The Exchanges

Q Let's go through each one of those. So how did you go about rebuilding the team?

A So that was a really fascinating project for me. I had quite a long notice period, so I had some time to reflect on how I was going to approach it before I actually got into the seat. And somebody recommended that I should read a book called Rebel Ideas by a British journalist called Matthew Saeed, and it was all about the power of cognitive diversity. So I became very focused on How was I going to build a team who would have a common core of values, but that would actually bring really different perspectives to the table so that we wouldn't fall into the risk of a kind of group think. And so really instrumental in that was working with very experienced HR professional that I was fortunate to meet very early on. And we, as part of our interview process, introduced psychometric Testing for all of the new recruits, which was specifically aimed at finding people who would bring very different personalities, skills, and approaches to the table.

AI assessment note: “introduced psychometric Testing for all of the new recruits”

Q What have you found that's different or unique about this organization, Cambridge University, than the places you've been exposed to in the past?

A Quite a lot of things, actually. Firstly, one thing that may be different about Cambridge relative to a US endowment is that we actually have quite a large number of discrete investors. So Cambridge is a collegiate university. There are 31 different colleges within it, and each of them has their own endowment, and they are completely independent in terms of whether they choose to invest those endowments with the central pool that we manage or to do something completely different. So as of now, we have 21 individual investors. In addition to the portfolio management aspects of what we do, there's also an investor communications element to it. We also have a complex group of stakeholders, so not just those who actually oversee those capital pools, but of course, many other constituents are also our stakeholders, students, faculty, professional staff, alums, So that has been very different for me, and I've actually found I really enjoy working on our stakeholder communications. Another thing that is maybe different is our currency situation. So we obviously, we're a British university, all of our liabilities are denominated in sterling, but our investment opportunity set is global. So we have to manage that in a sensible way. Hedging back the majority of our assets to sterling, but without hedging to the extent that if there's a disconnect in currency movements, we would have an u…

AI assessment note: “one thing that may be different about Cambridge relative to a US endowment”

Q Which two people have had the biggest impact on your professional life?

A The first would be a gentleman called Peter Englander, who was the chief investment officer at Apex. And he had a really foundational impact on me because I think he was the one who gave me my first break in investing. I had a number of interviews at Apex, but I could tell that Peter was a real decision maker. And I could also tell that he was incredibly skeptical about me during that interview. Somebody who came from Background in English, working in the corporate sector, no investment experience, and so on, but he had this unique balance of skepticism and ability to take risk that I learned from hugely. Very sadly, Peter actually passed away earlier this year, but I'd really just like to honor him as a legend within UK private equity investing. The other one would have to be Rob Wallace, who was the CEO of Alta when I joined, and again, he was the person who hired me into my first allocator job, and he's now, of course, the CEO of Stanford Management Company, and I really would say that Rob taught me more than a hundred percent of what I know about endowment investing, and I'm really fortunate to still be in contact with him today.

AI assessment note: “The first would be a gentleman called Peter Englander... The other one would have to be Rob Wallace”

Q What was it that led you to go from private equity to public equity?

A Private equity, it's a patience game. You do a lot of work, three months potentially on a single company. You learn a lot, but often things don't happen. There's a lot of binary outcomes at the end of three months of work. As soon as I was in public markets, I think the fact that you get multiple opportunities to use your knowledge, either long or short, and that steady flow of opportunity set, in a sense, And your ability to monetize your thinking both ways was extremely appealing. And really you're pitting yourself against other minds, similar to chess. I think there was something more like chess about it that appealed. Whereas in private equity, you have to create it, which is fine. It's entrepreneurial, much more process driven, but hopefully you do a deal a year.

AI assessment note: “steady flow of opportunity set, in a sense, And your ability to monetize your thinking”

Q What was your path from going through university into finance?

