The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
why aren't all 46 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 0 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
Investment decisions should be highly collaborative but not consensus-driven
“I am not a believer in consensus decision-making, so we aim to have a process that's highly collaborative where we can gather as many viewpoints as possible.”
Microfinance NGOs lost money for beneficiaries in public-private partnerships
“They were involved in some public-private partnerships, for example, that were actually losing money for the people that they were trying to support, but they looked really good on paper.”
Heller: Many fund managers struggle to explain their strategy without jargon
“It's shocking. I think sometimes managers use a lot of jargon when they talk about what they do, and when you ask really basic questions, even they have a hard time explaining it sometimes.”
Tax friction adds a 150-200 bps hurdle to active managers
“Tax efficiency creates, you know, an additional 150 to 200 basis At this point, annual hurdle for every active manager in the portfolio. That's what you can lose through turnover, and it can get worse than that.”
Heller: Active alpha will never reliably return to 2000-era levels
“I think alpha's never going to be as high on a repeatable basis as it probably was in 2000 or one, but we still believe in active management very much.”
Heller: Many institutional investment committees exist merely to rubber-stamp ideas
“A lot of investment committees at organizations like ours, Frankly exist to rubber stamp ideas, and it's very easy to get into that model because you meet with them quarterly, and you're meeting with your team weekly”
Heller speaks last and changes scores most during investment evaluations
“We go through this process, a pretty formal process of assessing investments before we put them in the portfolio. And I listen to all of the team's views because I'm always the last person to speak. And I am always the person that changes my scores the most by…”
Brandywine avoids high-fee, high-turnover, cash-heavy equity managers
“So for our long only portfolio, for example, we have a break-even analysis that we run to look at the returns of a manager, and it's something we do right up front of every process to say, what does a manager need to earn after fees and taxes to beat a benchma…”
Brandywine made a crypto investment, viewing it like the 1990s internet
“And we ended up pursuing a small investment in the space at the end of that process, understanding that there's just huge unknowable risks around regulation, around the investment in tokens and their volatility, around how you're owning something and what you …”
Top venture capital managers tend to strictly limit their fund sizes
“The best managers do tend to really limit their fund sizes dramatically in that space.”
Evaluate fund managers on process quality rather than market outcomes
“And there's a number of KDIs that might fall out of that in terms of the accuracy of their decision making, not necessarily on an outcome basis, but on a process basis, because of course you can't control what the market's going to do, but just looking at the …”
Specialty insurance offers rare uncorrelated returns and semi-liquidity
“And it's really hard for us to find Assets that are relatively uncorrelated and provide liquid-ish, not super liquid, but not ten-year lockup illiquidity that provide the post-tax returns that we look for. We have a pretty high bar for our hedge fund portfolio…”
Brandywine targets multi-decade crypto private equity over liquid trading strategies
“And I think relatively quickly, we came to appreciate that the trading strategies were not a good fit for us. And I do think, by the way, people can make fantastic money doing this, but we didn't really want to have our main bet be on the volatility of the ass…”
Sizing new fund positions at full capacity backfires during early drawdowns
“And the problem with that is when that position does something you don't expect, let's say the returns are horrific for the first couple of quarters, it puts huge pressure on the internal process. And I also think it puts a lot of pressure on your relationship…”
Brandywine rates investments 1-to-5, excluding 3 to eliminate fence-sitting
“We also are really, really believers in using a framework at the end of our process where everyone on the team grades any investment we're doing on a series of criteria that's very, very specific to that investment. On a scale of one through five, not using th…”
Manager advantages vary significantly across venture, buyout, and hedge funds
“So in venture, the advantages might be around personal brand, firm brand. On the buyout side, it might be really around their ability to add value post-close. And on the long only or hedge fund side, it might look, it might be much more around their approach t…”
Early reference calls are key to building an investment diligence mosaic
“So we do reference calls really at the early end of our process, because we find that that's just an incredible way to start building a mosaic.”
High-quality compounders are one of the best long-term inflation hedges
“And these businesses typically trade at a premium on the public side. But I do think that given there's a lot of uncertainty around inflation, it's one of the better tools that we have, again, thinking long-term to protect against that.”
Heller: Good entrepreneurs quickly test and blow up bad ideas
“What sets apart the good from the mediocre entrepreneur is how quickly they can test their ideas. That a good entrepreneur is willing to blow up a bad idea in order to let a good idea thrive, even if it's at a cost.”
Heller: Fast-growing economies leave large non-profits facing major talent deficits
“When you're in a really fast growing economy, talent wants to rush towards technology. They want to rush towards finance. So, so there was a bit of a talent gap in the sector and smaller organizations were figuring it out and filling it, but bigger organizatio…”
Heller: Hedge funds are diversifying strategies, not an asset class
“I know that's a silly thing because hedge funds aren't really an asset class, but a diversifying portfolio in the marketable space.”
Redeeming taxable investments leaves only 75 to 80 cents per dollar
“We are managing taxable money, and that means that the cost of wrong decisions is really high, because if we redeem from a manager, we're often reinvesting a 75 or eighty-cent dollar, so that means that the next manager has to be that much better.”
