Mar 24, 2022 · 47m · capital-allocators
Chris Heller - Weird Alternatives at Cordillera Investment Partners (Manager Meetings, EP.28)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Chris Heller, co-founder of Cordillera Investment Partners, joins Greg Dowling on Manager Meetings to explore investing in niche, non-correlated alternative assets such as whiskey aging, wireless spectrum, and specialized royalties. Heller outlines Cordillera's patient underwriting framework, risk mitigation methods, and the behavioral advantages of capitalizing on opportunities overlooked by mainstream institutional investors.
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 12.7% of the talking time here. How this is scored →
Ted as informed peer 4.3 Guest teaching 3.0 Guest disagreement 0.3 Ted pushing back 1.6
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 40:48 Inbound Inquiries as a Signal to Exit
Heller contrarianly points out that when institutional allocators and consultants repeatedly inquire about a niche asset like litigation finance, it signals that returns have been competed away and it is time to move on.
Hardest push from Ted ▶ 13:37 Warren Buffett Difficulty PushbackDowling challenges Heller on whether pursuing off-the-beaten-path investments is simply complexity for complexity's sake, citing Buffett's adage that investing does not reward degree of difficulty.
Biggest teaching moment ▶ 16:44 Aging Curve Economics in Whiskey FinanceHeller educates the listener on inventory finance in brown spirits, explaining how uncoupling distillation from aging allows them to harvest predictable pricing along the barrel aging curve.
Ted holds their own ▶ 19:55 Linking Whiskey Aging Dynamics to TimberlandDowling demonstrates allocator expertise by connecting the biological and time appreciation dynamics of whiskey inventory to traditional timberland harvesting optionality.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Intap DealCloud and Celeste Agentic AI | 0 | 0 | 0 | 0 | Sponsor message and show intro monologue read by Ted Seides. No dialogue or host-guest interaction occurs. | |
| Episode Introduction and Cordillera Investment Overview | 3 | 2 | 0 | 1 | Greg Dowling prompts Chris Heller for background and jokingly asks about the origins and meaning of the name Cordillera. | |
| The Shift to Uncorrelated Alternative Assets | 4 | 3 | 0 | 1 | Dowling inquires about the realization point for pursuing niche alternatives, and Heller articulates how traditional alternatives became crowded and correlated post-2008. | |
| Institutional Inertia and Exploiting Perceived Risk | 6 | 4 | 1 | 3 | Dowling invokes Warren Buffett to question whether pursuing weird assets adds unnecessary complexity. Heller explains that their alpha relies entirely on exploiting the gap between perceived risk and actual risk. | |
| Investing in Whiskey Aging as Inventory Finance | 6 | 4 | 0 | 2 | Heller details how investing in aging whiskey works as inventory finance, while Dowling insightfully compares the asset class dynamics and optionality to timber harvesting. | |
| Exploring Niche Deals: Alligator Farming and Collectibles | 4 | 4 | 0 | 1 | Heller explains passing on alligator farming due to ESG criteria and rejecting collectibles because they correlate directly with the macro economic cycle. | |
| Ridgeline Investment Technology Platform Sponsor Message | 4 | 3 | 0 | 1 | Following an ad break, Dowling asks how diligence differs for bespoke assets. Heller highlights the advantage of non-competitive deal flow allowing 6 to 12 months of underwriting. | |
| Idiosyncratic Risk Mitigation and Portfolio Construction | 6 | 3 | 0 | 2 | Dowling questions how physical carry and catastrophic risks are managed in inventory strategies. Heller explains their ahead-of-curve insurance modeling and portfolio-level factor isolation. | |
| Exit Strategies, Liquidity Risk, and Lessons Learned | 6 | 4 | 1 | 3 | Dowling presses on the liquidity and exit problem of buying niche assets that have few buyers. Heller breaks down self-liquidating cash flow structures and admits lessons learned from extended litigation timelines. | |
| Structural Innovation: Operating Partner Revenue Share | 5 | 4 | 1 | 2 | Heller describes structuring GP revenue shares with specialized operating partners. Dowling jokes about institutional allocators acting as contrary indicators when discovering niche themes. | |
| Personal Hobbies, Niche Literature, and Conclusion | 3 | 2 | 0 | 1 | Dowling asks for literature recommendations on weird assets. Heller notes that if a niche strategy is widely written about in books or blogs, it is already too crowded for them to invest in. |
Statements from this episode (18)
Heller: Broad institutional adoption steadily degraded returns across traditional alternative assets
“And as there became more and more adoption of those assets and asset classes, You know, what you would expect happened. Returns came down, whether you were trying to do individual deals or make investments in those spaces, or whether you were investing in mana…”
Heller: Mainstream alternative asset classes failed to provide diversification in 2008
“When we went through 2008, we got very little diversification from our quote unquote alternative asset classes.”
