74)
46:19

Karl Scheer is the Chief Investment Officer of the University of Cincinnati’s billion-dollar endowment.  Before taking the helm at Cincinnati in 2011, he co-ran a family office and spent eight years in the venture capital industry.

Our conversation covers Karl’s background, running a family office in the teeth of the Global Financial Crisis, high-functioning governance, avoiding the worst managers, taking the hard road, conducting due diligence with popular managers and without checklists, and picking your spots.

Book Links

John Brooks, Once in Golconda:  A True Drama of Wall Street 1920-1938

Edward Chancellor, Devil Take the Hindmost: A History of Financial Speculation

John Brooks and Michael Lewis, The Go-Go Years: The Drama and Crashing Finale of Wall Street's Bullish 60s

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Oct 29, 2018
Andrew Tsai – Catching a Theme on the Chalkstream (EP.73)
01:10:22

Andrew Tsai is the Chief Investment Officer of Chalkstream Capital Group, which he founded in 2003 to manage the assets of quant guru Peter Muller.  Andrew’s fascinating background started on the Lehman arbitrage desk in the early 1990s, after which he formed a quantitative hedge fund in 1997, built a dot.comlogistics business in 1999, and led the turnaround of a private equity-backed business thereafter.  He combined his wide range of skills to focus on investing at Chalkstream.

Our conversation walks through the stories and lessons from Andrew’s background and turns to Chalkstream.  His investment program is the opposite of asset allocation, emphasizing deep dive research, concentrated themes in niche spaces, low beta, long tails, and culture. We close by fleshing out examples of Chalkstream’s themes in Japan and electricity trading.

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Oct 22, 2018
Michael Schwimer – Moneyball as an Investment Strategy (Capital Allocators, EP.72)
56:04

Michael Schwimer is the CEO of Big League Advance, a company that makes investments in Minor League baseball players in exchange for an agreed-upon percentage of their future earnings.  Before founding BLA, Michael was a professional baseball player, working his way through the minors and reaching the majors as a pitcher for the Philadelphia Phillies.  A shoulder injury left him pondering what to do next, which led to the creation of BLA. 

Our conversation discusses Michael’s career as a player, the difficult life of Minor Leaguers, and his mission to improve their fortunes.  We discuss his passion for statistics, application of Sabremetrics, and development of a team of All-Stars in the game of sports analytics.  We close with a look into the future of BLA and Michael’s prediction for this year’s World Series Champion.  Whether his bet proves right or wrong, Michael’s rationale exemplifies second order thinking through the lens of data analytics that is never far from his mind.

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Oct 15, 2018
Michael Batnick - The Best Investors and Their Biggest Mistakes (Capital Allocators, EP.71)
29:23

Michael Batnick is the Director of Research at Ritholz Wealth Management, author of theIrrelevant Investor blog, co-host of the Animal Spirits podcast, and recently, author of his first book, Big Mistakes: The Best Investors and Their Worst Investments.

Our conversation starts with Michael’s atypical career path, his arrival at Ritholz, and his blog. We then turn to stories from his book about Ben Graham, Jesse Livermore, Jack Bogle, Stan Druckenmiller, John Maynard Keynes, Charlie Munger, and Chris Sacca.  Lastly, we discuss how Michael applies the lessons in his book at Ritholz. Michael is a widely followed rising star in financial social media, and our conversation is packed with nuggets of timeless investment wisdom.

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Oct 08, 2018
REPLAY Andrew Golden - Princeton University's Chief Investing Tiger (EP.13)
01:13:03

After getting some great feedback from the replay of my conversation with Scott Malpass, I am going to repeat some gems from the past every few months. This week I picked out my conversation with Andy Golden, the venerable head of Princeton’s 24 billion dollar endowment. It’s another master class in endowment management from a seasoned veteran.

Andy Golden is the President of Princeton University’s Investment Management Company (PRINCO). Having grown from $3B at the time of his arrival in 1995 to $22.5B today, PRINCO has been among the highest performing endowments in the world. Andy came to PRINCO from Duke Management Company, where he was an Investment Director, and received his formative training in the business working for David Swensen at the Yale University Investments Office. Andy currently serves on the fund Advisory Boards of several well-known private equity and venture capital managers, including Bain Capital, General Catalyst Partners, and Greylock Partners. He was a founding member of the Investors’ Committee of the President’s Working Group on Financial Markets and serves as a Trustee of the Princeton Area Community Foundation and Rutgers Preparatory School. Andy holds a B.A. in Philosophy from Duke University and an M.P.P.M. from the Yale School of Management.

