Chris Heller - Ten Years of Weird Alternatives (EP.420)
Dec 2, 2024
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Chris Heller, Co-Founder of Cordillera Investment Partners, dives into ten years of navigating the world of unconventional investments. He shares valuable insights on sourcing niche opportunities like whiskey financing and sports, emphasizing the importance of adaptability and strategic partnerships. The discussion highlights lessons learned from unique markets, along with the significance of timing and effective communication. Heller also reflects on mentorship's role in shaping his career and the personal insights that keep him grounded amidst his investment efforts.
Chris Heller emphasizes the importance of niche investments, or 'weird alternatives,' for achieving compelling returns and portfolio diversification.
The selection of effective operating teams is crucial, relying on relationship-building, humility, and quality judgment beyond just track records.
Adaptability in investment strategy allows Cordillera to capitalize on emerging trends and sectors while learning from past experiences and societal shifts.
Deep dives
Investment Philosophy and Strategy
The firm focuses on niche, non-correlated assets, often referred to as 'weird alternatives.' This strategy contrasts with traditional private equity and hedge fund investments, which have become mainstream over the years. The principle driving this approach is the belief that early identification of unique investment opportunities can lead to outsized returns. Finding these assets allows for diversification in portfolios while avoiding crowded markets.
Challenges of Liquidity and Risk
Engaging in investments that are off the beaten path often requires the sacrifice of liquidity; however, the firm assesses this trade-off carefully. While niche investments can carry perceived risks due to their uncommon nature, the firm contends that many of these opportunities hold a favorable risk-reward balance. Emphasis is placed on understanding both the liquidity implications and risk factors inherent to each asset class. The firm seeks to identify unique returns while ensuring that unpredictably illiquid investments are strategically managed.
Sourcing and Opportunity Development
Over the past decade, the firm has significantly expanded its sourcing channels, leading to better access to potential deals. Experience in the niche investment space has increased the firm's visibility, resulting in numerous opportunities presented to them regularly. By learning from past investments, they focus on thematic connections to identify trends that may yield fruitful opportunities. In addition, they prioritize acquiring assets from fragmented markets, particularly those owned by individuals rather than institutional investors.
Importance of People and Relationship Management
The firm's investment success heavily relies on identifying effective operating teams and management partners for their alternative investments. Key to this selection process is the quality of the individuals involved and their ability to foster strong relationships. The firm emphasizes the need for humility, effective communication, and shared experiences among partners. Assessing operators extends beyond their track record, requiring a mix of qualitative judgment on their capabilities and the culture they promote.
Adaptation to Market Changes
As the market evolves, the firm remains vigilant in adapting its investment strategy by exploring emerging trends and sectors. The portfolio includes various asset types, such as data centers, whiskey inventory financing, and even specialty investments in new sports formats. By recognizing the second and third-order effects of broader societal shifts, such as AI growth and changing consumer behaviors, the firm can stay ahead in identifying lucrative opportunities. Continuous learning from past experiences allows them to refine their approach and remain competitive in a dynamic investment landscape.
Chris Heller is the Co-Founder of Cordillera Investment Partners, a $1.6 billion manager of non-correlated, niche investments, or weird alternatives. Cordillera looks for investments ahead of the crowd that offer compelling returns and significant diversification. Chris came on the podcast two years ago in our Manager Meeting series interviewed by FEG’s Greg Dowling, and that conversation is replayed in the feed. Our follow-up covers lessons learned over ten years of focusing on off-the-run investments. We reflect on Cordillera’s strategy, sourcing funnel, research, operating partners, deal structures, and risk management. We then discuss the importance of people, humility, and struggle in investment success. Along the way, Chris colors his lessons with examples from specialty financing of whiskey, boat marinas, wireless spectrum, land for data centers, sports, and cheese.
