Insight
Fitzpatrick: PE pays advisors high fees while obscuring performance for ten years
“And if you're a financial advisor and you're recommending private equity, first of all, it's the thing you can sell where you get paid the biggest fees usually. And nobody's gonna know if you're right or wrong. For 10 years.”
Disclosure
Fitzpatrick pulled prime brokerage assets from parent bank UBS in 2008
“So we were wholly owned by UBS, and we actually had prime brokerage kind of assets exposed at that point in time, and actually one of the somewhat controversial decisions I made was I pulled from a number of different prime brokers, but UBS was one of them.”
Opinion
Fitzpatrick: Private equity is frothy and likely oversold to retail investors
“If that industry feels really frothy to me, and it feels like there's some bad practices that will come back to kind of haunt the industry, I also worry that it's maybe been oversold to retail.”
Insight
Fitzpatrick: Equity long/short managers add no value when moving beta
“When you look at equity long short managers, when they move beta, and we've looked at this a lot of different ways, we don't think there's real value added.”
Assertion Not checkable as stated
Fitzpatrick: Soros external managers generated zero net beta-adjusted excess return
“When you aggregated our external managers and you took out kind of beta, which isn't hard to kind of approximate, we were not getting an excess return. It was Zero. And that's, you're paying a lot of fees, and you're adding a lot of complexity, and not getting…”
Disclosure
Fitzpatrick attempted an O'Connor management buyout from UBS in 2008
“We did, and to be candid, we attempted a management buyout at that moment in time, and we got close, but we were recovering too quickly as were financial markets.
So the trader, me and my peers actually tried to extract ourselves at a good price, but ultimatel…”
What-if
Fitzpatrick: Platform hedge funds cut struggling managers prematurely
“And if he was at a platform shop, he doesn't make it till September.”
Disclosure
Fitzpatrick: Soros Fund Management is letting its PE allocation roll down
“The private equity allocation that I inherited, and this goes back to our spend and what we're solving for being a little bit different than your typical foundation or endowment, we were over allocated to private equity generally with money in the ground and f…”
Insight
Fitzpatrick: Boasting about MOIC without factoring time value is flawed
“People who quote multiple uninvested capital while pounding their chest and give no regard to time value of money or opportunity cost.”
Insight
Fitzpatrick: Trading provides a daily, merit-based report card
“Being an investor and being a trader, it felt like every day I would have a report card And you live and die on the merits of the work you did.”
Insight
Fitzpatrick: Pulling out of early market recovery momentum is a mistake
“As markets started to recover post the first quarter, there was a ton of momentum, and we didn't settle into that momentum. If anything, we added into it, whereas I think a mistake some investors would make is taking their ball and going home at that moment in…”
Opinion
Fitzpatrick: Soros Fund portfolio was overly diversified upon her arrival
“So the interesting thing is the portfolio when I arrived was actually over diversified, I'd argue. So there weren't enough big bets in the portfolio.”
Disclosure
Fitzpatrick: Soros baseline risk profile aligns to a 60/40 portfolio
“This is neutral to what we expect to exist over kind of a five to seven year period, and for us, that equates to about a sixty-forty portfolio, so definitely not market neutral. That's fairly high octane, although it's less than your typical Foundation or endo…”
Insight
Fitzpatrick: Open Society Foundations' inelastic spend restricts Soros risk capacity
“The Open Society Foundation has a less elastic spend because it's a huge global organization, so the ability to maneuver spend very quickly, it's just harder, and in that context, you can't take as much risk”
Insight
Fitzpatrick: Forward foundation commitments effectively function as portfolio leverage
“If you have forward foundation commitments, that is effectively leverage in your portfolio.”
Disclosure
Fitzpatrick: Soros leverages public equities at Fed funds plus 20 bps
“We can borrow against our public equities at Fed funds plus 20 basis points, lever up this safe but esoteric private credit, and it works really well.”
Insight
Fitzpatrick: Large lending syndicates produce lowest-common-denominator credit workouts
“Invariably in a moment in time when something goes wrong in a credit deal, if you're trying to solve for 20 utility curves, forget it. It's going to be lowest common denominator, versus when we do deals, it's only us or us and one or two trusted partners, so t…”
Disclosure
Fitzpatrick: A 6% IRR PE manager asked Soros for a fee-paying extension
“We just had a firm that asked for an extension. The results of the so far have been poor. It's like a six percent IRR. They're asking for an extension where they want us to pay a management fee while they extend the call option of their performance fee.”
Assertion Supported
Fitzpatrick: O'Connor was a beta test site for Steve Jobs's NeXT
“They were actually a beta test site for Steve Jobs Next, because they were one of the first trading kind of franchises to really embrace technology and compute power.”
Insight
Fitzpatrick: Gap risk is a foundational, painful lesson for options traders
“One of the first lessons you have to learn, and it's a painful lesson to watch, is gap risk, especially when you're an options trader.”
Insight
Fitzpatrick: Convertible bonds provide an exceptional multi-dimensional education
“First of all, they're cross-asset class security, but it's also a security where a lot of things can go wrong and right, so it's a great teacher and You also learn about the perils and benefits of correlations between equities and rates and what can happen whe…”
Disclosure
Fitzpatrick: Soros reduced external manager allocations to increase portfolio concentration
“We really reduced the number of allocations we made to managers to try to increase the concentration and give ourselves the ability to make more big bets”
Disclosure
Fitzpatrick: Soros allocates to 20 hedge funds and 90 PE funds
“So we allocate to 20 external hedge funds We allocate to over 90 external and private equity funds, and internally we have 28 portfolio managers and 17 kind of strategies or netting units”
Disclosure
Fitzpatrick: Soros shifted public market allocation to 75% internal managers
“So in public markets, we're about 75% internal and 25% external. And when I came in, we were about fifty-fifty.”
