Behavioral Alpha and Pre-Planning for Downturns

What really happens inside the hidden world of family offices—and why do they invest so differently from institutions? In this episode, I explore that question with Sid Malhotra, Chief Investment Officer at Kactus Capital, a single family office. Sid reveals how family offices align incentives between principals and investment teams, the advantages of having true “skin in the game,” and why their long-term, absolute-return mindset stands apart from pensions, endowments, and foundations. We also discuss the unique strategic role family offices play—from backing zero-to-one opportunities to leveraging deep sector expertise and networks—and how Sid’s career path, from Citadel to Pritzker Group to his current role, shaped his approach to risk, alignment, and building resilient portfolios.

Highlights:

• Alignment over agency: how Kactus ties compensation and co-investment directly to long-term portfolio performance.
• Single vs. multi-family offices: why governance, focus, and principal control make a difference
• Strategic capital: family offices as early backers of crypto, seed managers, and illiquid opportunities institutions avoid
• Lessons from six years at the Pritzker Group: how legacy ownership and manufacturing DNA shape an investment lens
• Absolute returns and relative returns: why compounding capital while minimizing losses guides Sid’s philosophy
• Preparing for corrections: dry powder, T-bills, and opportunistic offense in market sell-offs
• Citadel training: lessons on multi-strategy flexibility, thinking across the capital structure, and risk-reward sizing
• The total portfolio approach: blending macro-awareness, bottoms-up selection, and thematic top-down views
• Career advice from Booth to CIO: why networking early is as critical as working hard

Guest Bio:

Sid Malhotra is the Chief Investment Officer at Kactus Capital Management, a single family office where he leads all investment activity across public and private markets. Before joining Kactus, Sid spent over six years at the Pritzker Group, helping steward the family’s legacy of business ownership and investing across multiple asset classes. Earlier in his career, he worked at Citadel, gaining multi-strategy and capital-structure investing experience. Sid holds an MBA from the University of Chicago Booth School of Business and a B.A. in Economics from the University of Michigan. He has completed the Value Investing Executive Education program at Columbia Business School and is a Chartered Financial Analyst (CFA) Charterholder.

Our Podcast now receives more than 300,000 downloads a month. Are you interested in sponsoring an episode? Please email David Weisburd at david@weisburdcapital.com.

Stay Connected:

X / Twitter: David Weisburd: @dweisburd

LinkedIn: David Weisburd: https://www.linkedin.com/in/dweisburd/ Sid Malhotra: https://www.linkedin.com/in/sidmalhotra/

Links Kactus Capital Management: https://www.kactuscapital.com/

Questions or topics you want us to discuss on How I Invest? Email us at david@weisburdcapital.com.

(0:00) Introduction (2:09) Alignment of Interests and Trade-offs in Family Offices (5:24) Strategic Nature of Family Offices and Learnings from Pritzker Group (9:30) Focus on Absolute Returns and Criteria for Investment in a Manager (12:26) Investment Style: Jigsaw Puzzle vs. Treasure Hunt (14:24) Preparing for Market Corrections and Managing Dry Powder (18:19) Challenges of Cash Reserves and Strategy during Market Sell-Offs (22:33) Public vs. Illiquid Investments During Crises and Sources of Alpha (26:30) Lessons from Working at Citadel and Appeal of Multi-Strategy Firms (33:04) Impact of Tax Considerations on Portfolio Construction (35:46) Building a Career and Network Post-Business School (37:25) Closing remarks