Our conversation discusses Princeton’s endowment two decades ago and today, including its strategic advantages as an institution, shifts in thinking about asset allocation, decision making, team development, and partnership with managers. Andy’s long tenure in his seat, insight, and wisdom provides a treasure trove of information about how a top endowment manager practices his craft, and his subtle wit always keeps things light.

Learn more at www.PeterAttiaMD.com

Connect with Peter on Facebook | Twitter | Instagram.

Oct 01, 2018
Raphael Arndt – Australia’s Sovereign Wealth Fund CIO (Capital Allocators, Episode 70)
01:25:57

Raff Arndt is the Chief Investment Officer of Australia’s AUZ$145 billion Sovereign Wealth Fund, the Future Fund.  He trained as an engineer and dove into infrastructure policy at the beginning of Australia’s privatizations in the late 1990s. After investing in the space for six year, he joined the Future Fund in 2008 to head the infrastructure team. Six years later, Raff became CIO.

Our conversation spans all aspects of the management of a next generation institutional portfolio, including a one team, one portfolio philosophy, disaggregating beta and factors from skill in public markets, separating the impact of leverage and timing from skill in private markets, venture capital and co-investment opportunities in a large pool of capital, the option value of flexibility, the team required to make decisions in this format, compensation, fees, views on China, and the current market environment.

Australia created the Future Fund only eleven years ago with a mandate to compound capital for 20 years before even contemplating withdrawals. It has been described to me as a pool of capital with the size and transparency of CalPERS and the sophistication of Yale. I’m sure you’ll soon understand why.

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Sep 24, 2018
Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69)
01:08:42

Professor Stephen McKeon spent six years out of college working in finance for venture-backed startups before returning to graduate school and earning his PhD in finance in 2011. Blending his interest and experience, Steve focuses his research on corporate finance, M&A, security issuance, and most recently, crypto assets, where he has become a leading academic authority in the nascent area.

Our conversation starts with Steve’s first job smack into the teeth of the tech meltdown in 2000 and his subsequent roles at a winery and a drone company.  We then turn to his work as an academic in the world of crypto assets, walking through the thesis for security tokens. 

Steve presents a case for the future of security tokens that is tangible and achievable.  Now that the noise from soaring crypto currency prices has died down, we can learn a lot from Steve about what blockchain technology may bring to investing in the years ahead.

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Sep 17, 2018
Michael Mervosh – Invest in Yourself (Capital Allocators, EP.68)
01:12:05

Both times I was interviewed (by Khe Hy and Patrick O'Shaughnessy) and shared those conversations on Capital Allocators, I made reference to a special experience I’ve participated in for the last five years called the Hero’s Journey. The weeklong journey in the mountains of West Virginia provides a setting and platform for each participant to access their best self.

Michael Mervosh is the deeply insightful Executive Director of the Hero’s Journey Foundation, an organization he created that provides experiential learning opportunities for human development and transformation based on Joseph Campbell’s mythic hero’s journey. He has a passion and indescribable skill in enlivening the developmental process and fostering vitality, meaning and well-being in individuals, groups, and organizations. When not running programs or training others, Michael practices psychotherapy at the Nuin Center in Pittsburgh, where he has professionally resided for 25 years.

Our conversation took place in the mountains towards the end of this year’s journey and is quite different from those you may be accustomed to hearing on the show. We cover Michael’s path to creating the experience, the myth of the Hero, lessons in how the world actually works, the call to adventure, perfectionism, uncertainty, fear, and poetry.

If you’re intrigued, I strongly encourage you to check out herosjourneyfoundation.org. Spaces are limited for the annual summer Men’s and Women’s Journeys, so sign up for next year’s trip at the website or reach out to me.  I intend to be back on the mountain next year and hope to see you there.

