Sep 19, 2022 · 57m · capital-allocators
Friends Reunion 2 – Five Allocators Riff on Investing with Meredith Jenkins, Casey Whalen, Brett Barth, Jon Harris, and Ted Seides (Capital Allocators, EP.271)
Brett Barth · 17m spoken Ted Seides · 11m spoken Casey Whalen · 8m spoken Meredith Jenkins · 7m spoken Jon Harris · 7m spoken
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Host Ted Seides gathers veteran institutional allocators Meredith Jenkins, Casey Whalen, Brett Barth, and John Harris for an expansive roundtable on public equity volatility, private market valuations, contrarian macro themes, and behavioral discipline. The group shares actionable strategies for managing institutional portfolios through macroeconomic uncertainty while paying tribute to late Wall Street legend Ira Harris.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 23.5% of the talking time here. How this is scored →
Ted as informed peer 4.8 Guest teaching 2.1 Guest disagreement 1.6 Ted pushing back 2.5
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 32:30 Brett challenges Meredith's Africa equity thesis
Brett strongly counter-punches Meredith's allocation by reeling off macroeconomic headwinds, from fund flow dominance and US dollar strength to uncompensated currency and political risk.
Hardest push from Ted ▶ 33:13 Host counters emerging market historical analogiesTed directly pushes back on Brett's critique of emerging market vulnerability by citing hard data showing emerging market bonds outperforming global debt during this rate-hiking cycle.
Biggest teaching moment ▶ 16:14 Brett corrects short rebate yield assumptionsBrett tempers Ted's thesis on the short rebate windfall by calculating that a 4 percent rebate on a 60 percent gross short translates to merely 2.4 percent, which is quickly offset by management fees without alpha.
Ted holds their own ▶ 26:26 Host breaks down the shift in buyout leverage arithmeticTed displays sharp technical mastery by detailing how rising acquisition multiples from 8-10x to 16-17x while debt remains capped at 5-6x turns LBOs into 60 percent equity growth bets.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Friends Reunion 2 Agenda and Listener Greeting | 4 | 2 | 2 | 3 | Ted opens the discussion by provocatively questioning whether long-short equity is dead and challenging the panel on whether passive investing in the US has permanently beaten active management. Brett offers a polite counter-argument regarding cyclicals and macro-informed strategies. | |
| Deglobalization Strategies, Factor Awareness, and Short Rebates | 6 | 3 | 2 | 3 | Ted explains the mechanics of the long-short box and short cash rebate yields in a higher-rate environment. Brett tempers this enthusiasm by running the net math on a 60 percent gross short position after standard fee structures. | |
| Private Equity Markdowns, Denominator Effects, and Growth Equity | 6 | 2 | 1 | 3 | Ted raises philosophical questions on valuation discrepancies between public and private equity and demonstrates how rising purchase multiples have diminished the leverage benefit in LBOs. The panel aligns on growth equity substituting for traditional leverage. | |
| Contrarian Allocations in Africa and Frontier Markets | 5 | 2 | 3 | 4 | Meredith pitches her contrarian allocation to African public equities, drawing direct pushback from Brett regarding strong dollar and currency risks. Ted steps in with counter-evidence, noting emerging market debt resilience in the current cycle. | |
| National Security Opportunities and Macroeconomic Hesitation | 4 | 2 | 1 | 2 | John highlights defense tech and national security investments, while Brett reflects on the lack of clear distressed buying opportunities relative to 2008 and 2020. The dynamic remains collaborative and observational. | |
| Identifying Market Vulnerabilities in Private Credit and JGBs | 3 | 3 | 1 | 2 | Ted prompts the group for potential systemic vulnerabilities, prompting Brett to identify Japanese Government Bonds illiquidity and unregulated private credit specialty finance as potential landmines. | |
| Continuation Vehicles, Real Estate Extensions, and Co-Investments | 5 | 2 | 2 | 2 | The allocators discuss continuation vehicles and fund extensions, with John warning about obscured LP fee structures. Ted articulates the structural dynamics of co-investment programs and asymmetric sell discipline. | |
| Allocator Instincts: Favorite Profiles and Cognitive Blind Spots | 5 | 1 | 1 | 1 | Each allocator shares their personal blind spots around manager loyalty and turnover timing. Ted reinforces the shared problem by referencing Annie Duke's research on exit decision frameworks. |
Statements from this episode (21)
Harris: There are probably only 20 good long/short equity managers
“No, it's a very difficult model. There's probably only 20 good managers out there.”
