Alpha

“There are drawdowns where you're wrong, a company missed estimates, your hypothesis was invalidated, and you have to take your medicine and you crystallize that loss. And then there are drawdowns or periods of underperformance where you're underperforming beca…”

“In trading, so a hundred percent of our returns are alpha, a hundred percent”

“Because if you want to create alpha, it's not about only settling for a local maximum. It's about looking at a problem from different angles and being able to get different voices around how to solve that problem.”

“Go take other 99% kids and see why ours are learning three times faster than those kids. Right. You can get the score that says, we benchmark our 99 percentile kids not against the average kid. We benchmark them against the top one percent kid. And our top one…”

“The high and private schools are all lying to their parents by giving kids A's when they don't deserve them. So like we pulled in, you know, so we had hundreds of kids join, you know, whatever, couple months ago across the country. Right. And these are people …”

“Like we have a multi-user version where the kids are just competing, right? Think of video games, but just, you know, you're competing on academics”

“There's some neurodiversity throughout our industry, and we're trying to write a paper that says this is how you can see the same data set differently. That's the pathway to alpha.”

“There's a tremendous alpha that can be found from doing things better than other people.”

“In our model, right, we have built a learning engine that teaches kids 10 times faster. And so how that reacts or how you see it in our school is our kids come in, our students come in two hours a day. They're at an AI tutor. It's not Teacher in front of the c…”

“We pay every kid in middle school at Alpha a thousand dollars if they get to top one percent. And, but it funds their Robin Hood for Kids account to teach them how to earn, save, invest spend, and donate.”

“We're in the cash burn phase, and we're burning sort of hundreds of millions of dollars, you know, building all this stuff out.”

“Pushing the limit, right? Is where you get all the alpha, right? That's where you get all the benefit. That it's at that extreme where the real truths come out.”

“So most people should not try and find alpha on the investment side. However, if you can be smart about saving money on taxes, that is where your alpha comes from.”

“We actually launched an app called alpha, which is a little bit of a spin out of our AI product. Launched that in international markets late last year as a separate kind of product.”

“All the quote unquote big things everyone else is already doing. So there's not a lot of alpha in that. Whereas if you are paying attention to skills that people think are boring or too basic and realizing that there is, that's a lever that you can pull that, …”

“Getting in early is where all the alpha is. You know, before the thing is defined as a category.”

“The truth is, is that most strategies that can generate alpha don't scale and aren't even necessarily replicable.”

“Strategies that do three things over time really outperform. And those three things are invest with high active share. So you don't, by definition, look like an index. Second, concentrate in your best ideas in recognition of the fact that actually markets are …”

“And so I think the most interesting alpha today comes from a lack of capital. And that lack of capital can either be because it's unfavored or And that goes to being contrarian. Something's cheap because people hate it. It can be a lack of capital because of a…”

“ESG is a set of issues, but it's not the same thing as a set of drivers. You know, they're issues to be aware of, screens and filters on making institutional investment, which is different than A, you know, an alpha case reasoned to invest capital in something…”

“Everyone wants a pattern or a playbook that they can, and that's the stuff that normally does really well on social media, is like, just do this checklist, just build this model, and this will deliver results, but as soon as you can concretize it, You lose all…”

“Alpha is going to get harder and harder and harder. It already has gotten harder. AI is going to actually speed up that as well. And so as investors thinking about beta is going to become more and more important over time and having the best beta you possibly …”

“I tend to think those shops probably can't grow by another factor of five. There's just a limit to alpha. There are limits how many great traders that are out there.”

“All alpha, all outperformance relative to the index comes from anti-patterns. Patterns are the things people do over and over again... None of it is predictive of success. It's the anti-pattern.”

“Diversification cuts both ways. It eliminates systemic risk, but it also diversifies away your alpha if it's too diversified.”

“I would say that it's a bad time for beta because we've Really pulled forward a lot of market returns this way, at least in real terms, because we sort of have to inflate the economy into these asset levels. But it's a great time for alpha because since so muc…”

“When we break down the returns over the life of the fund, 18 years now, we've added about two and a half percent per annum, which we think is pretty good, and it's actually split, interestingly, only about a half a percent to diversification in the traditional…”

“I do think better tax strategy can actually create alpha. Alpha is a, you know, finance term for like, You will outperform. And using that tax alpha to just put more dollars in the market, I think is a smarter approach”

“And then if you go all the way to the factor neutral world, it seems that three percent alpha works for everybody. That's fine. We're shooting for 20% alpha.”

“You should pay huge attention to any source of alpha. It's probably beta.”

“We're always trying to make sure we're only paying performance fees on the alpha, not the beta.”

