Dec 2, 2021 · 1h 2m · capital-allocators
Will Cook - Sunriver Management (Manager Meetings, EP.22)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Manager Meetings, host Ted Seides and institutional allocator Ben Cooper of Cardano Group sit down with Will Cook, founder of Sunriver Management. The discussion covers Cook's investing journey, Sunriver's specialized mid-cap equity strategy, the disciplined mechanics of short selling, and the importance of firm culture and LP alignment.
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 10.8% of the talking time here. How this is scored →
Ted as informed peer 3.9 Guest teaching 5.1 Guest disagreement 0.8 Ted pushing back 1.0
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 35:00 Pushing back on market neglect of long-term structural flaws
Cook critiques the market's irrational behavior during cyclical surges where low-quality businesses with severe structural flaws receive undeserved multiple expansion.
Hardest push from Ted ▶ 8:21 Ted probing differentiation among Ziff spin-offsTed Seides presses Ben Cooper to articulate why Cardano backed Will Cook specifically over several other contemporaneous Ziff Brothers spin-offs.
Biggest teaching moment ▶ 40:45 Explaining the tweener mispricing dynamicCook thoroughly explains how overlapping analyst coverage boundaries in hybrid industries like government IT create huge consensus earnings discrepancies.
Ted holds their own ▶ 6:53 Cooper framing allocator underwriting of short sellersBen Cooper demonstrates institutional expertise by detailing the exact qualitative and quantitative metrics used to verify genuine short-side alpha versus beta tailwinds.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Allocator Perspective: Ben Cooper on Long/Short Alpha and Due Diligence | 6 | 5 | 1 | 2 | Ted Seides conducts an informed introductory discussion with allocator Ben Cooper on Cardano's rigorous manager selection framework and qualitative assessment of short sellers. Cooper articulates clear criteria on evaluating hit rates, slugging percentage, and short-seller psychology. | |
| Will Cook's Path to Investing and Early Career | 3 | 4 | 0 | 1 | Cooper prompts Cook on his background and entry into investing. Cook shares his pivot from philosophy and law into equity research, investment banking, and growth equity. | |
| Formative Lessons from the Internet Bubble and Shift to Public Markets | 4 | 5 | 1 | 1 | Cook details the formative impact of living through Internet Capital Group's rise and collapse during the dot-com bubble, followed by training in forensic accounting under John Griffin and joining Ziff Brothers. Cooper facilitates with targeted career-milestone questions. | |
| Building Culture: Humility, Resilience, and Learning from Mistakes | 4 | 5 | 1 | 1 | Cook explains the deliberate cultivation of humility, resilience, and systematic post-mortems on investment mistakes to separate process from outcome. Cooper steers the conversation toward practical implementation. | |
| Sunriver's Three-Pronged Strategy for Generating Alpha | 4 | 6 | 1 | 1 | Cook breaks down Sunriver's three-pronged strategy: moving down market cap into undercovered names, deploying capital offensively during dislocations, and adopting multi-year private equity-style underwriting. | |
| Framework for Capital Deployment During Market Dislocations | 4 | 5 | 1 | 1 | Cooper asks how Cook primes his team to exploit dislocations. Cook explains how real-time portfolio IRR tracking and permanent-capital conditioning enable them to lean in when the broader hedge fund industry retrenches. | |
| The Mechanics of Successful Short Selling | 4 | 6 | 1 | 1 | Cook outlines the structural differences in managing short books compared to long books, emphasizing forensic accounting, episodic alpha realization, and the importance of having a 'skeptical optimist' mindset. | |
| Mid-Episode Sponsor Break: Ridgeline | 2 | 2 | 0 | 0 | Contains a sponsor break followed by a transition back into the interview where Cooper asks about portfolio construction differences between longs and shorts. | |
| Current Dynamics and Macro Environment in Short Selling | 4 | 6 | 2 | 1 | Cook explains how cyclical rallies in low-quality companies and cheap liquidity create temporary headwinds for fundamental short sellers, contrasted by speculative manias that seed future short opportunities. | |
| Mid-Cap Focus and Exploiting 'Tweener' Market Inefficiencies | 4 | 6 | 1 | 1 | Cook provides a detailed defense of mid-cap investing, illustrating how 'tweener' companies that fall between industry classifications are mispriced due to sell-side blind spots. | |
| Data-Driven Refinements: Sizing, Execution, and Short Holding Periods | 4 | 6 | 1 | 1 | Cook shares insights from internal data analysis showing that trading added minimal value compared to security selection and sizing, while revealing that they were systematically exiting structural shorts too early. | |
| Portfolio Risk Management, Leverage, and Scalability Limits | 4 | 5 | 1 | 1 | Cook discusses balancing concentration, market risk, and financial leverage, noting Sunriver's deliberate AUM capacity cap of around $1.5 billion to avoid liquidity degradation in short names. | |
| Navigating a Barbell Market and Current Portfolio Setup | 4 | 6 | 1 | 1 | Cook critiques the market barbell between hyper-growth and low-quality cyclicals, detailing how unloved high-quality compounders and overextended speculative shorts created a rare dual-sided sentiment opportunity. | |
| Business Management, Investor Alignment, and Partnership Strategy | 4 | 5 | 1 | 1 | Cook reflects on the operational challenges of building an independent firm, explaining how fee tiering and incentive structures align long-term LP partnerships. | |
| Defining Success, Motivation, and Team Culture | 4 | 5 | 0 | 1 | Cook outlines how he separates controllable day-to-day decision hygiene from long-term alpha spread metrics, emphasizing his competitive drive and firm culture. | |
| Allocator Due Diligence, Daily Habits, and Guiding Principles | 4 | 5 | 0 | 1 | Cook recounts Cardano's grueling on-site audit of their worst losses as the toughest allocator interview he faced, and concludes with lessons on moderation in life and valuation. |
Statements from this episode (25)
Cooper: Fund managers who consistently generate short alpha are exceptionally rare
“We have a real focus on alpha, and we want to see managers able to produce alpha on both the long and the short side, and I think a lot of managers that we come across are very adept, consistent at generating long alpha. But those that can really generate shor…”
Cooper: Short selling requires more market sentiment feel than long investing
“Shorting is not just a mirror image of the long side. There are other things that need to be considered. And I think one important area is the kind of sentiment market feel, which I think you need more on the short side than perhaps you maybe do on the long si…”
Cook: Internet Capital Group reached $55B valuation with 100 employees
“The company peaked at a market cap of about fifty five billion when we had a little over a hundred employees at the time.”