A Met somebody in my university time that we discussed a lot. What do we want to do with our lives? Where do we want to go? That person is Rilof Beuter, who runs Sequoia globally. He went on his path, and I went the London private equity, long short equity path. But I think we were motivating each other, or at least discussing what's interesting, what's challenging, where's the opportunity set. Coming full circle back to chess, by the time I was in my late teens, it was obvious that there was some limit to how far I could progress in the chess world. Maybe you can get to the top 50 if you live and breathe it, but that's as good as I would have been able to achieve. Whereas I'd gone to private equity in the late nineties. It was a cottage industry. It's hard to imagine today, 25 years later, that private equity was literally teams of five or 10 people doing handcrafted deals, and the fund sizes were all one to five, and the firms were nascent in terms of just where they were in their development. And I think long, short equity It's similar. At least in Europe, it's still somewhat unproven. Fundamental, long, short, single manager. There's just not many of us left in a way. A lot more opportunity to not be number 50 at best, but rather excel and get to the top.

AI assessment note: “I went the London private equity, long short equity path.”

Q How do you define the characteristics of those types of businesses?

A So we have six criteria at SANS. The first is sustainable above average earnings growth. What that means is a business being able to deliver at the low end, at least double digit core type of earnings CAGR. When you're looking out over our investment time horizon, which we define as five years or longer, we're looking for leadership in a promising business space. One of the reasons why we focus on Either companies that are the clear market leaders, or they're on the path to becoming number one over time, is because in many of the markets that we invest in, a disproportionate amount of the economics tend to accrue to the market leader, and therefore you want to own those businesses. Now, significant competitive advantage is our third criteria. That's where we spend a tremendous amount of time, because that is what really underpins the sustainability of the earnings growth over time. The business that's growing at above average rate without competitive advantage, that's really just momentum. So the fourth criteria is clear mission and value added focus. That's really, in many ways, our governance and capital allocation criteria. We only want to invest behind management teams that not only have a demonstrable track record of creating wealth for shareholders and making effective capital allocation decisions, But we also want management teams that have protected the rights of minori…

AI assessment note: “So we have six criteria at SANS. The first is sustainable above average earnings growth.”

Q Why don't you take me through your quick background that prepared you to write this book?

A Born in Milwaukee, Wisconsin, went to college, Cornell. The whole time, I was very certain of my future, which was to be a PhD academic historian. Summer before the senior year of college, I was in London doing research on undergraduate thesis. By the end of the summer, realized maybe I don't want to be an academic historian, and the historians at the British Library are like, we don't need a Jewish guy from Milwaukee adding to an already very well-covered history. I was fortunate to To be born in 1973, the demographic lull in a post-war America, and so at that time, you can get a job with just a liberal arts education. I had no interest in finance, particularly, and I had no experience. I had two job offers in front of me. One was to be a speechwriter for the Parks Commissioner here in the city, and the other was to be a junior equity research analyst at Goldman Sachs, and I took the junior equity research analyst at Goldman Sachs. I did that for a couple years assigned to the energy group, Eventually, I promoted to look at Latin American oils. After that promotion, I had a very big bout of insomnia and started writing what was my first novel, and I've always been a big reader of novels, always been interested in it. 25 years old, took the job in finance lightly because it was never something I'd really sought, announced like a real pretentious asshole that I was quitting to w…

AI assessment note: “Born in Milwaukee, Wisconsin, went to college, Cornell.”

Q Which two people have had the biggest impact on your professional life?

A The simplest answer would be my colleagues, Ben and Jakob. And I know that sounds maybe a little bit cheesy, but they put together our team, and they decided that I should be part of that team back in 2013. And it is impossible to imagine anything that has influenced my professional life more than that single decision that they made back then. Being part of this team for 10 years Which I think is a very unusual thing anyways. Going back further, my thesis professor at university, Klaus Lester was his name. He argued that I would probably find it more fun and rewarding to go into the financial sector than to deep dive into academic research and do a PhD because I was considering that. He suspected that would be a little bit of a lonely endeavor for me, so he at least brought me to the private sector, and that was pretty important as well, I think.

AI assessment note: “The simplest answer would be my colleagues, Ben and Jakob.”

Q What was that training ground like for you and the people around you?

