Capital Allocators – Inside the Institutional Investment Industry

Ben Reiter is a senior writer for Sports Illustrated and the author of Astroball: The New Way to Win It All. He joined SI in 2004 a few years out of college and has written for them ever since. In 2014 Ben wrote a cover story for SI entitled YOUR 2017 WORLD SERIES CHAMPS featuring the then sorry Astros who were the laughingstock of baseball at the time. Three years later, his prediction came true. His book chronicling the journey has been dubbed Moneyball 2.0. Our conversation blew me away in how closely the parallels have been between baseball management and fundamental investing over the last 15 years. From the incorporation of data to the challenges in managing people, I suspect if you just change the names of the players and the labels for the process, this could be a full blown conversation about investing. Baseball may even be ahead of the data revolution in investing, and the story of the Astros could hint at lessons that money managers will need to apply going forward. Discuss the show and Read the transcript Join Ted's mailing list at CapitalAllocatorsPodcast.com Write a review on iTunes Follow Ted on twitter at @tseides For more episodes go to CapitalAllocatorsPodcast.com/Podcast

Roz Hewsenian is the Chief Investment Officer of the $6 billion Helmsley Charitable Trust. Prior to joining Helmsley in 2010, Roz had a storied career in the industry, highlighted by her two decades of work as the consultant to CalPERS while at Wilshire Associates. Our conversation tracks Roz's career, including lessons from teaching children, the most important rule of management, successful investment consulting, taking time off, and joining Helmsley. We then turn to her current role and cover opportunistic-based allocation, theme identification, benefits of concentrating in managers, oversight of a team and due diligence, stories from the front lines, exciting investment opportunities, co-investments, and governance. Discuss the show and Read the transcript Join Ted's mailing list at CapitalAllocatorsPodcast.com Write a review on iTunes Follow Ted on twitter at @tseides For more episodes go to CapitalAllocatorsPodcast.com/Podcast

Investment luminary Charley Ellis is the founder of Greenwich Associates, author of 16 books, and one of the most sought-after industry advisors worldwide. He also believes deeply in the paradox of skill and his latest book, The Index Revolution: Why Investors Should Join It Now, presents a compelling case for indexing for most investors.. Charley was an early guest on the show and we reconvened to talk through the full case of indexing for individuals and some of its constraints for institutions. Our conversation covers the case for indexing, smart beta, the retirement problem, investing in alternatives, private equity, and indexing challenges in emerging markets. After we turned off the recording, Charley proffered that we offer a prize for anyone who can find valid fault with the case against active management for most investors. Any takers can drop me an email, and I'll be happy to put them toe-to-toe with Charley to debate the issue. Discuss the show and Read the transcript Join Ted's mailing list at CapitalAllocatorsPodcast.com Write a review on iTunes Follow Ted on twitter at @tseides For more episodes go to CapitalAllocatorsPodcast.com/Podcast

Manny Friedman is the CEO of EJF Capital, a firm he co-founded in 2005 that manages $9 billion with a focus on the financial services industry. Manny started EJF after his retirement from Friedman, Billings, Ramsey Group, Inc., a company he co-founded in 1989 and served as Co-Chairman and Co-Chief Executive Officer. Our conversation looks back at Manny's lifelong passion for investing, the globalization of markets, and the financial crisis, and then looks forward at the newly created economic opportunity zones, long-term impact of government stimulus, stranded assets created by technological change, regulation, and philanthropy. Discuss the show and Read the transcript Join Ted's mailing list at CapitalAllocatorsPodcast.com Write a review on iTunes Follow Ted on twitter at @tseides For more episodes go to CapitalAllocatorsPodcast.com/Podcast

This replay is the one of the most downloaded shows from last year, and one that new listeners may have missed. Regular listeners no doubt might pick up a new insight listening again. Scott Malpass is the esteemed Vice President and CIO of Notre Dame University, where he oversees the school's $12 billion endowment. Scott earned his B.A. and M.B.A. degrees at Notre Dame, and returned to South Bend at the ripe age of 26 following a brief stint on Wall Street. His track record for almost 30 years, as defined by both performance and impact, place him indisputably in rare company at the very top of the field. Our conversation is a full-blown master class on endowment management, including the benefits of a long tenured team, asset allocation frameworks, passive management, preparing for dislocations, the state of venture capital, sourcing, monitoring and exiting managers, incremental process improvements, professional and personal development, and education and alignment across constituencies. It's hard not to be in awe of Scott's combination of humility, experience, and success. Discuss the show and Read the transcript Join Ted's mailing list at CapitalAllocatorsPodcast.com Write a review on iTunes Follow Ted on twitter at @tseides For more episodes go to CapitalAllocatorsPodcast.com/Podcast