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Book Links

Phillip Shepherd, New Self, New World: Recovering Our Senses in the Twenty-First Century

Joseph Campbell, The Hero with a Thousand Faces

Jack Kornfeld, After the Ecstasy, the Laundry: How the Heart Grows Wise on the Spiritual Path

Joseph Jastrab, Sacred Manhood Sacred Earth: A Vision Quest into the Wilderness of a Man's Heart

Sep 10, 2018
Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67)
52:13

Sarah Williamson is the CEO of FCLTGlobal, a non-profit consortium of large asset managers, allocators, and corporations dedicated to encouraging long-term behavior in business and investment decision-making. FCLTGlobal conducts research, convenes business leaders, develops actionable tools, and generates broad awareness of ways in which a longer-term focus can increase innovation, economic growth, and future savings.

Prior to joining FCLTGlobal in 2016, Sarah spent 21 years at Wellington Management Company, where she was most recently a Partner and Director of Alternative Investments.  She started her career at Goldman Sachs, and had stints at the U.S. Department of State and McKinsey before joining Wellington.

Our conversation beings with Sarah’s career and turns to FCLTGlobal. We talk about potential improvements at the corporate level, including eliminating quarterly guidance, executive compensation,  capital allocation, and Board dynamics, and then turn to the relationship between money managers and allocators, including fee structures, setting expectations, reporting returns, and governance. Lastly, Sarah discusses new research initiatives. 

I’m pulling for Sarah.  If her work bears fruit, we all will be better off, and most importantly, so will our clients.

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Sep 03, 2018
Kristian Fok – Australia’s CBUS Superannuation CIO (Capital Allocators, EP.66)
01:01:31

Kristian Fok is the Chief Investment Officer of Australia’s A46B ($35B USD) Construction & Building Industry Superannuation Fund, or CBUS. Prior to joining CBUS in 2012, Kristian spent 14 years consulting to Australian Super Funds at Frontier Advisors.  Australia’s Superannuation program mandates that employers contribute 9.5% of its employee salaries into a Super Fund, which is owned by the employee, like a 401k in the U.S., and grows with investment returns until retirement. The employees, in turn, have a choice of providers to invest their savings. The model has been one of the most successful in the world in preparing the population for retirement.

Our conversation starts with Kristian’s path to the CIO seat at CBUS and focuses on the hybrid investment model blending internal and external management. We discuss the transition to internal management as assets scale, example of CBUS’ internal property company, economics of internal management, talent recruiting and retention, portfolio structure, external manager selection, people management, and investment with a long time-horizon.

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Aug 27, 2018
Josh Wolfe – Seeing the Lux (Capital Allocators, EP.65)
01:10:03

Josh Wolfe is the co-founder of Lux Capital, a $1.5 billion venture capital firm formed to support scientists and entrepreneurs who pursue counter-conventional solutions to the most vexing puzzles of our time. Josh’s innovative thought process across his activities offers frameworks and insights applicable across the spectrum of investing.

Our conversation covers Josh’s early passion for science and finance, building a competitive advantage in venture capital from scratch, sourcing ideas, conducting due diligence, making investment decisions, constructing portfolios, making exits, learning from mistakes, navigating a challenging private equity environment, posting on Twitter, active vs. passive management, dinner table conversation, and life lessons.

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Aug 20, 2018
Ben Reiter – Moneyball 2.0 (Capital Allocators, EP.64)
47:26

Ben Reiter is a senior writer for Sports Illustrated and the author of Astroball:  The New Way to Win It All.  He joined SI in 2004 a few years out of college and has written for them ever since. In 2014 Ben wrote a cover story for SI entitled YOUR 2017 WORLD SERIES CHAMPS featuring the then sorry Astros who were the laughingstock of baseball at the time.  Three years later, his prediction came true. His book chronicling the journey has been dubbed Moneyball 2.0.

Our conversation blew me away in how closely the parallels have been between baseball management and fundamental investing over the last 15 years.  From the incorporation of data to the challenges in managing people, I suspect if you just change the names of the players and the labels for the process, this could be a full blown conversation about investing. Baseball may even be ahead of the data revolution in investing, and the story of the Astros could hint at lessons that money managers will need to apply going forward. 

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Aug 13, 2018
Roz Hewsenian –Helmsley Trust’s Chief of People and Process (Capital Allocators, EP.63)
01:15:44

Roz Hewsenian is the Chief Investment Officer of the $6 billion Helmsley Charitable Trust. Prior to joining Helmsley in 2010, Roz had a storied career in the industry, highlighted by her two decades of work as the consultant to CalPERS while at Wilshire Associates. 