A One of the things that I think is Remarkable about that period of time is that really we were all committing capital, so we were in a position to be able to commit capital on our own up to certain limits, so there was this concept of limits, basically, that created the way that we kind of went about the business, but they were pretty generous, especially for a bunch of young folks just starting out in the business. They were really flexible in moving past The treasury markets, and into more credit-related pieces. So I personally had the opportunity to invest and trade in high-yield bonds, municipal bonds, preferred stocks, bankrupt situations. I invested on behalf of the, in effect, the balance sheet at Cargill, but also on behalf of their insurance companies, and had exposure to Cargill's pension plan at the time. So this really became a hub of financial expertise And investing capabilities for the firm very broadly.

AI assessment note: “I personally had the opportunity to invest and trade in high-yield bonds”

Q What were some of those innovations over the course of your time just at Cargill?

A It was probably investing in bankrupt situations. Actually, it was exemplified by Texaco filing for bankruptcy in 1987. It was a very short-lived bankruptcy. It was really not a fundamental credit problem, but more of a litigation issue. I just remember very distinctly the rapid work that was done in and around enterprise value. But more importantly, An understanding of why there was motivated selling by virtue of the downgrade of a money good credit. There was motivated selling in the market. Prices were dropping quite rapidly. Cargill came in and had a bid, brought liquidity, and brought a lot of dry powder. So they just had this willingness to go into dislocated markets, be able to assess value quickly, And be prepared to have a bid. It's a very powerful early lesson in my career.

AI assessment note: “It was probably investing in bankrupt situations. Actually, it was exemplified by Texaco”

Q I want to circle back to a couple of those steps and maybe start with the financial crisis. What were the types of problems that you were dealing with inside of Morgan Stanley on the real estate side?

A There were really two firms who were leaders in terms of real estate private equity, Morgan Stanley and Blackstone. There were investments, hundreds of them across all asset classes, but the common theme It was very high amounts of leverage and cross-collateralization in funds that did not have the liquidity to manage themselves through. In addition, the firm was using its balance sheet to bridge billions of dollars of investments that would effectively be warehoused at the firm and ultimately moved into investment management vehicles. There were also open-end funds in Germany that we had formed. You put illiquid assets like real estate into Liquid open-end daily NAV, daily redemption vehicles. There were real estate hedge funds. It wasn't only the real estate. It was the vehicles and the ventures. The relationships with investors who were very disappointed. The firm that was on the verge of bankruptcy. There were issues that if a given fund received a going concern opinion from the auditors, it could trigger the ISDAs across the entire Morgan Stanley firm and take it down. So there were very complicated issues over a period of time. And the intensity lasted for, you know, nine months or a year.

AI assessment note: “high amounts of leverage and cross-collateralization in funds that did not have the liquidity”

Q What was the history of the organization and where the wealth came from?

A So his dad was a poor kid from East Texas that Served in World War II, married a young woman from Dallas whose parents had died, left her a small grain business, and in 1948 he had the vision to build an industrial business because he learned in the grain business that people needed space. He built a small industrial building in Dallas on Cole Street that we own today on what they call a speculative basis. He didn't have a tenant in hand. He just went out to build the building and thought they would come And they came, and that was very unique. That didn't happen in America back then. If you built an industrial building, you had a tenant in hand. And so from 1948, all through the 19 fifties, and by the 19 sixties, his dad became one of the largest real estate developers in the United States. And by the end of the 19 sixties, he was developing around the world, including in China, he was developing in the 19 seventies. So the company by the 19 seventies was widely regarded As the largest real estate developer, manager, leasing company in the United States.

AI assessment note: “in 1948 he had the vision to build an industrial business”

Q So what was the company other than a cash burning machine?

A It was a company called US Search. It was originally one 800 US Search, which was finding lost family members and loved ones via infomercials on TV for consumers. You lost track of your son or your daughter, your old war buddy, and they play these infomercials in the middle of the night and say, hey, you should really be better connected. You call us, pay us a hundred bucks, and we'll find your lost family members and loved ones. Generally by using offline capabilities. And then the internet came and someone said, hey, if you call it one 800 us search.com, your company worth 20 times more. So they did that. And Lehman Brothers and Bear Stearns took them public. They raised about seventy million dollars and they burned through it in about nine months. Everything was a bloated semblance of that era where none of the seven members of senior management actually lived in Los Angeles where the company was based. Five of the seven didn't even live in the same state. This is before remote work. They rarely saw each other, and the company was just burning capital, doing everything from big deals with AOL, where they were paying five dollars for a dollar of revenue, to just having a bloated structure. This was not an easy opportunity, but a great opportunity for someone who was willing to go in and roll up their sleeves.