“I do know we are decreasing alpha in our models, just in terms of what we expected historically.”

“We do not believe that we exist to generate alpha over short measurement periods like one, three, and five. Our goal is to outperform over a full market cycle”

“Sometimes the right size is small, and you have to be happy with that. You can't grow beyond where that alpha component is going to be reduced. There are plenty of people who are great at running a billion, but then they end up running five billion, and they s…”

“Mobuson did a study where he showed that when large caps outperform, alpha's harder to find because they crowd everything out.”

“The most alpha is usually found in the things that are annoying and hardest to do. Meaning if you have to set up a new wallet, if you got to get on some new exchange, if you got to learn some new protocol.”

“The moment we integrate into the any agencies, you know, environment, Alpha is going to be the only software that they're going to use.”

“The thing that has always attracted me to the seed stage has been that there's no beta in going from zero to one. That's all alpha.”

“One of the ways we can measure that is to look at the standard deviation of excess returns, right? So alpha, right? So excess returns. So, so you'd imagine and if you'd imagine If you're an active manager, what you want is a big fat bell shaped distribution, r…”

“We spent an enormous amount of time in conference rooms doing asset allocation meetings, trying to predict where did we think there was going to be alpha next year? Was it going to be an event year where there's going to be more alpha in stock picking in Europ…”

“And in alpha space, average managers lose money. You don't make alpha unless you are exceptionally good. And people think as long as you're reasonable, you'll do all right. Good isn't good enough. You've got to be great.”

“You have to have a repeatable process. It doesn't happen that one day you're a growth investor and the next day you're a value investor, that you're a bit of macro and then you're a bit of bottom up and you're, I don't believe in that.”

“If hubris is the biggest enemy of alpha, the second biggest enemy is taking too much capital into a strategy.”

“What I experienced in investing in funds is alpha maintains much more than people expect for a certain period of time in a strategy, certain size growth in a strategy. But once it starts to drift off, it collapses and goes negative. And once you fall off the c…”

“I think where a lot of the real alpha is going to be going forward. It's bespoke investments where you functionally create the investment, whether it's in the commercial real estate or resi or a European asset finance. The term loan to an aircraft producer. Th…”

“Our mission on the short side is to deliver five to 800 basis points of alpha consistently.”

“I think the journal is the most underrated source of context and alpha in like any asset class that you're investing in. Everyone assumes it's information that's already out there, so you're not going to get much value from it, and the reality is most people, …”

“I've always said, and I still believe that alpha is scarce, and it's transient. It doesn't stick around for very long because it gets competed away. And so you always have to skate to where the puck is going, knowing that it's not going to stay long in any one…”

“Private equity for sure. You can't separate the alpha from the beta. That's just one package.”

“I think the proportion of alpha that clients are happy to leave with a manager Has not really changed over years. You know, you can debate, and maybe it's something to do with the quality of the returns, some number between 25 and 30% of alpha that clients are…”

“The fee for beta today is nothing, right? I mean, you can go and buy a passive index of whatever beta you want for nothing. The alpha is what's valuable, and people are happy to pay for that and should pay for that.”

“If you begin to see that the individual not only Consistently delivers alpha, but their success ratio is consistently between 50 and 60%, so they're consistently getting it more right than wrong. There's a skew in there, and then you can look at how that works…”

“My biggest investment pet peeve is probably an over-reliance on trading algorithms and back tests that lack a foundation in underlying theory. Probably comes back to my academic roots. But while I believe big data is absolutely part of the answer, and there's …”

“What we have shown is that it's very clear that the standard deviation of alpha is Is greatest following periods of high dispersion. So that's saying that high dispersion allows, the tide goes out, you know, who's wearing a swimsuit. High dispersion, that allo…”

“One of the things we don't expect our long, short managers to do is to generate alpha Against our long equity benchmark in a rising market. That would mean that they're pushing it too hard on the long side.”

“Our logic, again, is that if we are doing things that other people are unwilling to do or unable to do, unwilling because it's tedious and boring, unable because of capacity issues, and we can do that, that should be where alpha is. I mean, that should be what…”

“And back at that time, Alpha was obviously easier to earn, fewer competitors, much smaller amounts of assets. You know, hedge funds in the eighties and early nineties were, some were large, some might have been multiple billions, but most were less than a bill…”

“In general, across the industry, for long periods of time, last 10 years, there is no alpha in the short positions.”

“There's not much alpha you can add managing a treasury book. So we don't really bother doing too much of that, so we have an index treasury book.”

“So, so I think the S of the ESG and the human element, let's call it, that we're picking up, is probably one of the most undiscovered sources of alpha. And when we do our factor analysis, one of the greatest contributors to the outperformance that we see.”