Risk management uses proactive review over automatic pod-shop sellouts
Tony Yoseloff · Tony Yoseloff – Forty Years of Davidson Kempner (Capital Allocators, EP.313) · May 8, 2023 · at 44:28
Tony Yoseloff is the Managing Partner and CIO of multi-strategy investment firm Davidson Kempner Capital Management, discussing risk management differences between pod shops and multi-strategy funds.
0:00 / 0:12exact quote · 12.9s
720p mp4 · rendered on demand · StarZero watermark
“We tend to operate differently than some of the pod shops in that regard, where typically hitting a test leads to a conversation versus an outright sellout, although typically it's conversations well in advance of hitting a test as people get closer to tests.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Tony Yoseloff
Many private equity deals rely on unspoken financing arbitrage
“Not all private equity, but a lot of private equity is buying In favor businesses at higher multiples because you think you can operate it better, or you think EBITDA is going to continue to grow, or sometimes it's just a financing arbitrage as to how you do t…”
Decentralized team captains make better investment decisions than senior executives
“I want to have a larger number of team captains who are people who have been here for a long time, who we've seen their work product, we trust their work product, and those people can be empowered to make decisions on individual investments because those peopl…”
Macro overlays often add portfolio risk rather than reducing it
“Because we run our portfolio without leverage and because of how we manage our portfolios, we don't use macro overlays. And I'm not even sure that macro overlays often would be risk Reducing. I think it much might be an additional risk that you're putting on t…”
Holding equity positions too long drives thesis creep and underperformance
“We typically find that if our teams have held stocks for too long, it's usually not a good thing. It's better to be trading in and out of them. There's also a risk of thesis creep, quite frankly. Where you start out in something for one thing and then you wind…”
Credit investors are the first to spot market trouble on ICs
“Over time, credit investors know first when things are going wrong, so I do actually think that there is a benefit to having at least some credit investors on any given committee.”
Calibrate downside risk and loss probability before considering upside
“The first questions I ask are, how are we going to lose money? How much money can we lose? On this, I always assume that if someone asks me about an investment that they're interested in, that they think there's upside to it. So I always want to calibrate the …”