AI assessment note: “It was a company called US Search. It was originally one 800 US Search”

Q How do you think about in your holding when it comes time to potentially have to take back the keys and own the properties?

A So we don't actively seek to own the properties. If we end up owning the properties, there's really significant friction cost on the transaction due to transfer taxes at broker fees and carrying costs. And so we've found historically that you're better off settling with the borrower before it comes to that. We are willing to take back the keys, and we've done so about 10% of the time that we've made investments in non-performing loans, and so we've taken back the keys about 20 buildings. We presently own about four properties, and we seek to sell them immediately through a broadly marketed process. Occasionally, there are small things to do to those properties to clean them up to maximize price, but we're generally not seeking to take on Ownership or development risk. We don't find that that is the risk that our limited partners are looking for, and we don't think it's risk that's appropriate for us to take on. There's somebody out there that's better at doing that than us. What we're great at is finding complex situations where loans are in default and realizing the value from the loan side.

AI assessment note: “we don't actively seek to own the properties... seek to sell them immediately”

Q What was it like for you guys taking that leap?

A It's a little bit scary. You're giving up good jobs. You're giving up certainty of income. It's also extremely exciting. I was working for a real estate developer. There was no capital available in the market to build anything, and so I wasn't really working on anything meaningful at the time, and that bothered me more than anything. My wife and I were expecting our first child, and I asked her, what do you think? And she said, well, if you don't do this now, it's going to be a lot harder down the road once we have our first son. And so I told Dave I was expecting a child with my wife. He said, let's do it. I said, I don't know where this road's going to lead, but we've got to make some money, and we've got to do it quickly.

AI assessment note: “It's a little bit scary. You're giving up good jobs.”

Q So to figure out all these signs of the apocalypse, you had to start somewhere at a business school. So why don't you take me back to your investment experience?

A I interned at Putnam Investments and loved it, thought it was an amazing experience, but ended up at a firm, RS Investments out in San Francisco, which is the old Roberts and Stevens funds, and I had a couple choices of where to go. A big firm like a Putnam or a Franklin Templeton or a boutique like this that's owned by the managers that had a smaller lineup of funds, and Andre Parole, my very wise advisor who I Idolized after taking his class said, obviously you go to the boutique firm. And I think what appealed to me at that time was just the entrepreneurialism of going to a smaller place where they said, if you see a nickel on the floor, go get it, go pick it up, it's yours. So there weren't as many rules about what you could do, what you couldn't do, what you could look at, how you could add value, and that seemed exciting to me. 2627 years old, you're like, that's what I want. And I was there 11 years, all the way until I went to Rice University to become the CIO.

AI assessment note: “I interned at Putnam Investments and loved it... ended up at a firm, RS Investments”

Q When you started, you held some of those assets. How have you evolved to expressing the real assets portfolio today?

A We've always held a significant portfolio of directly owned assets in those areas that we manage internally using consultants on a very cost effective basis. And not only are the consultants cost effective, but just the fee burden avoidance is very effective. And I think we have stuck with that strategy and where it made sense, taken some more things in. We have been opportunistic as well on co-investing where that's made sense. With managers in projects that I guess I would say are follow that high yielding, high margin of safety, 10 to 14% returning projects. So not trying to get 25% IRRs and living in the world of the most aggressive projects out there, building hotels and drilling oil wells. Not at all what we're doing, but more on the infrastructure side. The other thing is If you're awake and alive right now as an institutional investor, you must have a view on the carbon situation, global warming, greenhouse gases, etc. And Rice, I am very happy to say, has walked a good path on this in the sense that we have decided that the university will become carbon neutral by 2030, but additionally, the endowment is committing To make its oil and gas assets also carbon neutral by that same date. Now we will have to buy offsets in order to do that, but we have been engaging versus divesting. And so we spend a tremendous amount of time talking to our investment partners, talking to …

AI assessment note: “We have been opportunistic as well on co-investing where that's made sense.”