Our conversation tracks Roz’s career, including lessons from teaching children, the most important rule of management, successful investment consulting, taking time off, and joining Helmsley. We then turn to her current role and cover opportunistic-based allocation, theme identification, benefits of concentrating in managers, oversight of a team and due diligence, stories from the front lines, exciting investment opportunities, co-investments, and governance.

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Aug 06, 2018
Charley Ellis - Indexing and Its Alternatives (EP.62)
01:14:29

Investment luminary Charley Ellis is the founder of Greenwich Associates, author of 16 books, and one of the most sought-after industry advisors worldwide.  He also believes deeply in the paradox of skill and his latest book, The Index Revolution: Why Investors Should Join It Now, presents a compelling case for indexing for most investors..

Charley was an early guest on the show and we reconvened to talk through the full case of indexing for individuals and some of its constraints for institutions.  Our conversation covers the case for indexing, smart beta, the retirement problem, investing in alternatives, private equity, and indexing challenges in emerging markets.

After we turned off the recording, Charley proffered that we offer a prize for anyone who can find valid fault with the case against active management for most investors. Any takers can drop me an email, and I’ll be happy to put them toe-to-toe with Charley to debate the issue.

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Jul 30, 2018
Manny Friedman – Non-Linear Financial Systems (Capital Allocators, EP.61)
51:32

Manny Friedman is the CEO of EJF Capital, a firm he co-founded in 2005 that manages $9 billion with a focus on the financial services industry. Manny started EJF after his retirement from Friedman, Billings, Ramsey Group, Inc., a company he co-founded in 1989 and served as Co-Chairman and Co-Chief Executive Officer. 

Our conversation looks back at Manny’s lifelong passion for investing, the globalization of markets, and the financial crisis, and then looks forward at the newly created economic opportunity zones, long-term impact of government stimulus, stranded assets created by technological change, regulation, and philanthropy.

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Jul 23, 2018
REPLAY - Scott Malpass – The Fighting Irish’s Twelfth Man (Capital Allocators, EP.25)
01:20:51

This replay is the one of the most downloaded shows from last year, and one that new listeners may have missed.  Regular listeners no doubt might pick up a new insight listening again.

Scott Malpass is the esteemed Vice President and CIO of Notre Dame University, where he oversees the school's $12 billion endowment. Scott earned his B.A. and M.B.A. degrees at Notre Dame, and returned to South Bend at the ripe age of 26 following a brief stint on Wall Street. His track record for almost 30 years, as defined by both performance and impact, place him indisputably in rare company at the very top of the field.

Our conversation is a full-blown master class on endowment management, including the benefits of a long tenured team, asset allocation frameworks, passive management, preparing for dislocations, the state of venture capital, sourcing, monitoring and exiting managers, incremental process improvements, professional and personal development, and education and alignment across constituencies. It’s hard not to be in awe of Scott’s combination of humility, experience, and success.

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Jul 16, 2018
Anthony Scaramucci – It’s Called a Mooch (Capital Allocators, EP.60)
01:01:54

The name Anthony Scaramucci currently has 55% name recognition in the U.S. according to Politico. Anthony has been an entrepreneur in the hedge fund industry for 23 years, growing to prominence within the industry through his oversight of fund of funds Skybridge Capital, creation of the popular SALT conference, regular television appearances, and rejuvenation of the iconic television show Wall Street Week.  He grew to prominence worldwide when his longtime political interests led to a brief tenure as White House Communications Director in 2017.

Our conversation starts off with a bang and turns to the ups and downs in Anthony’s career, including getting fired and rehired at Goldman Sachs, starting and selling his first hedge fund, creating Skybridge and watching it almost fail, and thriving after the financial crisis. We discuss Anthony's thoughts on hedge funds, lessons from his stint in Washington, and books he has written about his experiences. Along the way, he shares life lessons about managing people, building relationships, resiliency, laughing at yourself, greed, ego, and fame.

Anyone who has only known Anthony from his recent public profile might be surprised to hear the depth of his insight, self-effacing honesty and caring of others, alongside his irrepressible salesmanship. Those who have known him longer will recognize the same Mooch as always in all his splendor.

