Andrew Tsai
1 appearance on the record.
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The record, in short
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Everything Andrew Tsai said on Capital Allocators that made the record, most notable first. Filter by type, assessment or year in the ledger →
VC investors blocked a multi-hundred-million-dollar buyout offer for Urban Fetch
“We actually had prior to that, another competitor try to buy us out, and this was, you know, halfway through that journey, so one year later after starting it, And this is another lesson in, in terms of lack of alignment and you kind of, all these things come …”
Friendly, constructive shareholder activism creates strong alpha in Japan
“And this is one where we really saw the value of activism in Japan done in a very particular way, which was friendly, constructive. And we saw that that created really good alpha.”
Relying heavily on historical correlations for asset allocation is dangerous
“Historical correlations would be useful, but dangerous to rely on too much. And if you think about asset allocation, right, you're relying on your forecast of volatility, expected returns and correlations.”
Falling 10-year Treasury yields drove manager performance more than individual skill
“A graph of tenure yields going back 40 years. And the reason I keep it there is that it looks like a ski slope, right? It goes from 14% down to where it is today. And there's been some gyrations, but it's basically, I say this to all my contemporaries, like no…”
Market crises can wipe out investors before mean reversion occurs
“When things go bad, they can go much worse than you expected. And things can really happen that, that don't make sense. And it doesn't matter if it makes sense or not, because you're not around to take advantage of the other side.”
One-hour consumer delivery is unprofitable without third-party logistics infrastructure
“Deliver ice cream within an hour and all that kind of stuff. And of course that's not a profitable business, but what could have been a very profitable business and what a lot of people What people today have seen is that if you can nail the third party last m…”
Over-diversification prevents asymmetric bets from generating meaningful returns
“When you kind of dissect return drivers and if you become overly diversified, all of a sudden it really gets hard to allow those asymmetric bets to be meaningful.”
Cross-asset valuation requires standardizing investments down to unlevered yield
“And I think having that kind of asset class valuation framework to be able to kind of look at things and kind of, if you think about it, roughly dissect things down into an unlevered yield, right? You can do that for an equity, you can do that for a cap rate, …”
Chalkstream shorts overleveraged, declining Japanese companies via credit default swaps
“We have CDS positions in Japan. That's a whole nother bet where we think there's these massively levered companies that are trading at ridiculously tight CDS levels that we think are in industries that are in secular decline.”
Investors should buy CDS when highly levered entities hit 17 basis points
“Lehman traded at 17 basis points. And just as an overarching theme, anytime a highly levered thing trades anywhere in that zip code, I think he just, I think he puts them on.”
Electricity and power markets are dominated by utilities, not investment funds
“Most of the people, the participants, I'm talking things like day ahead markets, FTR markets, price of power on the different regional exchanges. Most of them are public utilities or hedgers, not investment folks.”
Institutional-grade electricity trading teams are exceedingly rare
“We've probably met with 60 or 70 or so, but most of them are kind of small ex-utility traders from public utility or from an energy trading shop. And to find groups that we can partner with to do it in, in, in kind of a institutional long-term approach is, has…”
Chalkstream's capacity-constrained core strategy maintained a 0.1 beta to the S&P
“That part of our portfolio's probably been. 0.1 beta or so to the S and P over the last five, six years. With pretty consistent alpha.”
Finance professionals implicitly hold equity beta regardless of direct portfolio holdings
“If you work in finance in New York City, and you have zero equities, you're long equities, right? Right? If you're in the hedge fund industry, private equity industry, you have beta, DS&P.”
Capital saturation and copycat fund spinoffs have severely compressed active alpha
“It dwarfed what we expected by a factor of five. And so, it's really hard to create a lot of active alpha when there's that much money in the space, and when a lot of the similar approaches, we're now almost on third generation, meaning, like, some of the earl…”
South Korea's large equity market has very few quality hedge funds
“That's where in places like Korea, where it's a huge equity market and you can count the number of good hedge funds on one hand. So we think it's a secular play. That's why we built a business there, a hedge fund business there, and we expect to be there indef…”
None of Chalkstream's most successful investments were consensus committee bets
“If I go back and think about all of our greatest hits, you know, I don't think there was one that was a consensus, like, yeah, that feels good around the board kind of investment. It was always like, there was always some twists, some difficulty”
Top traders have largely abandoned Wall Street for hedge funds
“You know, there's not that many traders on the street today that have that kind of persona because they've all gone to hedge funds or done other things.”
Asset managers need capital duration to capture rare decade opportunities
“If you believe in your strategy, if you believe in your team, what is the X factor you need? You need duration of capital because you need to be around those times. And every decade, there's maybe one or two opportunities where there actually is Lower hanging …”
Japan, Korea, and power trading account for 40% of Chalkstream's risk
“If you look at Japan, Korea, and increasingly power as a percentage of our risk in our portfolio, that's probably 40% of our risk.”
TOPIX fell 44% in 2008 while Japanese net-cash activists lost 16%
“You know, Japan Topix is down 44%. You know, on average, these guys were down 16, 17%.”
Chalkstream holds a 4x notional short CDS position against tail risks
“Japanese equities down 40%, China hard landing, the world ends, like we're levered about four times short, notional short on CDS.”
Chalkstream bars near-term topics at its annual three-day company offsites
“We do an offsite every year. We take the whole company and we go somewhere for three days and we're not allowed to talk about anything that is in the near term. And the theme of the offsites is the same every year, which is in five years from now for looking b…”
Chalkstream holds intentional direct equity beta exposure in Japan and Korea
“We do have some beta portfolio. We have it in Japan. We have it in Korea and things like that. And so like, I definitely have indirect beta and I have some direct beta bets, but the direct beta bets in our portfolio are very, very intentional.”
Appearances (1)
| Episode | Date | Speaking time |
|---|---|---|
| Andrew Tsai – Catching a Theme on the Chalkstream (EP.73) | Oct 22, 2018 | 55m |