Q When you have a mandate that canvases each of, say, middle market buyouts, growth, and venture, how do you think about putting that portfolio together?

A It's a makase menu we're trying to build for each client. Where every dish has to delight, and then they have to come together as a smartly diversifying way. So a buyout portfolio, for example, will, as you would expect, targets both vintage diversification. We typically target a three-year commitment period. We then seek to diversify strategies within buyouts from turnaround to buy and build and target the core segment's GDP. So the portfolio is diversity across industries. And in venture, we're typically targeting, I'd say, 80% in information tech, and the rest in healthcare and biotech, and then 60, 70% the U.S., and the rest in proven parts of venture centers around the world. In addition to those general rules, we use a number of quantitative tools as well, including a Monte Carlo simulation tool that we developed with Josh Lennar,

AI assessment note: “It's a makase menu we're trying to build for each client.”

Q What are some of the characteristics of the ones that you have chosen?

A So from a business fundamentals perspective, they check a number of characteristics. These are all, for the most part, strong, good businesses. Mission critical product services to customers, hard to replace, resilient, pricing power, high margin cash flow characteristics. The capital Structure dynamics is also, I would say, more consistent than different. They tend to be anywhere between three to four times in leverage and entry. So when we see a deal that's four and a half times or more, we tend to raise our eyebrows. And then the last thing that's characteristic across them is that they sound obvious, but they have a very strong alignment with the strength of the GP. That's an area we pay a lot of attention to trying to tease out. Is this the deal led by the right partner out of a fund?

AI assessment note: “from a business fundamentals perspective, they check a number of characteristics.”

Q What was the distinction for you between cash flow lending and asset backed lending?

A At American National, I was doing more asset-based lending, so it was underwriting a company-based loan. You advance against AR and inventory and PP&E, and you're looking at it from a liquidation standpoint. So it was this totally new approach of underwriting the business itself and knowing that there's no way I'm going to be repaid from a liquidation of the assets. I'm underwriting the value of the business, so I want to underwrite companies that are Market leaders. Something that they do is proprietary. They're highly diversified. They have a reason to exist. It's a recurring revenue business, that type of thing. So while it was new to me, I actually liked it a lot more than asset based.

AI assessment note: “You advance against AR and inventory and PP&E... totally new approach of underwriting the business”

Q amount of capital you're managing, whether it's on balance sheet or in funds, how did the nature of the market change? You think of a syndicated market as everyone's in it together, right? You're trying to find the capital for the deals. Then there's so much capital that you can imagine there being competition and you probably don't syndicate anything anymore. When did that start to shift in the market?

A So we had created the Unitronch product when I was back at GE and Terry's. I actually led that effort. So we started that in 2010. And honestly, when we started the Unitronch product, we really thought this is going to be an alternative financing vehicle for sponsors to use during periods of market dislocation. Had no idea that it would actually become this primary financing vehicle, which it has. In 2000, let's say, 16, a three or a four hundred million dollar unit tranche was a pretty decent sized deal. By 2019, that was six hundred million dollars, and as you know today, it's multi-billion dollar unit tranches. Lenders can hold north of a billion, but a lot of lenders in the private credit market hold two, three, four, five hundred million dollars on a deal.

AI assessment note: “So we started that in 2010... By 2019, that was six hundred million dollars”

Q As you work through those teams, I'd love to hear a little more about how your process works. So you mentioned originators, long relationships with the sponsors. What does that look like day to day?

A Sure. So the goal of the originator is to gain trusted advisor status with the sponsor. So that means we want to be the first call on the last call. So we want that sponsor to call us, to run the company by us, the structure that they're considering, what they like about the deal. You need to understand too, the market's pretty efficient. If a deal is an auction deal, we may be seeing that from as little as two or three sponsors to as much as 20 sponsors. Maybe contacting us on that one deal. So we have a screening committee, very senior folks on the front end. So when I say the front end, I'm talking about originations and credit professionals that are evaluating the deal. So basically the best way to think about the originations team and the credit team, they're investors. It's our investment team. They're looking at it and determining, is this a company we want to finance? And if so, what do we think the appropriate leverage multiples are and how would we price it? But they also really dig in and say, okay, it's early on. It's an investment banking book. The investment bank is going to sell. It's all positive. From our side, we're lenders. There's downside risk. There's really no upside. So we're looking at it and saying, what are the major issues with that particular company? How do we think we're going to mitigate those? And then if it makes it through screening, We would …

AI assessment note: “if it makes it through screening, We would do a little bit more work”

Q As the economic winds are shifting a little bit these days, I'd love to walk through some of the opportunities and risks you're seeing. Where are the areas that you're excited about?

