EP.77 CAPITAL ALLOCATORS with TED SEIDES

I’m thrilled to have Ted Seides on the show to discuss his new BOOK, his wildly successful PODCAST, his FIRM’S media and coaching focus and the world of capital allocation. Ted has a unique perspective in the asset management world, having worked for the legendary David Swensen at the Yale Endowment, having conducted thousands of interviews with portfolio and investment managers and having capital allocation responsibility both for others (at Protege Partners) as well as himself. He takes a look back at what he learned and peers into the future of a space that has many challenges.

Introduction

Ted’s Background-

His experience at the Yale Endowment with David Swensen and lessons learned.

What does your BUSINESS do today?  Any particular lessons going strictly from the allocation industry into more of a media focus? How have you taken the amazing access you have to the capital allocation system and used it to build your media focus?

With this being your second book (the first is “So You Want to Start a Hedge Fund”), take us through the book writing process- how did you use the podcast to source material and whom were you writing the book for?

(As an aside, David is famous for having a [losing] bet with Warren Buffett that his allocation to hedge funds would beat an S&P 500 Index- he has talked about that frequently in other venues and WROTE ABOUT IT HERE.)

More specific questions on the Asset Allocation Space-

In synthesizing lessons from your interviews and balancing against your own experience, what was the most surprising common theme that resonated through them? 

Overcoming adversity (Pulling the plane out of the death spiral) . . . in the interviews and your experiences, how do allocators stop negative momentum?  Does career risk act as a natural stabilizer?  How big a threat is career risk for the asset manager and the allocator and how do you minimize that in the decision-making?

Manager selection as “predicting evolution” . . . how do you diagnose skill in a snapshot of time vs a culture of process evolution that will continue to persist?

The job description of CIO . . . (A question I didn’t ask, but should have was “Have you ever had anyone from the search industry on?” . . . how do they navigate this insular world where neutrality and discretion is often pried?)

The Impact of ESG, not on investments necessarily, but the managers themselves?  What percentage of asset managers are people of color?  Women?  

It is six times more difficult for a manager to get a face-to-face meeting with an institutional allocator than a high school senior to gain acceptance at Yale or Harvard.  What is the future for new and emerging managers in this environment?  Who is doing good work on manager inclusiveness?

How does politics impact decision-making at the Board Level, Allocator Level, Portfolio Manager level?

Is there a study on the impact of life events on investment performance / process?  Is there a correlation?  Character- What percentage of CIO’s / managers are divorced/getting divorced?  Death in the family?  Have you hired private investigators to “peer under the hood”?  How prevalent are questionable practices / fraud?  How does that information get whispered?

Do you have a couple of trends in the allocator/asset management space that we should watch out for?

I thought your end section compared well with Jon Winokur’s book “The Portable Curmudgeon” on famous quotes (I loved it- particularly Greg Fleming’s “Optimism is Moral Courage”) . . . What were your favorite quotes from experts on various topics?

How to find Ted: www.capitalallocators.com

TWITTER: @tseides