 

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Show Notes

2:48 – Anthony’s professional history

8:03 – Time at Oscar Capital/Neuberger Berman

9:25 – Neuberger sells to Lehman

10:13 – Leaving Lehman to start Skybridge

13:13 – Getting through the financial crisis

14:04 – Launching SALT conference

15:35 – Buying Citigroup's fund of funds business

17:34 – Anthony’s approach to the hedge fund business

20:28 – How he handles the relationships with managers

22:15 – Environment for the hedge fund space

            24:12 – After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead

26:02 – Hedge fund space moving forward

28:03 – What he learned from being fired

31:22 – Handling public adversity

32:40 – Selling the business to serve the country

35:35 – Life lessons learned throughout his career and shared in his books

            35:40 – Goodbye Gordon Gekko: How to Find Your Fortune Without Losing Your Soul

            38:40 – The Little Book of Hedge Funds

            38:44 – Hopping over the Rabbit Hole: How Entrepreneurs Turn Failure into Success

39:20 – The key principles that Anthony tries to impart on his team

41:47 – Lessons in launching a hedge fund business

45:00 – What changed upon his return to Skybridge

46:33 – How does it feel to be famous

48:10 – Closing questions

            56:06– The China Mission: George Marshall's Unfinished War, 1945-1947

Jul 09, 2018
Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59)
52:09

Peter Troob is the co-Founder and CIO of Troob Capital Management, an opportunistic investor and family office with particular expertise in distressed situations. Prior to starting TCM in 2002, Peter spent six years focusing on distressed debt investing at Contrarian Capital and Everest Capital.  He started his career as an investment banker, and after his tenure in self-proclaimed purgatory, he co-authored the entertaining book ‘Monkey Business: Swinging Through the Wall Street Jungle.”

Our conversation begins with life as an investment banking analyst, and turns to competing with large distressed funds, the frothy high yield market, trickery in the CDS market, high yield ETFs, idiosyncratic opportunities, diversifying family assets, managing teams, and learning from the dinner table.

 

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Show Notes

2:09 – Start of his career

3:02 – Peter's book Monkey Business

3:47 – The life of an investment banker

4:22 – Decision to leave the bank

4:50 – His experience at a hedge fund

5:27 – Some of his early mistakes

6:15 – The dynamics of distressed debt investing

8:05 – The appropriate size for a distressed fund

11:28 – What should your expectations be if you invest in a large fund

13:12 – Short credit thesis

18:00 – Impact of private equity owned companies on defaults

19:49 – Shenanigans we are seeing in the CDS market

24:36 – Concerns about high yield ETFs

26:42 – Investing family capital

29:16 – Sourcing idiosyncratic deals

32:49 – What Peter has learned about managing a team

35:43 – Hiring millennials

36:22 – Lessons from investing mistakes

43:05 – What is it like working with family

45:58 – Closing questions

            49:56 - Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts

Jul 02, 2018
James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58)
01:27:35

Australian James Aitken is the Founder and Managing Partner of Aitken Advisors, a one-man macroeconomic consultancy based in Wimbledon, England that works with approximately one hundred of the most influential pools of capital in the world. James started his career in 1992 as a foreign exchange trader, moved to London in May 1999, and in March 2002 joined the infamous AIG Financial Products team in London.

In August 2006 he joined UBS, where he deployed his knowledge of the inner workings of the financial system to help his institutional investor clients successfully navigate their portfolios through 2007 and 2008. At the urging of his clients, James established his own firm in June 2009.

Our conversation covers James' perspective on the Global Financial Crisis from his seat at its epicenter, the Eurozone crisis in 2011, subsequent process-driven opportunities in Greece, views on Central Banks in the US, China, & Europe, some brief observations on India, positioning for the current environment, and what makes a great macro manager.

 

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Show Notes

3:03 – The start of his career at AIG Financial Products

7:19 – Move to UBS

            9:03 – Influence: The Psychology of Persuasion

10:42 – Sell off of 2006

13:12 – Leaving UBS to go off on his own

24:22 – What makes a great manager

27:55 – What is he seeing in the markets today, especially the US Fed

33:09 – MIDROLL

34:08 – What happens when bond rates normalize

46:36 – China

56:50 - Japan

59:10 – Europe

1:05:28 – Risk in the asset markets

1:08:49 – Advice to allocators

1:11;05 – Why people should be focused on India

1:16:39 – How he spends his time

1:20:56 – Closing Questions

Jun 25, 2018
Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57)
01:00:26

Brian Portnoy Brian is currently the Director of Investment Education at $100B investment solutions provider Virtus Investment Partners, where he strives to simplify the complex world of money in an effort to help investors make better decisions and lead a joyful life. For the past two decades, he has held senior investment, research, and strategy roles in the hedge fund and mutual fund industries at Chicago Equity Partners, Mesirow Financial, and Morningstar. 