A In the base direct lending business, just really excited about how much I think that's going to grow. So I think at the very top, you're going to have private equity penetration of middle and upper middle market companies in North America just continue to grow. So McKinsey will say that that's maybe 12% today. Those private equity sponsors are going to be looking for direct lending solutions, probably more than syndicated solutions. So I think the private credit market's going to grow direct lending by, let's say, 15% a year for the next five years. I hope we grow faster than the market. So that's on the base. I think that there's a big opportunity in secondary lending. Secondaries have been around for a long time in private equities, so LPs commit to a fund, and for whatever reason they need to sell, they have liquidity issues, they're over-allocated or whatever. And there's a big secondaries business in private equity. I think that given the huge growth in private debt over the last five years, there's a big opportunity in secondaries. I also believe that there's a pretty decent opportunity in nav lending, which is lending against essentially the equity value in a private equity sponsor's portfolio. That's pretty big today in Europe, and it's just catching on here in the U.S.

AI assessment note: “In the base direct lending business, just really excited about how much I think”

Q So your business historically has gone through a few transactions. How do you think about, call it buy versus build, as you set out the opportunities in front of you?

A It's a really good question, and I think about that regularly. So if it's a build, it's a natural adjacency to something that we're already doing. So when I think about NAV lending, I don't really need to go buy a team. Our originators are already calling on the sponsors. We know how to underwrite credit. We're underwriting portfolios. When I'm going to do something, it's a new product. So let's say we were going into real estate. I would do that via acquisition or pulling a team out of another institution. I don't necessarily need to buy the company or the portfolio. Maybe I pull a team out. We've looked quite a bit at Europe. I wouldn't start a European lending business from scratch and grow it organically because I just think there's so many different countries. Each country's different. It's not like doing business in the U S so you need to have critical mass. And to me, you enter Europe via acquisition.

AI assessment note: “if it's a build, it's a natural adjacency to something that we're already doing.”

Q How do you think about where you see risks both broadly and then specifically in your portfolios today?

A Well, obviously, there's certainly financial risk that is more acute today in our portfolio companies than a couple years ago, just given the significant increase in rates. The good thing is for companies that we're underwriting today and that we've been underwriting while rates have been increasing, we've taken that into account. So we're underwriting really good companies with an interest rate scenario that is the latest curve. So our leverage is lower. The more challenging situations are the deals that we underwrote a couple years ago. Still really, really good companies, but they're just over levered. They were done at seven plus times EBITDA, and by the way, a highly adjusted EBITDA. So the risk there is companies are struggling with meeting their interest or fixed charges, and what we do there is we have those conversations with the sponsor. We're way ahead of it. We do a deep dive. We've done a liquidity analysis on all the 480 companies in the portfolio. How much cash do they have on hand? What's their revolver availability? How much cash is coming in, going out? And the liquidity risk is actually quite small, but we're having those conversations with the sponsors way in advance of them running out of money, them defaulting on a covenant with the idea they own the business. So they should be right sizing the capital structure. That means they inject additional equity. M…

AI assessment note: “there's certainly financial risk that is more acute today in our portfolio companies”

Q I'd love to ask each of you one last question, which is, What initiatives in your respective areas are most top of mind? And Eric, maybe start with venture.

A I've got a pet peeve right now. I've been looking at vesting schedules. There's this influx of investment bankers, mutual funds, hedge funds coming into the venture space, and this is a ten-year vehicle. Most of those funds don't end in 10 years. There's always the plus, plus, plus. I've seen An explosion of short vesting schedules of two to four to five years, and it's just not great alignment. I don't want a GP to be able to leave after two years, get a hundred percent of their carry, sit on the beach, and now the team or the LP base have to dilute the carry to bring in another partner, and then somebody reaps those benefits. I think that is proliferated. I don't know why some of the law firms have allowed this, I think it's bad for the GP as well as the LP, and I've seen some of the best funds fall apart because of that.

