Investment Managers
topic on 2 shows · 39 statements across 34 episodes
39 statements about Investment Managers, every show
Stan Boland: UK EIS and VCT fund managers are low quality
“Because the quality of investment managers is quite low and because they feel they've done a good job if they get anywhere close to just returning capital.”
O'Leary: Diligence pauses immediately if a manager dodges a question
“The experience gets baked into the process by us ensuring that if I don't get an answer, There's two other folks on this relationship that are gonna ask the same question, point out that it hasn't been answered, and it basically empowered us to be a lot bolder…”
Roth: Striving for excellence requires accepting the friction of manager turnover
“If you're trying for excellence, you can't ever get comfortable that it's just ok. And when it's not, be ready for all the commotion that comes with turnover. You gotta tell the manager. You gotta tell the client that things didn't work out the way that you pl…”
Seides: Swensen model ignores that business growth improves manager performance
“And while that's pristine, there's a part of that that doesn't consider the necessity of a successful business in generating optimal investment performance. Oftentimes, allocators see a manager, they like getting there early, someone who's great, delivering pe…”
Duhigg: Managers often misdiagnose emotional client conversations as purely practical
“Many managers treat the conversation with clients as if it's a practical conversation. Here's five solutions to the problem that you have. But for the client, and you know this better than I do, For the client, it's often an emotional conversation.”
Seides: Rational assessment favors firm growth over staying a boutique
“In almost any rational assessment, the playbook favors growth. Expanding organizations can attract and retain talent and capital, which creates durability. Staying the same may benefit from focus, but it carries significant business risk.”
Never Allocate Serious Capital to Managers Without Deep Background Checks
“How you do one thing is how you do all things is a great way to assess not just management teams, but also investment managers. I don't know why you would ever put serious capital with an investment manager that you didn't do a deep dive on their background.”
Morehead: Most managers Baylor parted with beat their benchmarks
“In fact, if you look at the last 13 years, the vast majority of the managers that we have parted ways with have outperformed their benchmarks.”
Liu: Smaller allocators must influence managers through thought leadership, not size
“We're not going to be able to influence managers by our size. It has to be because they think we're smart. So how do you show people you're smart? You serve on panels, you ask good questions in meetings, you become engaged and offer advice to managers.”
Mauboussin: Top investment managers excel at curiosity and epistemic rationality
“The thing that almost always strikes me about the best managers that I know is I guess two aspects of it. One is they're always curious about the world and want to learn about the world. And so anytime you find someone in investing who's not curious, you shoul…”
Sargent: Managers unable to cite an investing moral dilemma raise red flags
“And I often do ask managers before we partner with them, tell me about a time where you had a moral dilemma in investing and how did you handle it? And I don't expect everyone's moral compass to point in the same direction, but if the manager cannot think of a…”
Investment managers hit their career sweet spot in their first five years
“We have a very strong belief, backed up by quite a lot of data, that there is a sweet spot in the careers of great investment managers that really occurs in those first five or so years when somebody who's proven themselves at a larger firm leaves, start somet…”
Falls: Reviewing investor letters from inception reveals how managers handle mistakes
“I find that if you start with a book, I usually make a paper binder, of all the letters since inception, you will really begin to understand the thought process of a manager and how they handle mistakes.”
Falls: Relying on data over manager caliber causes the biggest investment mistakes
“I think the biggest investment mistakes were usually around too much reliance on data and not enough focus on the caliber of the person. Sometimes the data is either not right. The biggest mistake I ever made was really being swamped by how good the numbers lo…”
Asset allocators historically relied on asset manager technology hand-me-downs
“Allocators kept getting
Investment manager hand-me-downs, or they kept getting in bed with firms that would really service their asset manager clients before them.”
Asset owners want manager transparency for risk, not front-running
“Asset owners are not trying to reverse engineer portfolios or front run your trades. They're really just trying to understand their exposure and understand their risk”
Whalen: Retaining fund managers for 20 years likely yields poor results
“I think, you know, if you're still invested with the managers you were invested with 20 years ago, I'm not sure you've had a great experience.”