The name Anthony Scaramucci currently has 55% name recognition in the U.S. according to Politico. Anthony has been an entrepreneur in the hedge fund industry for 23 years, growing to prominence within the industry through his oversight of fund of funds Skybridge Capital, creation of the popular SALT conference, regular television appearances, and rejuvenation of the iconic television show Wall Street Week. He grew to prominence worldwide when his longtime political interests led to a brief tenure as White House Communications Director in 2017. Our conversation starts off with a bang and turns to the ups and downs in Anthony's career, including getting fired and rehired at Goldman Sachs, starting and selling his first hedge fund, creating Skybridge and watching it almost fail, and thriving after the financial crisis. We discuss Anthony's thoughts on hedge funds, lessons from his stint in Washington, and books he has written about his experiences. Along the way, he shares life lessons about managing people, building relationships, resiliency, laughing at yourself, greed, ego, and fame. Anyone who has only known Anthony from his recent public profile might be surprised to hear the depth of his insight, self-effacing honesty and caring of others, alongside his irrepressible salesmanship. Those who have known him longer will recognize the same Mooch as always in all his splendor. Learn More Discuss the show and Read the transcript Join Ted's mailing list at CapitalAllocatorsPodcast.com Write a review on iTunes Follow Ted on twitter at @tseides For more episodes go to CapitalAllocatorsPodcast.com/Podcast Show Notes 2:48 – Anthony's professional history 8:03 – Time at Oscar Capital/Neuberger Berman 9:25 – Neuberger sells to Lehman 10:13 – Leaving Lehman to start Skybridge 13:13 – Getting through the financial crisis 14:04 – Launching SALT conference 15:35 – Buying Citigroup's fund of funds business 17:34 – Anthony's approach to the hedge fund business 20:28 – How he handles the relationships with managers 22:15 – Environment for the hedge fund space 24:12 – After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead 26:02 – Hedge fund space moving forward 28:03 – What he learned from being fired 31:22 – Handling public adversity 32:40 – Selling the business to serve the country 35:35 – Life lessons learned throughout his career and shared in his books 35:40 – Goodbye Gordon Gekko: How to Find Your Fortune Without Losing Your Soul 38:40 – The Little Book of Hedge Funds 38:44 – Hopping over the Rabbit Hole: How Entrepreneurs Turn Failure into Success 39:20 – The key principles that Anthony tries to impart on his team 41:47 – Lessons in launching a hedge fund business 45:00 – What changed upon his return to Skybridge 46:33 – How does it feel to be famous 48:10 – Closing questions 56:06– The China Mission: George Marshall's Unfinished War, 1945-1947

Peter Troob is the co-Founder and CIO of Troob Capital Management, an opportunistic investor and family office with particular expertise in distressed situations. Prior to starting TCM in 2002, Peter spent six years focusing on distressed debt investing at Contrarian Capital and Everest Capital. He started his career as an investment banker, and after his tenure in self-proclaimed purgatory, he co-authored the entertaining book 'Monkey Business: Swinging Through the Wall Street Jungle." Our conversation begins with life as an investment banking analyst, and turns to competing with large distressed funds, the frothy high yield market, trickery in the CDS market, high yield ETFs, idiosyncratic opportunities, diversifying family assets, managing teams, and learning from the dinner table. Learn More Discuss the show and Read the transcript Join Ted's mailing list at CapitalAllocatorsPodcast.com Write a review on iTunes Follow Ted on twitter at @tseides For more episodes go to CapitalAllocatorsPodcast.com/Podcast Show Notes 2:09 – Start of his career 3:02 – Peter's book Monkey Business 3:47 – The life of an investment banker 4:22 – Decision to leave the bank 4:50 – His experience at a hedge fund 5:27 – Some of his early mistakes 6:15 – The dynamics of distressed debt investing 8:05 – The appropriate size for a distressed fund 11:28 – What should your expectations be if you invest in a large fund 13:12 – Short credit thesis 18:00 – Impact of private equity owned companies on defaults 19:49 – Shenanigans we are seeing in the CDS market 24:36 – Concerns about high yield ETFs 26:42 – Investing family capital 29:16 – Sourcing idiosyncratic deals 32:49 – What Peter has learned about managing a team 35:43 – Hiring millennials 36:22 – Lessons from investing mistakes 43:05 – What is it like working with family 45:58 – Closing questions 49:56 - Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts

Australian James Aitken is the Founder and Managing Partner of Aitken Advisors, a one-man macroeconomic consultancy based in Wimbledon, England that works with approximately one hundred of the most influential pools of capital in the world. James started his career in 1992 as a foreign exchange trader, moved to London in May 1999, and in March 2002 joined the infamous AIG Financial Products team in London. In August 2006 he joined UBS, where he deployed his knowledge of the inner workings of the financial system to help his institutional investor clients successfully navigate their portfolios through 2007 and 2008. At the urging of his clients, James established his own firm in June 2009. Our conversation covers James' perspective on the Global Financial Crisis from his seat at its epicenter, the Eurozone crisis in 2011, subsequent process-driven opportunities in Greece, views on Central Banks in the US, China, & Europe, some brief observations on India, positioning for the current environment, and what makes a great macro manager. Learn More Discuss the show and Read the transcript Join Ted's mailing list at CapitalAllocatorsPodcast.com Write a review on iTunes Follow Ted on twitter at @tseides For more episodes go to CapitalAllocatorsPodcast.com/Podcast Show Notes 3:03 – The start of his career at AIG Financial Products 7:19 – Move to UBS 9:03 – Influence: The Psychology of Persuasion 10:42 – Sell off of 2006 13:12 – Leaving UBS to go off on his own 24:22 – What makes a great manager 27:55 – What is he seeing in the markets today, especially the US Fed 33:09 – MIDROLL 34:08 – What happens when bond rates normalize 46:36 – China 56:50 - Japan 59:10 – Europe 1:05:28 – Risk in the asset markets 1:08:49 – Advice to allocators 1:11;05 – Why people should be focused on India 1:16:39 – How he spends his time 1:20:56 – Closing Questions

