Jul 13, 2020 · 1h 4m · capital-allocators
Adam Fisher – Blending Global Macro and Real Estate at Commonwealth Asset Management (First Meeting, EP.21)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Ted Seides interviews Adam Fisher, Chief Investment Officer of Commonwealth Asset Management, exploring his unique dual-mandate approach blending discretionary global macro trading with thematic private real estate. Fisher shares foundational career lessons, asymmetric trade structuring techniques, fund alignment models, and the macroeconomic transmission mechanisms linking property markets to interest rates.
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 16.2% of the talking time here. How this is scored →
Ted as informed peer 3.6 Guest teaching 4.0 Guest disagreement 2.0 Ted pushing back 0.2
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 47:40 Dismissing predictions of 5-6% interest rates
Adam forcefully refutes mainstream forecasts from banking leaders like Jamie Dimon, arguing that levered real estate and homebuilding would instantly go bankrupt at those rate levels.
Hardest push from Ted ▶ 22:13 Challenging the feasibility of deal-by-deal executionTed directly questions whether executing transactions deal-by-deal is tricky and asks if Adam is simply assuming capital availability rather than securing it.
Biggest teaching moment ▶ 42:00 Masterclass on the Italian sovereign debt forward tradeAdam delivers a detailed masterclass on how synthetically constructing Italian forward bonds created an asymmetric payoff where even a default scenario was profitable.
Ted holds their own ▶ 35:43 Framing macro investing via slugging percentage vs. batting averageTed demonstrates deep allocator expertise by formulating a nuanced comparison between slugging percentage and batting average models to address investor communication hurdles.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Early Life, Trading Bar Mitzvah Money, and Formative Mistakes | 2 | 1 | 1 | 0 | Ted opens with a standard biographical prompt about early investing experiences. Adam shares an extended narrative about trading his bar mitzvah money, blowing up, and heading to law school. | |
| Breaking into Principal Investing and Early Career Stumbles | 3 | 2 | 1 | 0 | Ted asks how Adam transitioned back post-law school and what he learned in principal investing. Adam details his idiosyncratic career path and explains that Wall Street modeling didn't leave a deep imprint. | |
| Richard Rainwater's Advice and Entering Real Estate | 3 | 4 | 2 | 0 | Ted asks how Adam transitioned to real estate. Adam explains Richard Rainwater's counterintuitive advice that lack of experience was an unencumbered superpower, prompting his macro call on post-2001 rates. | |
| Real Estate Strategy: Rezoning, Hawaii, and Development | 4 | 3 | 1 | 0 | Ted prompts Adam on his learning process and real estate categorizations. Adam breaks down real estate into long-duration bond proxies versus value-add rezoning and development in SoCal and Hawaii. | |
| Deal-by-Deal Investing vs. Committed Fund Structures | 4 | 4 | 2 | 1 | Ted asks whether operating deal-by-deal is tricky and how underwriting differs for thematic investments. Adam argues committed fund structures dull creativity and details his Socratic approach to underwriting. | |
| Discovering the CDS Hedge and Transitioning to Global Macro | 4 | 4 | 1 | 0 | Ted asks how Adam moved back into trading while running private real estate. Adam details recognizing mid-2000s real estate froth, meeting Jeff Greene, and putting on mortgage CDS trades as personal hedges. | |
| Macro Risk Management and Return Expectations | 3 | 4 | 3 | 0 | Ted inquires about the approach to running the macro hedge fund. Adam critiques the hedge fund industry's modern obsession with tight risk parameters, asserting it inevitably suppresses overall returns. | |
| Mean Reversion Style and the 'Big Trade' Sidecar Model | 5 | 4 | 2 | 1 | Ted introduces a sophisticated framing comparing slugging percentage and batting average businesses. Adam agrees and elaborates on macro's lack of traditional value anchors and the necessity of sidecar vehicles. | |
| Fund Portfolio Construction and the Iconic Italian Bond Trade | 4 | 6 | 2 | 0 | Ted asks about portfolio construction and an emblematic trade. Adam gives an in-depth breakdown of synthetically creating Italian 7y-7y forward bonds during the European sovereign debt crisis where worst-case payoff was positive. | |
| Real Estate as the Rosetta Stone of Global Macro | 4 | 6 | 4 | 0 | Ted asks how private real estate informs macro trading. Adam vigorously explains why real estate is the Rosetta Stone of macro, rejecting Jamie Dimon's predictions of 5-6% rates because real estate leverage would collapse the economy. | |
| Current Macro Climate and the Discipline of Inaction | 3 | 4 | 3 | 0 | Ted asks where macro opportunities lie. Adam candidly pushes back on the industry compulsion to always have a trade, emphasizing that acknowledging the absence of high-conviction ideas is vital discipline. | |
| Industry Evolution: Allocators, Machines, and Human Edge | 4 | 6 | 2 | 0 | Ted asks about the future evolution of the hedge fund and allocator industry. Adam provides a structured analysis of allocator return bogeys, machine dominance in timing, and the narrow scope for human edge. |
Statements from this episode (19)
Fisher: Buy-side firms avoid hiring juniors because training wastes time
“All of us look at this now that I'm in this seat is yeah, let them go work at like one of these bolts bracket firms. Let them train these people for us. And then we'll take them, right? Like, we don't want to train any of these people. Like, that's a waste of …”
