The Exchanges

Q And how did you build out your team over the years to support the growing business?

A At the beginning, I was fortunate to add some really great people to help just on the technical piece of the business. Joanne Hagopian was at an accounting firm, and She grew to become a very valued partner before leaving actually to run a family office for one of our clients. And it was really that grow your partner. I was able to convince John Boymaster, who is co-chairman with me of the firm today, where John had had, actually he had had a career as a partner, trusted estates partner at a law firm. He was at the time at JP Morgan, working in the private bank. And that's been our view all along, is like, let's absolutely go for the A-plus people, and bring them in, and bring them in as partners, and to have the folks that have been part of the firm really have that commitment to doing the best for our clients, that deep investment experience and capability, and I was very much willing to bring in that quality, and if you will, share the wealth. That comes with actually bringing in people as partners, not as employees. Then we've also had the benefit of really being able to grow talent from within. Two of the three managing partners literally began their career. So we really do have a real commitment to continuing to develop the talent that we have in the company, and it's served us very well.

AI assessment note: “let's absolutely go for the A-plus people, and bring them in as partners”

Q So let's dive into each one of those for fun. Let's start with equities. You mentioned concentration. What does that mean to you?

A There's not any one answer, but in general, we think if you're going to be investing in a way that is an active manager, you need to be different than an index. So you don't end up with just an expensive index. And the way that you most frequently get there is by being significantly more concentrated. We invest with managers that on the very limit side, we have invested with managers that own a dozen positions. We also have invested with managers that own 60 plus. I think it's very rare that we've invested with managers that have north of a hundred, unless it's sort of more like farm team and stuff. Just to, those aren't like rules. It's just about the idea. If you're going to actually vary from the index, you have to vary from the index.

AI assessment note: “the way that you most frequently get there is by being significantly more concentrated.”

Q I'm curious that even though you don't have a model portfolio, if you were to think about your clients in terms of their composition, right? So a tax exempt looks a lot different from a taxable, maybe a certain type of taxable investor looks different from another one. How wide is the variety of where you end up in terms of allocating to those different buckets?

A Actually, surprisingly varied. The places where there's meaningful difference, and probably this is more true in the family world, is in what's needed in core cash and fixed income. That tends to be a dollar amount as opposed to a percent, but there's a huge range of what people need to have that sort of sense of Flexibility, stability, mindset that permits the rest of the portfolio to run on a long-term basis. The other place where there's meaningful differences is in just this percent in long-term illiquid. But if you're adding real assets and private investments, to a certain extent, private credit, which we refer to as hybrid, just that aggregate long-term illiquidity is another constraint that that's the other place where there's the biggest difference.

AI assessment note: “Actually, surprisingly varied. The places where there's meaningful difference”

Q And so then across different asset classes, what are your biases in terms of effectively what the opportunity set should be for any one of your clients?

A Well, we use large buckets of asset classes. So we talk about core cash and fixed income. We talk about equities. We talk about alternative assets slash head funds. We talk about private equity, private investments. We encompass this private equity, venture, growth capital. We talk about hard assets. So you start with big buckets as opposed to narrowly defined. And so I think that that, in some sense, answers the question. We're trying to get over, away from trying to tilt towards any one narrow return pattern or targeted return pattern. I'd say that that is a place where there's differences. There's differences based on individual circumstances, but there's also, that is a place where there's individual, there's differences based on tax status. It is very common for us to have a higher percentage of some alternative assets in tax-exempt Institutions as opposed to taxpayers, I mean, for the obvious reasons, but our portfolios are generally or heavily oriented towards overall capital appreciation, and we're getting that disproportionately through equities and private equity slash venture.

AI assessment note: “our portfolios are generally or heavily oriented towards overall capital appreciation”

Q That'd be fun to take that plan that you laid out and apply it to alternatives where you started your career in risk guard, which for some point in time was like the ultimate absolute return on correlated investment, much less so today. So if you think about just that hedge fund landscape, what do you see looking out as what that opportunity set is?