Brian is the author of “The Investor’s Paradox,” a book about manager selection rooted in choice theory.  His second book, “The Geometry of Wealth” hits electronic and physical bookstores this week.

Our conversation covers Brian’s experience in manager research and lessons learned, choice theory and managing expectations, differences between institutional investment and private wealth management, distinction between seeking wealth and trying to get rich, his terrific new book, and why volatility is risk. Brian’s insightful take on investing and his journey from the complex to the simple is full of investment nuggets of gold.

 

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Show Notes

2:24 – Brian’s start in the business

5:18 – The useful skills he developed during his tenure at Morningstar

6:37 – The hard questions he would ask

7:15 – Why he left Morningstar

8:53 – What he learned at Mesirow that made him so detail oriented

10:57 – Leaving Mesirow

12:08 – What led Brian to writing The Investor's Paradox: The Power of Simplicity in a World of Overwhelming Choice

            14:51 – The Art of Choosing

16:58 – What is the investors paradox

            17:04 – The Paradox of Choice: Why More Is Less

19:29 – Reaction to the book

24:10 – Difference between his views on the asset management side vs the wealth management side

27:11 – The concept behind The Geometry of Wealth: How To Shape A Life Of Money And Meaning

30:58 – The shapes used to take people from confusion to comfort with money and investments, starting with the circle

36:00 – Moving on to the triangle in this formula

41:03 – The second triangle, focused on behavior

43:36 – The big blue square

49:29 – Hopes for the book

52:46 – Closing questions

Jun 18, 2018
Tom Lydon – ETF Trends (Capital Allocators, EP.56)
01:03:23

Tom Lydon is one of the leading experts in the ETF and mutual fund industries. He is the founder and CEO of ETF Trends, a business he created in 2004 whose website, etftrends.com, is filled with news, analysis, and webcasts about the world of ETFs. Before creating ETF Trends, Tom ran a financial advisory and publication business that followed the mutual fund industry.

Our conversation covers the evolution of mutual funds in the 80s and 90s and the rise of ETFs in the 2000s. We discuss the composition of the ETF marketplace, structure and tax advantages of ETFs, passive, factor and actively managed funds, characteristics of a superior manager, leveraged ETFs, VIX blowup, potential future problems in high yield and emerging market ETFs, and coming trends in the space.

 

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Show Notes

2:01  – A look at Tom’s early career

4:52 – What drove people to buy or sell a mutual fund in those early days

5:33 – How did Tom's sell signal just before Black Monday impact the business

6:21 – What were the right funds to invest with

6:56 – What were the key trends during the 80’s and 90’s

8:25 – Layers of cost for mutual funds in the early days

9:04 – Average active management fee back then

10:56 – Evolution of ETF’s

13:49 – Some numbers on the ETF landscape today

15:40 - Why did the last downturn foster more growth in ETFs

18:08 – The institutional presence in the ETF market

18:55 – Fees in the ETF space

19:50 – Distribution of ETFs

21:29 – Actively managed ETF’s

23:35 – Tax efficiency of ETF’s

26:42 – Judging ETF managers

31:26 – Do levered ETFs add any value

            34:00 – Ted paper against levered ETFs

35:18 – Potential landmines in ETFs

38:49 – Risks in the ETF space today

42:11– How do ETFs impact pricing distortions

46:16 – What’s happening in active fixed income ETFs

47:43 – Will fund flows chase hot managers?

48:35 – The big trends on the horizon

49:52 – What happens with liquid alternatives

51:08– What are businesses have thrived in the ETF space

53:56 – A deep dive into Tom’s business ETF Trends

55:41 – Closing questions  

 

Jun 11, 2018
Tali Sharot – Optimism, Decisions, and Mistakes (Capital Allocators, EP.55)
47:56

Tali Sharot is a leading expert on human decision-making, optimism and emotion. A neuroscientist by trade, Tali combines research in psychology, behavioral economics and neuroscience to reveal the forces that shape our decisions, beliefs and inaccurate expectations of the future. She is currently a visiting professor at MIT, and is also an associate professor of Cognitive Neuroscience at University College London where she directs the Affective Brain Lab. Tali is the author of The Influential Mind, The Science of Optimism, and The Optimism Bias. 

