History Rhymes with the Downturn
"History doesn't repeat itself, but it often rhymes."
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What's In a Name? The Problem with ESG
“Listen closely to the words I lay. It’s all about the wordplay.” - Jason Mraz
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The Melvin Dilemma
In the early days of institutional interest in hedge funds, Byron Wien published a paper entitled “The Inherent Instability of Hedge Funds.” He described how strong performance leads to inflows, which can shift the investable opportunity set away from the one in which the manager thrived, and weak performance can lead to concerns over the […]
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HODL or Hit and Run
David Swensen held onto managers for decades. I recall several times when David stayed the course despite mounting evidence that a manager was unlikely to outperform going forward. I used to think it was the only systematic mistake that he made, but now I’m not so sure it was a mistake at all.
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Wash U and Kim Lew, Part Two
In the first half of “Wash U and Kim Lew,” I suggested the not-so-shocking revelation that what gets reported in the media isn’t quite right. Scott Wilson led Washington University of St. Louis to an extraordinary 65% return in 2021, but the news missed the real story. Scott’s novel approach to concentrating positions drove the […]
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Wash U and Kim Lew
When Warren Buffett and I made a charitable bet in 2007, Carol Loomis wrote a terrificstory about it in Fortune magazine. Within a day, dozens of news reports followedbased on her piece. Almost every other story got the facts wrong.
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The One Thing Successful Private Equity Firms Have in Common
On September 8th, Institutional Investor published an article written by Ted revealing how eight industry leaders built their private investment empires.
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Coinbase: My Favorite Beta
For a while, I’ve owned crypto beta in the form of Bitcoin, Ethereum, and more recently, Coinbase stock. Coinbase reported earnings this week for the second time since going public. Once again, it blew away expectations. After a modest move higher on the news, the stock trades around $280, representing a market cap of approximately […]
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The Thinking Behind Capital Allocators University
The hardest day to invest is always today. That investment truth seems particularly apropos today – a time when assets seem expensive, managers competition has intensified, and allocators are more sophisticated than ever before. In order to meet client needs, institutions will need to identify the next frontier, which I believe will come from inside organizations rather than from […]
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SPAC-less
SPACs have shifted from an exciting investment opportunity to another efficient corner of the capital markets. When I wrote SPACs: Croupiers and Incentives, Don't Just Do Something, Sit There, Air Out of the SPAC Balloon, Follow the SPAC Upside, and Concentration vs. Diversification, I saw lots of value to capture in SPACs. Since the last […]
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The Excitement of Optionality
The precipice of these new ventures reminds me of every time I've made a new investment. I do a ton of research upfront, think I have something special, and write the ticket. Each time I've funded a new manager, bought a new stock, or grabbed a new crypto token, my optimism about the outcome reigns […]
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Missionaries and Mercenaries
Alex Rodriguez described selecting investment partners as searching for missionaries and not mercenaries. His partner on the Minnesota Timberwolves purchase and VCP Fund, Mark Lorie, used the same expression on Guy Raz’s How I Built This to describe how he felt after selling Jet.com to Walmart (a missionary) and diapers.com to Amazon (a mercenary). That […]
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No Easy Entry
I bought my first crypto token this week – my first crypto-related investment outside of BTC and ETH. One of my takeaways from Crypto for Institutions was the potential for DAOs to be the next big thing in the ecosystem after NFTs. I had the idea to buy leading DAO token Maker a month or […]
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It's All Relative, Until It's Not
Private equity has been the rage for a while. Managers delivered, and capital is abundant. As a result, purchase prices for new deals keep rising. Add to that the capital deployed in late-stage privates through mega-funds, crossover vehicles and SPACs, and it all feels like a feeding frenzy. I’ve long thought that these conditions would […]
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Hail to the Chief (Investment Officer)
David Swensen was my mentor in the investment business from this day many years ago when I graduated college and came under his tutelage. As I reflected on his passing this week, I felt into how much of an impact he had on my career and life.
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Don't Be So Short Term
David Swensen walks into the office every day embodying Yale’s perpetual time horizon. The way he instills and reinforces that mindset is one of his many unique skills. Shortly after I left Yale and had a summer job at Brahman Capital, I was taking in a ball game in the old Shea Stadium with Yale’s […]
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Concentration vs. Diversification
Earlier this week, I rotated the lion’s share of my SPAC portfolio to concentrate in three names from two sponsors – Chamath Palihapitiya (IPOD and IPOF) and Jason Karp (HMCO). I also tightened the selection of warrants to focus only on those most likely to make a bang with a merger announcement. The evolution of […]
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Stay in the Game
Ari Paul and Matthew Goetz at crypto fund manager BlockTower Capital experienced a meaningful drawdown in 2018 as Bitcoin collapsed (disclaimer: I'm on their Advisory Board). As they looked to the future, the fund needed to make up substantial ground to recoup their highwater mark. Almost anyone would have folded the tent at that point […]
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Follow the SPAC Upside
The resetting of SPAC prices creates an evolving set of opportunities. My portfolio of post-IPO, pre-merger SPACs looks asymmetric and attractive.
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Air Out of the SPAC Balloon
A month ago, I shared my thesis about Post-IPO, pre-merger SPACs. At the time, the average SPAC traded at $10.50, the cheapest one in my portfolio was $10.30, and the four SPACs I owned that announced deals each popped from 10-24% on their announcement. What a difference a month makes. The entire SPAC sector deflated […]
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Don't Just Do Something, Sit There
Markets have a funny way of lulling us to sleep and fooling us into dreaming about a price graph that goes up and to the right. When market volatility is muted for long enough, the slightest tremors can cause fear and anxiety. I’ve read the books about behavioral finance and have spent hours with behavioral […]
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I Told You So
Amidst the chorus of bugles playing during this bull market, I’m hearing the not-so-faint sound of contrarian skeptics. Elaine Garzarelli called the 1987 crash, Jeremy Grantham nailed the dot.com bubble, and John Paulson, Michael Burry, and a dozen others minted money in the housing crisis. I was fortunate to listen to Chicken Little in 2007 […]
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SPACs: Croupiers and Incentives
The croupier and one-off idea concepts from the last two weeks intersect with SPACs. I see unusually attractive dynamics in the nascent ecosystem. SPAC sponsors are the ultimate croupiers, and their sponsor equity investment is one of the most attractive risk-rewards I have ever seen.
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Lack of Consensus
What struck me most about our virtual guest happy hours was the lack of consensus on ideas. Single stock ideas ranged from quality growth to deep value, and tobacco and oil alongside the evident wave of ESG. Private equity ideas spanned big core to idiosyncratic. Themes ranged from cannabis to Japanese small caps. Macro included […]
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Bet on the Croupier
Two of my best friends were members of the MIT blackjack team in the early 1990s, chronicled in the book Bringing Down the House and the movie 21. I remember back then thinking how unfair it seemed that the house always wins. If you learn to tilt the odds in your favor by counting cards […]
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The Short Squeeze
This week's short squeeze triggers all kind of thoughts. I sent out this tweet storm that scratches the surface. It led me to want to share investment ideas with our Premium Community as they arise. I'll share investment concepts, ideas, and actions as they arise at the top of the weekly, although probably not every […]
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