A It is actually a very complicated and interesting question, in part because a lot of the spread-based return opportunities, those spreads have just compressed, and so even where there's sort of interesting things to do, it's harder to actually realize attractive whole dollar returns. So I think that we have seen that migrate to more complex credit strategies. We've seen that move to some more leverage credit strategies. We do see interesting things, you know, comes and goes in merger ARB land. There just isn't much to do in distressed land, even though it's not intuitive. I mean, you would think there should be, but the combination of free money, And ability of almost everybody to access financing has suggested there's not much there, and so it's a more varied environment. I think that's also coming back to sort of how we think about things. You don't have to do everything forever. Again, I think that stress is a good example. I mean, there are some really good dedicated to stress folks who have done a very good job, have done exactly what they have said they're going to do, but there just isn't much to do, and so that would be a time where we probably would either reduce our exposure to those sets of firms or largely exit Just because of the forward opportunity isn't as interesting. I think that in general, a lot of things in the alternative assets arena are, as do the underly…

AI assessment note: “a lot of the spread-based return opportunities, those spreads have just compressed”

Q What are the impact consequences that you see differently from how others are perceiving the ESG label?

A It's really changing. I do think that there are still remnants of people thinking about ESG as rooted in negative filters. None of this. No fossil fuel. No something. Which again, those are perfectly legitimate. Things, but that I don't think captures the real power of holistic ESG investing. I actually think that if you, in the world state that I see, in the end, people will really be incorporating these things fully, and it won't even be something that will be described as something else. It will just be an expected part of a person that's going to be an active investor, that it's a necessary. A key piece of that, though, is time horizon. I think that Energy is a good example of that. We probably stopped investing in making commitments to private energy funds now probably, I don't know, four-ish years ago, and we didn't stop because we thought they were inherently bad, but we stopped because the price deck became so much more uncertain on forward oil prices. Because of the substitution, because of the risk of regulation, because of the technological advances, and those things in our mind just made the risk reward of those investments just less appealing. And I think that that's a time horizon conversation that is a good example of how those different factors can be attached to investment choices.

AI assessment note: “I don't think captures the real power of holistic ESG investing.”

Q So what do you think Hall Capital looks like five or 10 years from now?

A I bet that Hall Capital will, will continue to grow. We continue to grow. We've actually grown meaningful in assets, and much less so in clients. That's actually by design. In some sense, we are very much attentive to still being a extremely high touch, very close partnership with all of our clients. So as we've continued to add new clients, they generally speaking have been larger. So I think that we will continue to have Meaningful growth. We'll have growth in clients, but more meaningful growth in assets. Hopefully, not just from adding clients, but from returns, the good way. We have offices here in San Francisco and New York, but we really are sort of one team. I think that that commitment that we have to being a very tight, relatively flat organization is still just such an important part of our culture and who we are. So I think we are trying to balance That, in some sense, both imperative to continue to grow with maintaining a very particular culture.

AI assessment note: “We'll have growth in clients, but more meaningful growth in assets.”

Q to Ridgeline gain a decided advantage. That's why customers call it miraculous, game-changing, and an awakening. If that's not how you would describe your investment management tech, request a demo at ridgeline.ai. And now, back to the show. What does the process look like distinguishing between, let's say, your subset is those more concentrated managers? How does your team go about finding them and then distinguishing one from the next?

A Our approach across all investments, it's the same. And we have been reflecting our overall investment philosophy. So we start from the viewpoint that we don't have to do anything. And so it's really a matter of, one, thinking about an investment opportunity set. What is an opportunity set that's delivered or out there? Then we're thinking about, is it something that we think is available and will generate attractive returns on a going forward three, five, 10 year basis? We're then looking at identifying people, the players, who are the people that actually can or are taking advantage of that opportunity set and doing it well. What's the evidence of success that they can do it well? Your past performance, their investment methodology. It's really digging in and say, okay, we think this is the opportunity. What leads us to believe that this group of people knows how to do that and actually capture that opportunity? So, I mean, there's obviously, kind of, understand the investment discipline, the investment practice, the history, but then it's also really about understanding the organization. We talk about incentives. We're really interested in what makes an organization tick, how are people be rewarded, because that tells us a lot about where people allocate their time, where people allocate their energy, what their commitment is, how they're going to follow through, which is al…

AI assessment note: “going back to your question about how do we find people... we cast a big net”

Q shifted and did something else. How have you thought about that corollary in your portfolios where, let's just say that example of private equity, prices are going up and up and up, and we all know that. Whether it's private equity or somewhere else, how do you go about making a decision to make a meaningful shift in even one area that you're investing in because of that opportunity set?