Cook: Internet Capital Group stock dropped 90% to 95% in six months
“And then subsequently the stock fell something like 90 or 95% in the next six months.”
Cook: High-performing active investors are still wrong 40% of the time
“You're wrong about 40% of the time in our business if you're doing a good job.”
Cook: Sunriver reviews portfolio losers annually to distinguish process from outcome errors
“At the end of every year, I go through all the big losers in the portfolio, and I try to separate process and outcome as best as I can, and really try and talk to each of the analysts about what I think are process mistakes as distinct from outcome mistakes.”
Cook: Sunriver shifted portfolio median market cap from $20B to $5B
“We have intentionally moved down market cap into less well-followed stocks. So our median market cap many years ago Was roughly twenty billion today. It tends to hover more around five billion.”
Cook: Prime broker data shows hedge funds retrench during market dislocations
“If you actually look at the data we get from our prime brokers, what at least we see is that the industry as a whole, the hedge fund industry as a whole, actually does not deploy more capital during periods of dislocation. The hedge fund industry retrenches an…”
Cook: Sunriver employs an external forensic accounting firm for short analysis
“We also have an external forensic accounting firm that we work very closely with that helps us in really complicated accounting issues”
Cook: Short alpha generation is episodic compared to steady long alpha
“What I have found over the years is that long alpha generation tends to be a little more smooth and steady, not always, but a little more smooth and steady and short alpha generation tends to be a little more episodic. So there are periods when it just rains s…”
Cook: Sunriver holds about 20 concentrated longs and 35 shorts
“One is just purely from a concentration perspective that we are much more comfortable being concentrated on the long side than the short side. We have about 20 longs. Typically, top 10 longs are 60 to 70% of capital. Short side is less than half as concentrate…”
Cook: Low-quality businesses have outperformed in public equities throughout 2021
“Historically speaking, that tends to mean that low quality outperforms, which is what you've seen over the last call it, 12 months.”
Cook: Widespread speculation on unproven business models creates attractive short pipeline
“I'd say that the tailwinds to short selling right now are that there's been a quite a lot of speculation and quite a lot of, I think, willingness of investors to embrace Fanciful business plans with hockey stick projections that are currently unproven and in b…”
Cook: Doing the opposite of sell-side recommendations predicts future alpha generation
“You kind of want to do the opposite of what the sell side tells you to do in our business, and it can actually be a very powerful predictive tool for future alpha generation.”
Cook: Mid-cap equities were the best-performing market segment over 30 years
“One is if you look over a very long period of time, mid caps have actually been the best performing part of the market over, say, 30 years.”
Cook: Companies falling between standard industry classifications are often inefficiently priced
“I've always loved these companies that fall kind of in between industry classifications. And the reason is because they're more likely to be inefficiently priced.”
Cook: Sunriver generates alpha from selection and sizing, not tactical trading
“It really showed that we're adding a lot of value in security selection and a large amount of value in Sizing and really not much value in trading at all. Good news was we weren't destroying value in trading, but we weren't adding a lot of value in trading.”
Cook: Sunriver's internal data showed they exited structural short positions prematurely
“We were exiting some of our shorts, particular structural shorts too early. So we were taking a gain and then the short kept adding alpha even after we had exited. And so the data said, gosh, if we had just, I think we hold our shorts longer than the average h…”
Cook: Short sellers must hold positions longer for markets to become efficient
“Really good short ideas are hard to come by and the market's pretty smart. The longer you give the market, the more likely it is to be efficient.”
Cook: Sunriver Management averages net market exposure in the low 40s
“We're roughly on average, low forties, 40% net.”
Cook: Sunriver faces short-side liquidity constraints above $1.5 billion in AUM
“What we have said is that we probably start to have some liquidity issues on, particularly on a couple of our shorts at around one and a half billion in AUM to stay in our sandbox and generate the kind of returns that we think We can and should generate for LP…”
Cook: Sunriver typically holds at most one Goldman Sachs VIP stock
“At any given point in time, when I look at, say, for example, the Goldman Sachs VIP list, we'll have maybe one stock in there.”
Cook: Sunriver's proprietary sentiment tracker hit record highs across both books
“The short book right now actually has the highest sentiment tracker it's ever had. So it's an unusual setup for us. Usually you have one side of the book with
Really good sentiment tracker on the other side, not so good. You know, today we actually have high s…”
Cook: Sunriver offers sliding-scale management fees and loyalty incentive cuts
“So we have a sliding scale management fee, which disincentivizes us to be asset gatherers and keeps us focused on performance. We also have a incentive fee that gets better with time. So the longer you're an investor with us, the better your incentive fee gets…”
Cook: In investing, good ideas become bad when taken to valuation extremes
“A good idea taken to an extreme becomes a bad idea. And I think that's true in life and it's definitely true in investing. As an example I mentioned earlier, people have gone from talking about 20 to 30 times earnings for a good growth company to 20 to 30 time…”