Mar 25, 2019 · 1h 23m · capital-allocators
Jordi Visser – Next Generation of Manager Allocation (Capital Allocators, EP.92)
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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 Capital Allocators, host Ted Seides interviews Jordi Visser, President and CIO of Weiss Multi-Strategy Advisors, exploring the modern evolution of active portfolio management through behavioral alpha, factor awareness, dynamic risk visualization, and transparent manager allocation frameworks.
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 15.1% of the talking time here. How this is scored →
Ted as informed peer 4.8 Guest teaching 3.9 Guest disagreement 1.0 Ted pushing back 0.1
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 39:20 Rejecting PM narratives in favor of objective data
Jordi bluntly dismisses standard portfolio manager storytelling, declaring that he has zero tolerance for narratives when data provides the truth.
Hardest push from Ted ▶ 32:15 Pressing on the objective measurement of behavioral alphaTed directly challenges Jordi's premise by questioning how behavioral changes can be measured objectively when fundamental data is stripped away.
Biggest teaching moment ▶ 48:08 Demonstrating factor replication regression against active feesJordi educates on why asset managers should not pay active fees to PMs whose returns can be fully replicated with standard factor time-series regressions.
Ted holds their own ▶ 42:35 Interrogating alpha generation mechanics in tight multi-manager booksTed demonstrates deep allocator expertise by questioning the exact mathematical mechanism of how PMs extract profit under strict market-neutral risk boundaries.
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 Influences, Blue-Collar Roots, and Fascination with Data | 4 | 2 | 1 | 0 | Ted opens with standard biographical framing about school, and Jordi shares his upbringing in a blue-collar household, horse racing data analysis, and early fascination with math. | |
| Entering Wall Street: Morgan Stanley Derivatives and Mexico Devaluation | 4 | 3 | 1 | 0 | Jordi details his transition from controllers to option trading at Morgan Stanley and navigating the 1994 Mexican peso devaluation. Ted facilitates the storytelling with light prompts. | |
| Lessons in Curiosity and Adaptability from Brazil | 4 | 2 | 0 | 0 | Ted asks about core takeaways from Morgan Stanley, leading Jordi to emphasize asking questions, overcoming fear of vulnerability, and gaining adaptability in Brazil. | |
| Challenges Abroad and the Choice to Go Entrepreneurial | 5 | 2 | 1 | 0 | Jordi reflects on living on edge in Brazil and why corporate politics and lack of adaptability pushed him to leave Morgan Stanley for entrepreneurial pursuits. | |
| Anchor Point Asset Management and Meeting George Weiss | 5 | 2 | 0 | 0 | Ted affirms Jordi's early 2000s thesis on hedge funds, and Jordi narrates launching Anchor Point Asset Management and his pivotal first meeting with George Weiss. | |
| Building the Weiss Multi-Manager Platform and Market Neutrality | 5 | 4 | 1 | 0 | Jordi explains the roots of Weiss's multi-manager platform, defining market neutrality as factor neutrality paired with high-turnover liquidity provision. | |
| Refining Risk Management and Introducing Data Visualization | 4 | 4 | 1 | 0 | Ted prompts on adaptations following the 2005 drawdowns. Jordi explains the introduction of strict manager risk limits and intuitive visual heatmaps over tabular reports. | |
| Shift to Factor Awareness and Liquidity Provision Post-2008 | 5 | 5 | 2 | 0 | Jordi critiques hedge funds that operate as closet passive managers and describes how post-2008 quant dynamics and mobile technology transformed liquidity provision. | |
| The Concept of Behavioral Alpha in Active Management | 5 | 5 | 1 | 0 | Jordi connects poker decision frameworks to active asset management, arguing that behavioral alpha and rapid risk sizing matter far more than finding undiscovered fundamental alpha. | |
| Ridgeline Sponsor Message | 4 | 4 | 0 | 1 | After the sponsor break, Ted challenges Jordi on what objective data is measured to judge behavioral quality when fundamental information is low. Jordi details tracking execution strike zones. | |
| Hedging Factor Risks and Verbalizing Portfolio Strategy | 5 | 4 | 1 | 0 | Jordi explains algorithmic Greek hedging tools for equity portfolios and the psychological benefit of requiring PMs to verbalize their theses and exit strategies. | |
| Establishing Manager Autonomy and Transparent Communication | 5 | 5 | 1 | 0 | Jordi dismisses anecdotal excuses from PMs, arguing that transparent daily data analytics eliminate self-serving stories during unexpected portfolio swings. | |
| Capitalizing on Dispersion and Integrating Macro Insights | 6 | 5 | 1 | 1 | Ted probes how individual PMs extract alpha in strictly neutral books. Jordi outlines market dispersion, post-Dodd-Frank sell-side voids, and top-down macro context. | |
| The Evolution of Portfolio Manager 'Baseball Cards' | 4 | 5 | 2 | 0 | Jordi introduces the 'baseball card' system, explaining factor replication regressions to ensure the firm does not pay high performance fees for commoditized factor exposure. | |
| Evaluating Performance Metrics, Anti-Momentum, and Fossil Tracking | 5 | 4 | 1 | 0 | Jordi walks through the four scorecard tabs, highlighting anti-momentum managers who trade gross exposure effectively and tracking stale holdings via the 'fossils' metric. | |