A It really is less the big asset class opportunity set, and much more a la arb, or a la distressed, or a la leverage credit, that it becomes much more of a sub opportunity set evaluation, as opposed to an asset class operation, and that is the really hard calls, because it's, as we know, it's so hard to leave or pare back when things are looking great. And one of the things that we've actually talked about a lot internally is we just have had spectacular performance coming from particularly some of the ventures, particularly some of those that have a lot in enterprise. We've seen it in the buyout lands. We've seen it, actually, we've seen it in the public portfolios. And it's really the discipline to keep trimming back as opposed to necessarily feeling these make the all the way in or all the way out call. But maintaining that disability of trimming back is really what you have to do.

AI assessment note: “it's really the discipline to keep trimming back as opposed to necessarily feeling”

Q How have you seen that shared ownership play out in the motivations of the people on your team?

A I think it has played out in the sense that there really is, again, the sense of one team, and that is something that we have tried to set up really throughout the way that we incentivize and comp people. We don't pay people for client acquisition because we view that as something that the entire firm is responsible for in terms of we have each of our senior people that are leading client teams Views that client team as their responsibility, and their whole team's working for that, but we are all collectively doing what we can to support that to make it work, so I think it's really trying to reinforce this idea that we all are going to benefit from actually doing very well by our clients in every way possible, starting with investment performance, but then very much being their aligned problem-solving partner in other ways.

AI assessment note: “there really is, again, the sense of one team”

Q I'd love to know a little more about your experience, say, with Princeton in particular. Andy was a colleague of mine at Yale back in the day. What was that dynamic like sitting on the board of Princeton's endowment?

A I was on the board of PRINCO for many, many, many years, and had the great joy of working with Andy, and I was chair for three years before, chair of PRINCO before I moved on to another position with the, the larger university board, and you know, I think that in all of those cases, what was really interesting was actually engaging in these, exactly these debates that we've been talking about, about opportunity set, about The right allocation about what's a time horizon, about what are the actual attributes That make an opportunity interesting or not, and how things are changing. That was just fun. I think that's true, actually, if I think about all the different investment committees I've been on, particularly in the places where I sit in a chair seat, it's both working closely with the CIO and talking through the different sets of issues and questions that come up, whether it be portfolio questions or Shifting strategy questions or team development questions. I enjoy that, and I've learned a lot from that in every circumstance, because every circumstance is different. And it's also about how to actually, one of the things I'd say that I have learned and continue to learn is how to actually involve the other committee members in a way that is both engaging and constructive. Typically, these investment committees have Really interesting, successful investment people in their ow…

AI assessment note: “it's both working closely with the CIO and talking through the different sets of issues”

Q When you were looking at a manager or strategy today, where do some of those factors give you and your team the most difficult decisions and trade-offs?

A I think that that harks back a little bit to what we're talking about in terms of private equity today or venture in some sense. It's understanding what has been rewarded and why in sort of valuation land. Let's talk about enterprise. There's a whole sets of reasons technology's been so extraordinarily rewarded, and some of the tech companies have been rewarded. And so the factors that we think about are, is there going to be a dramatically changing regulatory environment that you won't be able to capture that same kind of outsized profitability? What are the risks of new radical disruption that people think, like, you know, can't happen, but it's going to happen, right? I don't know what the next cloud is, but there's going to be something that will, again, radically disrupt even the players that are so strong today.

AI assessment note: “the factors that we think about are, is there going to be a dramatically changing regulatory environment”