Heller: Early-Stage Funds Offer Greater Alignment and Cheaper Valuations Than Mature Funds
“It's much easier to do that if you invest in funds when they're small, when the alignment is high, when they can buy businesses more cheaply. If you're investing at fund five or six when there's a really stable business, often the life cycle on the strategy is…”
Heller: Reference checking is easier for private equity managers than public managers
“I found there's just a higher level of transparency often on the private side, where managers can really, really dive in and tell you exactly how they were adding value at companies. You can talk to the CEOs of the companies often because they're small busines…”
New managers underestimate the transition from analyst to decision-maker
“On the public side, when someone's new, it's a bit of a struggle because often that person hasn't been a trigger puller. So you're trying to make a bet on whether they can transition from being an analyst to being a portfolio manager. And often I think the ind…”
Heller: Permanent Equity Managers Often Revert to Traditional Funds
“We've encouraged them to stay outside of the fund model and try to find a way to partner with us to just build and hold something long term, and then, but we aren't necessarily enough capital for them, maybe. In some cases we are, but in some cases they want t…”
Heller: Taxable Family Investors Must Think Longer-Term Than Endowments
“Because we pay taxes, we have to think even longer term than an endowment, I would say. We have to be even more conscious of turnover, both at the fund level and at our portfolio level.”
Heller: Private Equity Offers Key Investment and Estate Planning Advantages
“We really love private equity as an asset class here. It's a wonderful asset for families. Also, it's a wonderful asset, not just from an investment perspective, but from an estate planning perspective, it has some wonderful benefits.”
Brandywine yields mid-teens pre-tax returns on affordable housing bonds
“So we had made an investment in securitized affordable housing bonds, and they produce a really fabulous post-tax return, even a pre-tax return in the mid teens, and they have very low default risk, and they're just a wonderful asset for our multi-strategy por…”
Thematic deep dives require discovery, connection, and identification phases
“He refers to the research process around a deep dive as discovery, connect, and identify. So the discovery part of the process is To understand an industry's history, its development, and how it works today across all stakeholders. The connect part of the proc…”
Brandywine uses web-scraping utility as a key diligence indicator for re-ups
“We have a manager that's built this really cool web scraping tool as part of their sourcing engine. So a big KDI around re-upping with them is, is that, has that tool provided actual utility to them from a sourcing perspective?”
Lloyd's specialty insurance pricing shifted from a soft to hard market
“What's happened in that space is we got a call from a manager saying the pricing environment has moved from sort of a soft market to a hard market, frankly, for good reason, because there's been a lot of risks that have popped up in the space. It might be an i…”
Brandywine requires an illiquidity premium to invest in private markets
“And of course, with anything private we do, we're always looking at the public comps to make sure that we're getting paid in a liquidity premium for being invested on the private side. Otherwise, there's no point.”
Brandywine holds only about ten active long-only manager relationships
“We only have about 10 active relationships in our long-only portfolio, and it's something we're always trying to whittle down, actually.”
Brandywine maintains closer to fifteen hedge fund relationships for diversification
“We have a few more closer to 15 in our hedge fund portfolio because it's a little harder there sometimes to get the concentration we want.”
Brandywine overlooked broken culture while underwriting a complex quant strategy
“And I'm thinking in particular of quant for us, which is a space where we invested in A manager that was sort of a tax scheme, and it seemed very clever, and it was a factor strategy, so we spent a lot of time looking at factor research and understanding all o…”
Brandywine assigns a second senior diligence lead to check the CIO
“One of the things that a newer colleague recommended in the past couple years was to bring on a second after what we call the early to midpoint, you know, in our diligence process, which is our issue memo stage. After the issue memo is discussed as a team, som…”
Repetitive meetings expose fund co-founder friction and stress responses
“It's an intensely human business investing. And the pattern recognition that comes from doing it for a long time is to be able to sort of dive underneath what you see initially. And you can learn this through references, but you can also learn it just through …”
Misalignment is unavoidable and managers frequently break multi-year promises
“One would be misalignment, which is unavoidable, but something that drives me crazy every time I see it. And two would be when managers promise something and then five years later forget that they made those promises and do something else.”
Heller: An individual's genius closely mirrors their eccentricities and struggles
“Most people's genius lives right next to their eccentricity or whatever it is that they struggle with.”
Heller: Brandywine's average manager holding period exceeds 11 years
“Our average hold for a manager is over 11 years.”
Heller: Brandywine's Largest Equity Position Was Seeded Over 20 Years Ago
“In one case, over 20 years ago, we put a manager in business, and it's still the largest part of our global equity portfolio.”
Heller: Brandywine models break-even alpha for every active long-only manager
“So we actually model out a break-even alpha for every active manager we invest in on the long-only side to understand what we have to believe they have to earn to be able to put them in the portfolio.”
Brandywine investment team members operate entirely as generalists
“Everyone on my team is a generalist and we're often exploring things that are really unknown.”