AI assessment note: “I've got a pet peeve right now. I've been looking at vesting schedules.”

Q On a day-to-day basis, how do you go about turning over those rocks?

A We take a lot of intro meetings. There's 35 members on the hedge fund team across the globe, US, Europe, Asia. On average, we take in excess of over 800 meetings a year. Roughly a third of those is spent on new opportunities or new ideas that are coming to market. So, New manager launches, and those really come from a pretty broad set of inputs. So we have our own network that we've built through that team of 35 and through the experience over the years. So we know of new launches and spin-outs maybe before they're actually formally announced in the market. We're obviously plugged into a lot of industry events and attend those. Very well plugged into the cap intro community, so see what comes through that pipeline. Our clients serve as a really good source To flag opportunities for us to look at, and then of course we have our database, which really any manager in the world can sign up to be on. Through that, I would say we take almost every meeting that's offered. We say no more than we say yes in terms of making it through the process, but this team is dedicated to finding the new opportunities before the rest of the market identifies them and to secure that capacity for the benefit of our clients. That's what we're focused on day in and day out.

AI assessment note: “On average, we take in excess of over 800 meetings a year.”

Q How would you describe the event driven investing environment when you started?

A Back then, it was a good deal easier. A lot of it was, might sound a little crass, but picking off long onlys. There were a lot of alpha donors out there, and something would get announced, whether it was a merger or a spinoff, or a company would get into trouble with some asbestos liabilities, and you just had a lot of reflexing selling. So a lot of what we did was make a quick look at what was going on, and then be liquidity providers to people who were panicking. And then you could, over the course of time, figure out what was really going to happen, but the first announcement of something really created this enormous opportunity to get involved. Now, I think partially because of the rise of passive and quant, partially because the Darwinian process has weeded out a lot of the alpha donors, it's not as simple as that anymore. You have to be much more focused on both the event dynamics, but also the fundamentals of the business. It's not like all you have to do is get the event right anymore, and now it's gotten a lot more complicated.

AI assessment note: “Back then, it was a good deal easier. A lot of it was... picking off long onlys.”

Q You've talked about the one 44 a market. What are some of the other opportunities that you're really excited about?

A I would say right now we're really excited about bank debt. I don't know that the duration of this opportunity, but it's very, very attractive right now. Essentially the bank debt market, leverage loan market, I should say, has been really dominated by the CLOs. And that algorithm right now is broken. So CLO formation is harder now than it was before. There's less demand for the triple A tranches of CLOs. So what we're seeing, paradoxically, is that actually the larger bank debt deals are harder to place, and we're getting more concessions in that market. So we've been very active on the capital market side of the bank debt market, and compared to, say, friendly merger arbitrage, it just seems like a much, much more attractive opportunity set. So we've been pretty excited. We've been dialing up our exposure there a decent amount.

AI assessment note: “I would say right now we're really excited about bank debt.”

Q What'd you do with the property from owning it directly to eventually selling it and getting out of the direct real estate business?

A When the market improved, we went to sell the deal in the late nineties. So essentially we marketed the asset for sale. And at the time the Russia crisis hit in 1998, despite being under contract, the deal fell through and Harry Macklow at the time was the buyer. And we had come up with a plan to not only sell the building, but sell the dream of redeveloping the retail. At the property and let the next guy take that to wherever they wanted to go. And Harry saw the vision. To be honest, he was the only one that saw the vision. But when he couldn't close because he couldn't get financing, we approached Harry and asked him for some advice on how we could do it ourselves. And myself and one of my colleagues went to David and the president of Yale, and we said, we have a plan to redevelop this asset. We have to get it rezoned in New York City next to Trump Tower. And we did. We ripped off the front of the building and expanded it, and Yale probably made a hundred million dollars on the redevelopment. It was a great experience for me. I got to learn all aspects of the real estate business. Helps me do my job today, which is, you know, understanding what our partners are going through and how they do what they do.

AI assessment note: “we have a plan to redevelop this asset... We ripped off the front”