Institutional allocators underwrite a fund manager's communication skills alongside portfolio performance
“What people don't tell you about being an investment manager is not only are people underwriting your ability to execute on an investment portfolio and to run a business, but every now and then you have allocators that are underwriting your ability to go to th…”
Seides: Allocators should conduct distinct interviews for each due diligence topic
“Maybe the very first interview, you're just gathering facts, trying to figure out, is this a fit structurally for what we're trying to do? Somewhere down the road, you probably want to do a deep dive on their process. You might want to do a deep dive on indivi…”
Seides: Allocators talk too much in manager meetings to look smart
“What you see often in manager, kind of, allocator interactions is that allocators want to be the smartest person in the room and prove themselves. And so they talk too much. You're not going to learn a whole lot about somebody else by talking. You're going to …”
Rushing due diligence based on urgent recommendations rarely ends well
“They say something to you like, run, don't walk to this manager, and you do, and that is not necessarily a good thing to do. I mentioned earlier that we have sort of a slow, careful process for adding new managers and getting to know them, and sometimes when y…”
Siegel: Exceptional returns require managers who teach allocators something genuinely new
“When you're evaluating a manager,
You've pretty much heard all their sales pitches.
You know all of them personally.
You know pretty much what they know.
You just don't do the detailed work that they do.
So if you meet one who teaches you something that's real…”
McCusker: Allocators will negatively view well-capitalized managers taking SBA loans
“For a lot of well-established, well-capitalized managers, that's not an appropriate use of that pool of capital, and In some ways, they're taking from small businesses on Main Street that can really deserve it, and I believe that list is going to be made publi…”
Robertson: Manager fee opacity is a bigger issue than high fees
“I think my issue is when people are not transparent on the fees, as opposed to the absolute fee levels.”
Kraus: 85% to 90% of managers rely on identical screening processes
“What I find is 90%, maybe 85% of the managers source things pretty much the same way. They have some kind of a screen process that identifies a large universe and brings it down to a smaller universe, and then they start to actually think about what they want …”
Marshall: Majority of Hewlett Foundation managers have 10+ year tenures
“A majority of our managers have been in our portfolio for at least 10 years.”
Sicilia: Asset management fees should plateau rather than increase linearly
“How do you justify the fact that if you're managing a bond portfolio or an equities portfolio and you're trading, that the fee goes up in a linear way, more or less, if I give you five hundred million or a billion or three billion? Surely it should plateau At …”
Seides: Allocators interview different team subsets to test message consistency
“In those first couple of meetings, you might have roughly the same meeting with different subsets of people on the other team. And so as the person on the other side of the table, you're looking for consistency of the message. You're looking for the way people…”
Seides: Allocating to active managers based on track records guarantees failure
“Investing based on, well, investing in an investment manager based on a piece of paper and a track record is a recipe for failure.”
Williamson: Managers fear portfolio transparency when allocators invest directly
“One of the challenges for many investment managers these days is that a lot of their clients are both investing through managers and investing on their own account. And so investment managers rationally sometimes can be Scared of showing their positions to, Yo…”
Seides: Top investment managers are only right 55% of the time
“The best guys in the world are in this business are right about 55% of the time. Barely over, like, you flip a coin, you're fifty-fifty. Barely better than that, and those are the guys who eventually become billionaires.”
Sample size predicts manager performance persistence better than time periods
“And so when I think about persistence, I think about it in terms of N, not in terms of T. So I think about number of observations as being a more important predictor of what will happen in the future than whether or not there's consistency in T.”
Spitz: Firing top managers during cyclical underperformance usually fails
“I think the point is that the best people in this business underperform for significant periods, and if you pull the trigger in those periods, it's probably not going to work.”
Seides: Allocators choose investment managers on quality, not price
“What you find for reasons that are a little bit confusing is if you think of just normal business strategy, sort of one of Porter's models of price differentiation and product differentiation, investors really, for the most part, do not select their investment…”
Klein: Exceptional managers are driven by production and contribution over consumption
“I think the third one would be a, what I would sort of describe as productivity, meaning an interest in being productive. We find that there are people in this world, there are managers in this world that have, by any measure of success, certainly any measure …”
Investment managers fail most often by raising too much capital
“Most of the time when people don't become successful, They ended up getting away from some of their own core beliefs. You know, they ended up raising too much money.”
Solomon: A manager's hardest task is foreseeing peripheral risks
“The hardest thing to do as a manager is to have peripheral vision and understand how something at the periphery might impact something in the middle of your vision.”
Barth: BBR Partners evaluates more than 2,000 investment managers every year
“We meet over 2000 managers across the spectrum, you know, literally from wireless spectrum to muni bond managers. So our database That's 2000 a year. Thousand A year.”