Heller: Entering undiscovered asset classes yields outsized returns before competition arrives
“One prong is being early to an asset class before competition and capital has competed away returns. Is useful and beneficial, and we came at this first and foremost from a return perspective. You can be early to a place where the world hasn't found yet. That'…”
Cordillera exited music publishing and litigation finance after returns compressed
“When we were early on, we were investing in things like music publishing and litigation finance, which was in our minds, very cutting edge at the time in 2014, you know, fast forward to today and the whole world has found music and litigation finance, and subs…”
Heller: Most Cordillera deal underwritings take six to 12 months
“We are not in a bake off or a competitive process where we have to have a deposit down and an LOI down within two weeks. Otherwise we're going to lose a deal. Most of our underwriting takes six to 12 months.”
Heller: Whiskey aging price curve is deepest in a long time
“That aging curve today is as deep as has been seen in the industry in a long time.”
Cordillera evaluates investments in aging cheese alongside spectrum and precious metals
“We also have expressions of this in wireless spectrum licenses that we invest in. There's some precious metal strategies that we invest in. And so, and then we're looking at a deal right now in cheese and aging cheese.”
Heller: Whiskey barrel pricing predictably appreciates compared to traditional commodities
“You never know how steep or how flat that aging curve might be, but it is typically positively sloped. Whereas some other commodities can be up, can be down, you know, if you didn't sell your corn or your wheat or your timber this year, next year you might be …”
Heller: Cordillera rejected alligator farming deal due to ESG concerns
“We actually really liked that investment from an economic perspective. We ended up saying no to that investment from an ESG perspective, and we have a pretty heavy ESG overlay to our fund.”
Heller: Luxury assets like art and wine are cyclical, not non-correlated
“Those investments for us are really tough because they are not non-correlated. They are tied to the economic cycle. Art, wine, diamonds become much more valuable as the economic cycle accelerates, and then as it turns, as so does the price of those things.”
Heller: Cordillera Has Never Closed a Deal in Income Share Agreements
“Income share agreements is a theme of ours that we can talk through, and we have found some interesting deals. We've never done a deal in that space, but we watch it”
Heller: Cordillera backs a boat marina roll-up company
“We also have a boat marina roll-up company that, you know, boat marinas can be subject to hurricane and weather risk, but those are solvable through insurance.”
Heller: Cordillera insures whiskey inventory based on projected one-year-ahead aging value
“For whiskey, we insure a year ahead from the aging curve, so whatever the value is today, we actually insure it for a higher value for what we predict the value of the whiskey will be a year ahead. So if we get wiped out for some reason, the collection for the…”
Heller: Cordillera requires viable exit markets to exist at underwriting
“When we underwrite a deal, we have to know exactly that there's a viable market to exit that deal today. It can't be, hey, look, this is a great idea. Let's invest in it now and figure out if five years, six years down the road, something will develop to sell …”
Heller: Litigation investments take far longer to liquidate than anticipated
“Like, I think the big takeaway, whenever somebody asks me, because we've done lots of things in litigation, what is your takeaway? It's that they take forever. And it takes way longer, no matter where you are in that space. It just generally takes longer to ge…”
Heller: Cordillera structures deals to take revenue share in operating partners
“Today, the way that we structure is we will, the fund, our funds and our LPs will get a revenue share in that business. So we will get the return of the assets themselves. And then if the operating partner can build a big business around that, our LPs will ben…”