Opinion
Rattner: A company's primary fiduciary duty is to responsibly serve its shareholders
“And I'm almost with Milton Friedman, who wrote that famous New York Times Magazine piece in 1970, which said that the job of a company is to go out and make money ethically, legally, responsibly, but ultimately to serve the shareholders.”
Opinion
Rattner: 2009 auto restructuring nearly collapsed over Sheila Bair's FDIC
“Particularly the FDIC, which was run by Sheila Bair, who was particularly difficult. And this caper, as my deputy Ron Bloom used to call it, almost fell apart over that problem.”
Assertion Not checkable as stated
Rattner: Harvard is still untangling illiquid investments it shouldn't have made
“What a lot of these firms or institutions have is a lot of illiquid stuff. Harvard is still trying to untangle some of it that they probably shouldn't have done”
Insight
Rattner: Firing underperforming fund managers rarely creates value compared to holding them
“One of the things that I force the team to do once a year is go back and look at our terminated managers, because it's easy to fire a manager. And in most firms, you fire a manager, nobody's ever going to ask you again, well, how did that manager do? Did you m…”
Insight
Rattner: Over-diversifying across 100 fund managers guarantees index-like mean reversion
“If you do the math, right, a firm has, let's just say, a hundred managers. So each manager has one percent of your capital on average. And each of those managers has 20 top positions. What is that? Five basis points of your capital is in some given position. N…”
Opinion
Rattner: Endowments should use a specialist model rather than generalists
“I believed in the specialist model. The idea that you have five or six smart senior people, and they all go off and do whatever they feel like doing, and often they're doing different things from one investment to another, it didn't make perfect sense to me.”
Opinion
Rattner: Private equity still delivers a return premium over public markets
“I do think the return premium Which, while it's smaller now, probably, certainly than it was, is still there. I think the way that private equity guys and ladies think about driving performance, not getting caught up in being a public company, being very comme…”
Insight
Rattner: Hedge funds are a fee structure, not an investment strategy
“I think I wrote a piece for Business Week years ago, in which I said that hedge funds are not an investment strategy, they're a fee structure.”
Insight
Rattner: Nobody is actually good at market timing or factor overlays
“We're not good, I frankly don't think anybody is, at market timing or even factor overlays”
Opinion
Rattner: Willett is significantly underweight Europe due to profoundly unattractive fundamentals
“We're way underweight Europe. There are many days when I wake up and think we should just leave altogether. There's nothing attractive about the fundamentals.”
Insight
Rattner: Banking and private equity skills do not translate to asset management
“People assume, and maybe Mike assumed this, that because I had been a banker and a private equity guy, I could run an investment management firm, but it's like asking a cardiologist to look at your elbow that you think you might have broken that's really belon…”
Disclosure
Rattner: Bloomberg's family office will always manage most capital externally
“Most of our money is and always will be managed externally because we do believe in diversification.”
Insight
Rattner: Private equity has the largest fee drag of any asset class
“The advantages of doing it internally are that, quite frankly, the fee drag of private equity is the biggest of any asset class, and I Sort of knew what it was when I was on the other side, but as a limited partner, I really knew what it was. It's enormous.”
Assertion Not checkable as stated
Rattner: Willett maintains a far lower unfunded liability ratio than typical endowments
“And so our unfunded liability ratio is very, which again, I don't want to get into specifics, is very low compared to what the typical endowment or foundation has.”
Insight
Rattner: Private equity performance persistence across consecutive funds is weak
“Now the problem is that just like in other parts of money management, performance persistence is not that great. So a firm that was top quartile in its last fund could well end up being second, third, or fourth quartile in its next one, and then back to first …”
Disclosure
Rattner: Willett willingly pays high fees if net performance is demonstrably superior
“I believe that it's a little bit of reverse engineering, that I'm willing to pay almost any level of fees if I believe the net performance is going to be superior. So we have people that we pay very high fees to, because I really believe they're exceptional pe…”
Disclosure
Rattner: Willett Advisors avoids investing in Russia and likely always will
“We don't invest in Russia, I can't imagine we ever would”
Insight
Rattner: New York investment managers cannot match on-the-ground talent in China
“I don't know how a guy sitting in New York can be as effective in China as people who are on the ground there.”
Disclosure
Rattner: Willett's most successful managers are fiercely independent owner-operators
“We like owner operators. We want Firms that are owned by the people who are actually managing the money, not part of some colossus. We want the lead person, or lead couple people, if that's what it is, to just be so driven that you can feel that they taste thi…”
Disclosure
Rattner: Willett strictly avoids non-top-quartile venture managers, slowing portfolio growth
“One of the early decisions that Alice and I made was that if we couldn't be in what we thought was a top quartile manager, we just wouldn't do it, and so the result was it has taken us 11 or 12 years now And we still do not have as big of a venture portfolio a…”
Assertion Not checkable as stated
Rattner: China lacks true private equity and remains primarily a venture market
“There isn't really a true private equity market in China yet. It's more of a growth equity and venture market, and probably also cheaper than the US.”
Disclosure
Rattner: Willett backs more female-led private managers in China than the US
“I'll make one observation you didn't ask about, but it does, I found it fascinating, which is that we have more investment managers in China on the private side with a senior partner or the CEO of the firm as a woman than we have here, because here we have zer…”
Assertion Not checkable as stated
Rattner: Bloomberg's family office fortunately launched with mostly cash in 2008
“We actually opened our doors for business, his business on January one of 2008, which I mentioned because you know what happened in 2008. And so we went right down the water slide with everybody else. Fortunately, most of our money was in cash in 2008.”
Assertion Not checkable as stated
Rattner: Willett faced a severe venture capital disadvantage starting in 2008
“They had had 15 or 20 years to build a portfolio, to establish relationships, build a team, and so on, and we were starting fresh. That certainly put us at a disadvantage, particularly in things like venture capital.”
Steve Rattner