Our conversation tackles many of the issues Tali has studied in her career, including the optimism bias, sense of control, confirmation bias, behavioral change, and overconfidence.  We then touch on some of the applications of her work to investing, including the home country bias, making non-economic financial decisions, active management, emotion-driven decisions, team-based decisions, and research heuristics.  Lastly, we learn a few parenting tricks from the Influential Mind.

This conversation took place behind closed doors at the Context Leadership Summit in Las Vegas. 

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Show Notes

3:18  – Tali’s educational path to becoming a cognitive neuroscientist

4:58 – Why people make mistakes, optimism bias

7:24 – Does optimism bias impact our view of others as strongly as ourselves

9:12 – What should we do about our optimism bias

12:37 – How does controlling your environment impact how your brain works

14:47 – How do we work around our problems in decision making?

17:40 – How do you get more people to conform to things that are beneficial

21:11 – The impact of different personality types on these tactics

22:05 – How do we use this information to impact financial decisions

23:53 -  Home country bias among investors

25:00 – Is home country familiarity a bad thing?

27:12 – Impact of well-being on investment decisions

28:20 – Picking stocks because of the illusion of control

29:52 – The role of emotion in driving our decisions

32:39 – How do you use this information to help individuals or teams make better decisions

36:23 – New research

40:41 – Raising kids

42:29 – Closing questions

Jun 04, 2018
John Pfeffer - Crypto for Institutions (Capital Allocators, EP.54)
48:26

John Pfeffer is an entrepreneur, investor and author of “An (Institutional) Investor’s Take on Cryptoassets.”  He is currently Partner of Pfeffer Capital.  In the 2000s, John was a Member at private equity firm KKR, and in the 1990s, he was Chairman of the Executive Board of leading French IT company Groupe Allium S.A. Before that, he advised on turnarounds while with McKinsey in Europe and Latin America.

Our conversation jumps in the thought process and structure behind John’s family office portfolio, which combines building new businesses alongside fund investments in public equity, private equity and venture capital. We touch on common issues like active vs. passive, access and fees, but from a very different insider’s perspective.

We then turn to his work in the crypto world and discuss his framework for incorporating crypto investing in a portfolio, conducting research in the space, defining the proposition for store of value and utility protocols, and valuing tokens and coins.

John was the first investor I’ve come across that has both done a deep dive into the crypto world and is neither all-in nor all-out.  He connects markets and economics with the complex ecosystem just simply enough that a layman like me can follow along.

 

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Show Notes

2:38 – How John thinks about managing his own capital

2:51 – Process to find a business to build

5:08 – Sizing of thematic deals

5:50 – New project copying a European retail model

7:18 – Core of the portfolio

9:02 – Biases of investment alternatives

11:18 – How will tax changes impact the private equity business

11:49 – What does he know about GP’s as an insider that other LP’s might not know

13:53 – How do they tackle venture capital investing

16:25 – Fees

17:40 – First involvement in looking at cryptocurrencies

            17:46 – Institutional Investors Take on Crypto Assets

19:40 – Where do crypto assets fit in the structure of the portfolio

21:20 – Holding period for an asymmetric option

22:07 – What else did he do in cryptoassets after that first investment

24:54 – Store of value and utility protocols

29:51 – Valuing crypto assets

31:51 – Velocity of crypto exchange

40:12 – Gold replacement value of bitcoin

45:21 – Closing questions

May 28, 2018
Ross Israel - Stable, Predictable Cash Flows (EP.53)
53:06

Ross Israel is the Head of Global Infrastructure Investments for QIC, Queensland, Australia’s 82B AUZ ($62B USD) investment fund. The Queensland government formed QIC in 1991 to oversee its Superannuation Fund, and the business has since evolved into a Global Diversified Alternative Asset Manager. Ross joined QIC in 2006 to create the Global Infrastructure effort and also serves as a member of QIC’s Executive Committee.  He has a quarter century’s worth of experience in corporate finance and infrastructure funds management. 