Fisher: Real estate investors bet 80% on the asset and 20% on the person
“To some degree, the person is betting on the asset, probably the way most people look at it, myself included, because I've been on the other side of these conversations as an investor, not as a sponsor, is you're betting maybe 80% on the asset and 20% on the p…”
Fisher: Rezoning creates huge value because institutional investors despise the risk
“Buying something that's zoned for X and rezoning it for Y creates enormous value. And nobody likes to do it, by the way, and even to this day, people hate it. The large institutional investors despise that risk. There's nothing that gets them excited about tha…”
Fisher: Committed real estate funds distort alignment and dull creativity
“I think it's not that great for the sponsor. It's great in the sense that you get a huge amount of capital in our management, you get all these asset management fees and all this other stuff, but I think it makes you do stupid things. The alignment's all off, …”
Fisher: Commonwealth focuses thematic real estate on data centers and sound stages
“The one we chose was investing in data centers and we continue to invest in that. And then the other one, which we've most more recently kind of tripped into is sound stages for content production. And so those two share in many ways, a lot of similarities and…”
Fisher: An investment argument is stronger the harder it is to invert
“My core principle as an investor is the harder it is, To invert your argument, the more powerful your argument is.”
Fisher: Thematic real estate strengthens underlying assumptions rather than lowering return targets
“What I would say about thematic investing is it doesn't really change the numbers. You know what I mean? Meaning like, it's not like you're shooting for a lower IRR or a lower anything. It's just that it's harder to invert the arguments surrounding your assump…”
Fisher: Extreme risk management parameters reduce hedge fund industry returns
“I think it's still a worthy debate for the entire industry to have as to whether or not the drive into these extreme risk management parameters is a good thing. I believe it causes everyone's returns to go down, but I think that's a choice.”
Fisher: Mean reversion trading is emotionally harder than trend following
“Mean reversion in trading is very, very hard. It also is hard because when you're doing trend trading or you're doing breakout trading, it's clear where the break is. If it goes back below the break, just stop out and you're done. It's emotionally pretty easy.…”
Fisher: Macro investing lacks traditional Graham-Dodd value anchors
“Macro is probably the one trading style or investing style that generally doesn't have a very good value anchor, at least as it relates to sort of Business school, one-on-one Graham Dodd value style investing.”
Fisher: Discretionary macro managers should shift toward trade-specific sidecars
“Frankly, except for very few traders in our industry, I think it's kind of where macro people should try to turn to. I mean, I have a strong view that discretionary people Should really push deeper that direction, not shrink away from it.”
Fisher: Macro funds cannot achieve a 1.0 Sharpe ratio
“So that sort of coquates to like a .75 sharp, which is probably as good as one can hope and macro. I mean, everyone wants to do a one, but nobody will get there.”
Fisher: Central bank volatility suppression has made anti-correlation hedges rare
“Central banks, in their zeal to destroy volatility, they've created so much correlation that it's really hard to find anti-correlation is kind of a way to think about it.”
Fisher (2020): At 5% interest rates, every real estate investor goes bankrupt
“No, not a chance. They go to five to six percent. Every real estate investor that we know is bankrupt. They're not hanging on. They're broke and dead. And every home builder in America has no customers. That's a fact.”
Fisher: Interest rates are the Rosetta Stone of global macro investing
“And the Rosetta Stone of macro investing is interest rates. It is the Rosetta Stone. It is the security or set of securities that really radiates out to every other security in the world.”
Fisher: Admitting you lack trade ideas is better than forcing them
“Just saying I don't have a good idea is arguably more important than saying you have a good idea. I think one of the problems in our industry, particularly in macro, is there's this just need, this almost driving need To constantly have a good idea.”
Fisher: Market timing alpha has declined and may be negative
“Your excess returns are going to come through Timing, asset allocation, and then leverage. Timing's the hardest. It's what hedge funds basically are asked generally to do, and I think we can all agree with the number of managers that exist today, and then they…”
Fisher: Exploit rare, repeatable human errors with aggressive leverage
“That's where I am as Commonwealth is I got to find trades where machines can't intervene. And where I can find persistency of an essence human error. And I would say to you that the number of them are small. And that's why I've asked my investors to say, look,…”
Fisher: Violently eject envious and negative people from your life
“Make sure you surround yourself with those, the type of people that I'm talking about and work violently almost to eject the people who don't fall into that category. And unfortunately, people are very good at hiding that from you. So work aggressively to figu…”