Harris: The best time to add to managers is during drawdowns
“Some of the best time to add to a manager is when they're down, as long as they haven't gone dumb overnight.”
Whalen: Traditional long/short hedge funds are too big to short effectively
“A lot of those funds are too big to short. It just doesn't work anymore.”
Barth: Emerging markets favor active hedge funds over buy-and-hold investing
“Emerging markets is not a good buy and hold marketplace, but between being macro informed, more alpha opportunity, more short opportunities, it's a good place to own hedge funds.”
Barth: Deglobalization makes global portfolio diversification more valuable
“A deglobalization in the world being less flat means capital flows are going to be less connected. Therefore, being globally diversified is a better thing.”
Barth: Firm invests in US rail, barges, and light manufacturing onshoring
“We've invested in shipping businesses, rail car businesses, barges, domestic transportation, infrastructure funds in the United States, funds that focus on light manufacturing here in the U.S.”
Harris: Few hedge fund managers monitor short-side portfolio liquidity
“Very few managers answer it anywhere beyond I own X amount of stocks long and this size, and I used to run this amount. Very few will actually talk about the liquidity on the short side. And I think going to Casey's point, that's where the trouble shows up fir…”
Jenkins: Asset-light startups allow well-funded VCs to stretch capital across cycles
“Venture capital firms have a lot more money than they had back then. And the nature of the businesses that have been founded over the past 10 to 15 years, those are very asset-like businesses, and so they're not expensive to keep going. The biggest expense, ho…”
Barth: Private markets will see slower realizations rather than valuation volatility
“Obviously, they all have to get audited, and it all has to be gap, and you've got to get Houlihan Loki or someone else to sign off on the valuation, but I don't think you're going to see the volatility in private markets. You're just going to see a real slowdo…”
Barth: LPs are cutting routine re-ups to second-quartile private equity managers
“The re-up process was relatively straightforward. That is unequivocally not the case anymore. We would be investing two times more than we have just in re-ups if that was the case. There are a lot of good, not great managers that would have their big LPs write…”
Jenkins: African public company valuations trade at high single-digit multiples
“High single digit. There's some stuff in the teens, for sure, but that's crazy.”
Barth: Fund flows matter more than fundamentals in frontier markets
“When you look at those markets, though, my counter would be, one, fund flows probably matter more than fundamentals. Two, things like rising US interest rates are particularly bad for emerging markets or speculative markets of any kind, but particularly emergi…”
Harris: Cybersecurity investments will lose more money than they make
“There's a lot of money going into cyber. I think cyber is going to be very difficult. I think a lot more money will be lost than made because you always have to ask yourself the question, what's stopping Microsoft from coming in and walking over XYZ company.”
Harris: Ukraine war is an inflection point for drones, AI, and OSINT
“When the story's written about Ukraine, especially on drones and AI and open source data, It's really going to be a game changer and a real inflection point in these industries.”
Barth: JGB market distortions will cause systemic issues for banks
“There aren't any JGBs left to own. The markets effectively become completely privatized, and that's going to have some real systematic issues, particularly as it relates to banks.”
Barth: Systemic US lending risk sits outside regulated banks
“I think there's a lot of systematic risk in the lending market in the United States that's not in financial institutions.”
Harris: Non-continuing LPs in continuation funds get hit with fees
“We've already seen situations where the LPs who are not electing to continue are getting stuffed with fees. We're seeing deal fees that the manager's taking, and because there's not enough management fee, they're not being offset against it.”
Barth: Private REIT asset raises have swamped closed-end PE real estate funds
“If you look at assets raised By institutional real estate managers, the amount in private REITs versus private equity structured vehicles, the private REITs have swamped it.”
Whalen: Venture co-investors fail unless they do enough deals to build pseudo-funds
“If you're going to do it, be prolific because you want to actually create your own pseudo venture fund. And what we've found where they haven't had success on it is when you're doing one a year or two a year.”