Our conversation covers QIC’s structure, examples of long duration assets in ports and waterways, crossing knowledge between private and public markets, managing external assets alongside a substantial internal pool, governance structure, compensation and incentives, navigating stakeholders, and opportunities and risks in the space.

The subtle differences in constituents and objectives of sovereign wealth funds from other institutional pools come out in the implementation of QIC’s investing. It’s a topic we’ll continue to explore on future shows. 

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Show Notes

3:10 – A look at Ross’s background

5:58 – QIC and how is it structured

7:32 – Portfolio composition when Ross arrived

9:08 – What was his strategy for putting money to work

10:03 – What was the thinking behind such a concentrated portfolio

11:28 – Port of Brisbane

15:38 – Local vs. global focus

16:58 – Most challenging deal he’s done

18:28 – Lessons learned from their investing strategies

20:01 – Structure of their investment decision meetings

22:43 – Why does QIC take on outside capital?

25:27 – How does being part of a government entity play out in the deal dynamics

27:43 – How does decision making work on the fund?

29:06 – What happens if an internally run fund falters?

30:40 – QIC’s approach to incentives and compensation

37:13 – What influence do the large pool of funds have on the way they pursue investments

39:06 – How do they think about their objectives

41:30 – What is the competitive landscape for infrastructure investments

44:38 – What are the concerns as they look out on the horizon

47:32 – How do they view public debt

48:54 – Closing Questions

May 21, 2018
Kim Lew – The Carnegie Way (Capital Allocators, EP.52)
01:10:51

Kim Lew is the Vice President and CIO of Carnegie Corporation, where she is responsible for the investment and oversight of the Corporation’s $3.5 billion Foundation. Kim joined Carnegie in 2007 after spending a dozen years at the Ford Foundation. She is also a Trustee of Ariel Investments, the Board Chair of the Stevens Cooperative Schools, and a member of the investment committees of the Girl Scouts of America and the ACLU, and the steering committee of the Private Equity Women Investor Network. Last year, Institutional Investor awarded her Endowment & Foundation CIO of the year.

 

Our conversation covers the American dream story of Kim’s parents, Kim’s path to picking technology stocks and venture capital managers at Ford Foundation, two very different models of successful Foundation investing, blow-by-blow of the creation of an atypical Co-CIO seat at Carnegie, responsibilities that CIOs hate, idiosyncratic investments, committee meetings that foster long-term thinking, evolution of a farm team of managers, risk-taking in investing and life, and what to do when you turn 50 years old.

 

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Show Notes

1:52 – A look at Kim’s background

4:03 – How did her family life impact her schooling

5:26 – Was there anything in her upbringing that drew her to business

6:18 – First job out of college

7:15 – Heading to Harvard Business School

8:42 – The move to Prudential

9:48 – Her time at Ford Foundation

17:35 – Move to venture funds at Ford

18:20 – Comparing the job of sourcing managers then to today

20:27 – Kim’s move to Carnegie

22:42 – How the investment thinking was different at Carnegie

26:32 – How did their thinking on investing play out in individual decisions

27:55 – The decision to have Co-CIO’s

34:22 – Worst parts of being a CIO

37:13 – An outside responsibility that has been helpful to Kim’s career

38:56 – How the thinking on an investment committee for a pension can be different

40:05 – Stepping into the sole CIO role

41:06 – Imparting your influence on investment decisions when you are less in the weeds

41:42 – Carnegie's investment strategy

46:38 – Implementation

56:59 – Taking risks vs being smart with your capital

1:01:36 – 50 things she had never done before

1:05:42 – Closing questions

May 14, 2018
Paul Black - Gratitude, Fun, and Growth Stocks (Capital Allocators, EP.51)
55:41

Paul Black is Co-CEO and portfolio manager at WCM Investment Management, a $26 billion manager of global equities that he joined when it was a $200 million boutique in 1989.  With so much of the institutional world, including my own training, focused on value investing, I was pleasantly surprised to learn about a large, high performing growth stock manager located in a non-descript building in Laguna Beach, California.

Our conversation starts with Paul’s trial-by-fire entry into the business and turns to growth stock investing, including defining a great growth company, searching for widening moats, assessing a culture tied to competitive advantage, creating a positive culture, learning from mistakes, identifying tailwinds, and protecting the downside.

Paul embodies the principals he preaches and offers some tasty food for thought.

 

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