Discover how Brian Higgins built one of the industry's premier hedge funds with insights on risk management and market outlook. Explore his financial journey from Wall Street influence to credit opportunities, and his approach to embracing challenges and constant growth in business. Learn about navigating investments with a focus on downside protection, global perspective, and credit market dynamics.
Brian Higgins emphasizes the importance of humility and constant learning in the investment world to manage losses effectively.
King Street prioritizes a multidimensional risk management approach, focusing on factors like liquidity, rate risk, and spread risk for delivering absolute returns.
Kingshire's investment philosophy revolves around creating equity-like returns from fixed income securities, adapting to market conditions, and seeking global risk-adjusted opportunities.
Deep dives
Brian Higgins' Background and Investment Philosophy
Brian Higgins grew up in an environment surrounded by Wall Street and was attracted to the idea of working in a field where he could gain a deep understanding of markets and put things into perspective. His curiosity was fueled by the economic and geopolitical changes he witnessed during his formative years. His early experience in the merchant banking department exposed him to the opportunities and volatility of the credit market, particularly in high-yield securities. Higgins' investment principles were shaped by the market crashes of 1987 and the subsequent financial stress experienced by First Boston. These early experiences taught him the importance of risk management and the need to constantly question and reassess investment decisions.
The Importance of Humility and Constant Learning
Higgins highlights the importance of humility and remaining open to constantly learning and adapting in the investment world. He acknowledges that success in investing often comes from managing losses and being able to admit when you are wrong. He emphasizes the ever-present possibility of missing critical information or misjudging a situation, driving him to always question and challenge his own assumptions. Higgins believes that the investment industry is highly competitive and one must constantly work hard and evolve to stay ahead.
Risk Management and King Street
Higgins discusses the critical role of risk management at King Street, emphasizing the need to thoroughly analyze risk at both the portfolio level and at the level of individual investments. King Street's risk management system encompasses a multidimensional approach, taking into account factors such as liquidity, rate risk, and spread risk. The firm's focus on risk management is embedded in its culture of collaboration, with risk management being a shared responsibility among all team members. The ability to assess risk and protect against downside is seen as essential for delivering on King Street's promise of absolute returns.
Investment Philosophy and Differentiation
Kingshire's investment philosophy focuses on creating equity-like returns from fixed income securities while prioritizing downside protection. They differentiate themselves by taking an early position on the short side, managing both macro and micro aspects of their portfolios, and actively analyzing global markets. Their agnostic view on credit deployment allows them to seek the best risk-adjusted opportunities worldwide. With an emphasis on relative value and risk management, Kingshire aims to capture alpha and constantly evolves their toolbox of investment strategies.
Building a Great Firm and Managing Credit Risks
Kingshire emphasizes collaboration and knowledge transfer within their team by conducting regular meetings and involving everyone in the decision-making process. They value diverse perspectives and encourage the sharing of new information. Their focus on risk assessment includes analyzing both the probability and proportionality of investment opportunities. Additionally, Kingshire recognizes the importance of adapting to changing market conditions, such as the historic interest rate tightening, and seeks opportunities in sections like commercial real estate and structured credit, where they identify dislocations in the market.
Brian Higgins is the Co-Founder, Managing Partner and Co-Portfolio Manager of King Street, a $25 billion global alternative asset manager. Brian offers insights into his risk management approach, describes how he built one of the industry's premier hedge funds, and shares his market outlook.
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