| Talent Sourcing, Cultural Alignment, and Factor Understanding | 5 | 4 | 1 | 0 | Ted questions hiring and firing rhythms. Jordi emphasizes evaluating cultural fit and insisting that prospective PMs thoroughly understand factor risk upfront. | |
| Internal League Tables and Cultivating Accountability | 5 | 4 | 1 | 0 | Ted asks how rigorous quantitative ranking coexists with a friendly culture. Jordi explains top performers welcome analytics and take full accountability rather than blaming markets. | |
| Limitations in Non-Equity Analytics and Corporate Credit Risks | 6 | 6 | 2 | 0 | Jordi explains why non-equity markets lack quantitative depth and issues a warning on over-leveraged corporate credit and the unwinding of globalization. | |
| Technological Transformation in Biotech and Healthcare | 5 | 4 | 1 | 0 | Jordi predicts a major secular wave in biotech and healthcare AI while outlining why modern hedge fund platforms must embrace technology, customization, and strategic partnerships. | |
| Allocator Best Practices: Enforcing Transparency and Assessing Netting Risk | 6 | 4 | 1 | 0 | Ted asks how allocators should navigate hedge fund negotiations. Jordi advises LPs to demand direct data transparency and appreciate internalized netting risk. |
Statements from this episode (36)
Visser: Morgan Stanley was culturally unprepared for emerging markets in early 2000s
“Emerging markets, Morgan Stanley was not set up for that. They didn't understand it. It was a cultural thing and their business was in New York and Japan and Europe.”
Visser: Hedge fund industry faces disruption similar to 1990s mutual funds
“I had spent enough time as a salesperson looking at the hedge funds. And I just thought that the industry was ripe for the same type of disruption that the mutual fund industry went through in the nineties with exchange traded funds and that the hedge fund ind…”
Visser: Extreme success and genuine kindness rarely coexist in hedge funds
“He was incredibly successful in the hedge fund industry, and at the same point, he was one of the nicest people I had ever met, and those two don't go hand in hand normally in the industry. Most people get into it because of the wealth opportunities”
George Weiss operated his market-neutral fund as a bank liquidity provider
“He chose something where he basically was running kind of like a market making business, and the banks were using him for liquidity purposes. So he was a liquidity provider, high turnover, market neutral, made it unique.”
George Weiss's family office generated over 50% annual returns prior to 2005
“George had gone through a long time period where not only had they been highly successful, I think the family office returns were above 50% a year.”
Risk data must be visual because tabular data fails to communicate
“One of the beliefs I have in risk management is that you really need to have A lot of data. It needs to be visual. If it's tabular, it doesn't speak to you. And data visualization is the most important thing to me, heat maps, anything along those lines.”
Many hedge fund managers run passive portfolios with minimal active components
“Dynamic managers, hedge fund managers are active managers. Static managers are passive managers. And I think there were a lot of people in the hedge fund industry that were running passive portfolios that had a very small active component.”
Smart turnover is the most important factor for persistent investment returns
“And to do that, the number one factor we saw over time was the ability of having smart turnover.”
Overall hedge fund returns have barely been positive since August 2007
“If you look at hedge fund returns back to August of oh seven, which was when the quant unwind occurred, if you look at the overall returns of hedge funds, and you just look at any measure there's barely any returns, if any.”
Infrequent decision-making cannot justify active management fees in current markets
“If you're investing in making decision changes every six months or every year, that environment I just don't think works anymore if you want to get paid active management fees.”
Behavioral alpha is the primary differentiator as fundamental inefficiencies disappear
“Behavioral alpha, the ability of getting out of stuff at the right time and sizing up at the right time, admitting that you made a mistake and folding your hand and moving on to the next one, those are not easy decisions for people to make, and I think histori…”
Michael Milken prefers bonds over stocks because returns ignore other buyers
“I was with Mike Milken recently, and he specifically said the reason he likes bonds as opposed to stocks from an investment standpoint is, I don't need other people to buy them. I just need them to pay me off. So I'm happy being the only person buying them. In…”
Portfolio managers cannot intuitively understand all risks across 70 positions
“Most managers think they understand all the risk in their portfolio, and that's just not possible with 70 positions.”
Portfolio managers must verbalize strategies to generate behavioral alpha
“For human beings to be able to be more flexible and have behavioral alpha, they need to verbalize things. So one of the things that makes them more aware and more comfortable with this risk is just verbalizing it to someone.”