Brian Portnoy Brian is currently the Director of Investment Education at $100B investment solutions provider Virtus Investment Partners, where he strives to simplify the complex world of money in an effort to help investors make better decisions and lead a joyful life. For the past two decades, he has held senior investment, research, and strategy roles in the hedge fund and mutual fund industries at Chicago Equity Partners, Mesirow Financial, and Morningstar. Brian is the author of "The Investor's Paradox," a book about manager selection rooted in choice theory. His second book, "The Geometry of Wealth" hits electronic and physical bookstores this week. Our conversation covers Brian's experience in manager research and lessons learned, choice theory and managing expectations, differences between institutional investment and private wealth management, distinction between seeking wealth and trying to get rich, his terrific new book, and why volatility is risk. Brian's insightful take on investing and his journey from the complex to the simple is full of investment nuggets of gold. Learn More Discuss the show and Read the transcript Join Ted's mailing list at CapitalAllocatorsPodcast.com Write a review on iTunes Follow Ted on twitter at @tseides For more episodes go to CapitalAllocatorsPodcast.com/Podcast Show Notes 2:24 – Brian's start in the business 5:18 – The useful skills he developed during his tenure at Morningstar 6:37 – The hard questions he would ask 7:15 – Why he left Morningstar 8:53 – What he learned at Mesirow that made him so detail oriented 10:57 – Leaving Mesirow 12:08 – What led Brian to writing The Investor's Paradox: The Power of Simplicity in a World of Overwhelming Choice 14:51 – The Art of Choosing 16:58 – What is the investors paradox 17:04 – The Paradox of Choice: Why More Is Less 19:29 – Reaction to the book 24:10 – Difference between his views on the asset management side vs the wealth management side 27:11 – The concept behind The Geometry of Wealth: How To Shape A Life Of Money And Meaning 30:58 – The shapes used to take people from confusion to comfort with money and investments, starting with the circle 36:00 – Moving on to the triangle in this formula 41:03 – The second triangle, focused on behavior 43:36 – The big blue square 49:29 – Hopes for the book 52:46 – Closing questions

Tom Lydon is one of the leading experts in the ETF and mutual fund industries. He is the founder and CEO of ETF Trends, a business he created in 2004 whose website, etftrends.com, is filled with news, analysis, and webcasts about the world of ETFs. Before creating ETF Trends, Tom ran a financial advisory and publication business that followed the mutual fund industry. Our conversation covers the evolution of mutual funds in the 80s and 90s and the rise of ETFs in the 2000s. We discuss the composition of the ETF marketplace, structure and tax advantages of ETFs, passive, factor and actively managed funds, characteristics of a superior manager, leveraged ETFs, VIX blowup, potential future problems in high yield and emerging market ETFs, and coming trends in the space. Learn More Discuss the show and Read the transcript Join Ted's mailing list at CapitalAllocatorsPodcast.com Write a review on iTunes Follow Ted on twitter at @tseides For more episodes go to CapitalAllocatorsPodcast.com/Podcast Show Notes 2:01 – A look at Tom's early career 4:52 – What drove people to buy or sell a mutual fund in those early days 5:33 – How did Tom's sell signal just before Black Monday impact the business 6:21 – What were the right funds to invest with 6:56 – What were the key trends during the 80's and 90's 8:25 – Layers of cost for mutual funds in the early days 9:04 – Average active management fee back then 10:56 – Evolution of ETF's 13:49 – Some numbers on the ETF landscape today 15:40 - Why did the last downturn foster more growth in ETFs 18:08 – The institutional presence in the ETF market 18:55 – Fees in the ETF space 19:50 – Distribution of ETFs 21:29 – Actively managed ETF's 23:35 – Tax efficiency of ETF's 26:42 – Judging ETF managers 31:26 – Do levered ETFs add any value 34:00 – Ted paper against levered ETFs 35:18 – Potential landmines in ETFs 38:49 – Risks in the ETF space today 42:11– How do ETFs impact pricing distortions 46:16 – What's happening in active fixed income ETFs 47:43 – Will fund flows chase hot managers? 48:35 – The big trends on the horizon 49:52 – What happens with liquid alternatives 51:08– What are businesses have thrived in the ETF space 53:56 – A deep dive into Tom's business ETF Trends 55:41 – Closing questions