Prediction Not checkable as stated
Higgins: Wage inflation is less transitory than goods and supply chains
“Wage much less transitory than the goods service. So I think there's the supply chain issues, which some might say will be resolved in short order. I think that will run a bit longer. The wage pressures will not be.”
Prediction Not checkable as stated
Higgins: Rate hikes in 2022-2023 will crush high-multiple asset valuations
“If rates do move in 22, 23, you will have, I think, some major movements in terms of discount rate and some of these high-flying multiple situations.”
Insight
Higgins: Investors only win 50-60% of bets; risk management is everything
“You have to have that humility as an investor because, I don't know, whatever, 50 plus, below 60, depending on the year, But it's not like we get 80% of the stuff. So that's always the dirty little secret. And what ultimately reveals itself is then that's the …”
Insight
Higgins: Investment edge begins with understanding existing portfolio risk
“Edge comes in at different points in the investment cycle. And so there's an initial edge, which is sourcing. But even before that, there's the edge on, can you understand the risk in your portfolio and what piece of risk do you need to then augment, supplemen…”
Insight
Higgins: Paranoia and insecurity are core tenets to maintain investment edge
“Other tenants at King Street are paranoia and insecurity, you know. So it's, people are like, really? Oh, that sounds dark. I said, no, no, it's because the work's never done, right? It's like going edge, right? When we say edge, why are we so lucky to be seei…”
Assertion Supported
Higgins: Post-2020 office occupancy sits at 30% in NYC, 20% in SF
“We were still from 2020, we're still only say 30% of occupancy in New York, San Francisco, around 20%.”
Insight
Higgins: The worst assets default first in a cycle, depressing recovery rates
“Early in the cycle, I always say the worst goes first, and so, so recovery rates are lower.”
Insight
Higgins: Buy late and sell early to capture the middle convexity
“We always like to say we buy late and we sell early. And so there's so much money in between to make. And because what happens is at the first beginning of it, the story is not as well known, right? So the knowledge reduces risk. So you just don't have as much…”
Insight
Higgins: Investors must trade current value instead of anchoring to purchase price
“I would say anchoring to purchase price. So when someone comes in and says, well, we bought it here. We, you know, it's like, I don't care. I mean, I care obviously, but like to assess people, I said, don't trade the mark, trade the value. So it's back to that…”
Disclosure
Higgins: Bear Stearns CEO Jimmy Cayne provided King Street's first $1M
“We got a million dollars from Jimmy Cain, who was the CEO of Bear Stearns, a friend and mentor, and was amazing because he gave us the first million. He acted as a reference for us.”
Assertion Supported
Higgins: Unicorn companies hit $2.7 trillion in total market valuation
“There's 2.7 trillion of unicorns out there.”
Assertion Not checkable as stated
Higgins: King Street held investment committee meetings 11 times weekly in 2020
“We had meetings literally twice a day for investment committee and on Sunday, so 11 times a week, plus ad hoc huddles all the time.”
Assertion Supported
Higgins: Over half of King Street Capital works in operations
“Also that core competency inside over half our firm comes from the operations side.”
Insight
Higgins: Investment risk must be weighed by probability and proportionality
“I talk a lot about internally about probability and proportionality. That's our job is to weight the two. And so what events are out there ahead of us? Like what's the probability that those events can occur? And then what proportion of the business or that yo…”
Assertion Partly supported
Higgins: Drexel Burnham held a 90% high-yield market share before collapsing
“Drexel Burnham, they're issuing CP one day, 90% market share in the high yield market, and boom, they go bankrupt the next day.”