Weiss targets portfolio managers with 60% 10-day win rates and 1.0 Sharpe
“So we're looking for them to basically be able to make money on a rolling ten-day basis over 60% of the time, on a rolling five-day basis over about 55% of the time. We want them to be able to make money most years running market neutral with high turnover wit…”
Weiss investment teams maintain low pairwise correlations of 0.10 to 0.15
“And our pairwise correlation amongst the teams is somewhere around .one to .one five, which means when you look at it, we really don't have teams that are correlated to each other. We don't have overlapping approaches.”
Dodd-Frank regulations severely constrained sell-side balance sheets and proprietary trading
“Dodd-Frank really neutered the sell side in a very big way. There's just not as many prop tests. They can't hold positions in these things overnight the way they used to, so their balance sheets are under constraint.”
US-China tech decoupling will drive global markets for the next decade
“China and the US are in a trade war, and probably more importantly, embarking on something which I think has historic implications, or at least for the next 10 years, but it's this relationship from a technology basis with the two technology powers on the plan…”
Evaluating managers requires probing emotional reactions during market shocks
“That gives me a really good data point of how the behavioral alpha of that person is. How emotional were they during there? How much did they know their space and know what was in them? That's kind of what you want to identify how good someone is. If you don't…”
Many hedge fund competitors require managers to stay fully invested
“Now, a lot of our competitors, they don't want their managers to play around with their gross, they're fully invested all the time.”
Weiss uses a 'fossils' tool to flag positions unchanged for 10 days
“So we have a visualization called fossils, where we want to see any position that they have in their portfolio that hasn't been meaningfully changed within 10 days.”
Weiss Multi-Strategy replaces marketing pitch decks with live WebEx analytics
“We don't use marketing decks anymore. We use WebEx's to present, and we show them the baseball cards.”
Portfolio managers make a mistake delegating factor risk to risk teams
“Everyone right now who's managing money should understand factorists. If they dump this off to their risk team, it's a mistake. You have to embrace it, you have to learn it, and you have to understand it.”
Weiss ranks internal portfolio teams using 15 quantitative and qualitative metrics
“We have a league table which ranks all of the teams here based on 15 different analytical metrics that are pure quantitative, and then there's about three or four qualitative metrics”
Top-performing portfolio managers actively welcome granular performance analytics
“I will just tell you as a fact, great performers do not care if you're looking at what they're doing, meaning if they're really good at what they're doing, they want the analytics. They want to get better. They're obsessed with being good and having as much da…”
Portfolio managers who blame outside factors struggle most to adapt
“If you're blaming the market, or you're blaming CEOs, or you're blaming your analyst, or you're blaming your trader, those are the people that I can just tell you have had the hardest time adapting.”
Quantitative factor analytics will fail in credit markets due to illiquidity
“I just don't think it's ever going to get there because liquidity's dropped off. So the problem is, what does it matter from a factor basis if things aren't even trading? And we've entered this point in the credit markets and the debt markets in general, where…”
US-China trade war is about AI and intellectual property, not soybeans
“And that's why when people talk about the trade war with China, the paper was specifically said, this is not about soybeans. This is about censors in everything. And it's a race to artificial intelligence supremacy. It's about intellectual property.”
Debt covenants will dominate financial market conversations by 2024
“And that capital structure, things like covenants, these are going to be a major part of the conversation over the next three to five years. And I don't think people are ready for what that means.”
Next decade of market excitement will center on longevity and healthcare
“I think the next 10 years is going to be about longevity and advances in healthcare, and I think that's going to be the most exciting thing.”
Biotech underperformed tech and matched the S&P 500 over five years
“It's interesting that if you go look at the biotech industry relative or any of the small cap biotech industries relative to the NASDAQ or relative to the S&P, they've underperformed the NASDAQ, so they've underperformed tech the last four or five years. They'…”
Alternative beta products and CTAs failed to mitigate risk in 2018
“In fact, last year I would say was the worst year for risk mitigation from the hedge fund side. The alternative beta products that people had jumped into did not perform the way most had hoped. The CTAs, which traditionally have helped during years of big fall…”
US equity markets will deliver 8% to 10% annualized returns through 2029
“No, I think the next 10 years in the equity markets, the U.S., and I think globally will be better, but let's just say the U.S., I still think we'll get eight to 10%, and I think it's because rates are still low and money has to go to work somewhere, so I stil…”
Active equity managers have no excuse to withhold portfolio data
“For an active manager that's in equities, there's no excuse why you can't get the data, because it's very simple to do it. There's tons of ways. It doesn't cost much in this day and age with data to do it.”
Data transparency will be the hedge fund industry's next major battleground
“So I think over the course of the next few years, and you got to give it time because I think it was 2016 that the movement of one or 30 and kind of focusing on the fees and the alignment of what you're getting paid matched up. That was good for the industry. …”
Within 30 years, bonds will not exist and everything will be free
“I say to people regularly, I don't think there'll be bonds and everything will be free in 30 years. I say it not as a fact or as a guess, but it's something I do believe is coming because of my belief in the impact that nano and three D printing and artificial…”