E47: Sean Warrington of Gresham Partners on Avoiding False Signals in Investing
Mar 5, 2024
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Sean Warrington of Gresham Partners delves into his investment process, addressing extreme risk factors and investing in emerging managers. The episode covers reference processes, social proof, and cutting-edge family office practices. Explore the nuances of fund investing, the value of large funds in startup success, and evaluating emerging managers for investment. Learn about quirky fund managers, navigating investment signals, and the importance of quality over quantity.
Importance of transparent communication and clear timelines in investment models.
Significance of evaluating emerging managers based on deal identification, winner selection, and investment security criteria.
Deep dives
Foundation Investment Strategy and Transparency
The speaker discusses the transition from working at the Deep Hunt Trust as a foundation with an eight to $10 billion portfolio to Gresham Partners, a multi-family office. At Gresham, the focus was on making the investment model more attractive and transparent for potential partners. This included providing timelines, having a three-person IC for decision-making, and emphasizing clear communication to instill confidence in potential investors.
Assessment Criteria for Emerging Managers
The discussion delves into the evaluation process for investing in emerging managers, highlighting the importance of three key criteria: identifying great deals, selecting winners effectively, and securing investments. The speaker acknowledges the challenge of assessing managers without a comprehensive track record but emphasizes the significance of determining if the managers can recognize, pick, and succeed with lucrative opportunities.
Challenges of Fund Sizing and Group Mentality
The conversation addresses the impact of fund size on investment decisions, noting past mistakes related to following trends and succumbing to group thinking. The complexity arises when funds vary in size, potentially affecting their ability to scale or make suitable investments. The speaker reflects on the balance between avoiding the herd mentality and making informed decisions based on the fund's specific objectives and strategies.
Sean Warrington of Gresham Partners sits down with David Weisburd and Erik Torenberg to discuss his investment decision-making process, extreme risk factors in diligence, and his approach to investing in emerging managers. The episode also covers reference processes in fund management, the impact of social proof and momentum in investing, and best practices of cutting-edge family offices.
(0:00) Episode Preview
(0:41) Introduction and Sean Warrington's journey to Gresham Partners
(1:27) Sean Warrington discusses the strategy of Founders Fund
(4:06) Sean Warrington's process of making investment decisions
(5:47) Discussion on extreme risk factors in diligence
(9:04) Sponsor: Deel
(9:49) Sean Warrington's approach to investing in emerging managers
(13:02) Process for references in fund management
(15:06) 10X Capital Podcast Newsletter
(17:03) Impact of social proof and momentum in investing
(18:22) Best practices of cutting-edge family offices
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