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.
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Galbraith: Appointing trusted friends to corporate boards improves governance
“And so, you know, some people would argue that's nepotistic, or it's not the way you're going to lead to good governance. I couldn't disagree more. I mean, because we know each other, Joel Greenblatt's on the board as well, Charlie Johnston, who had run distri…”
Galbraith: Success Academy achieved New York's highest test scores with $35k average family income
“We're now up to 15,000 kids, and they had the highest test scores in the entire state of New York. The average family income is 35,000 dollars a year.”
Soccer clubs gain more value investing in bench depth over superstars
“Soccer, like American football, is very much a team sport, meaning you're much better off spending incremental money on the 1514, 13th And obviously, 12th, 11th player, the people coming off the bench and the less good players than paying a ton of dough for a …”
Galbraith: Most university boards are unwieldy and dysfunctional
“Usually university boards are a huge, b unwieldy, and c not always that functional.”
Galbraith: Endowment CIO turnover stems from disconnected university leadership
“What you tend to find, and I did a lot of this as part of my due diligence, is when you have a lack of connectivity there, you typically have turnover. Because there's not a true understanding of what's going on at the endowment level, and oftentimes it's not …”
Galbraith: Boards should never seat directors who rely on board fees
“One of the things Rich was very cognizant of in constructing his board is he didn't want anyone on the board Who needed to be on the board. In other words. To collect a check. You got it. Yeah. And I, I'm a firm believer in that.”
Galbraith: Quant and AI data scraping is a tough arms race
“All the dough seems to be moving more towards quant, more towards artificial intelligence, more towards data scraping, all these kinds of things. And I just think that's a tough game to win. It's kind of like an arms race. And some folks can do it. I think at …”
Maverick Capital's top analysts were right 55% to 60% of the time
“Our best analysts were right probably 55 or 60% of the time. Like, our real rockstar guys. And I think the lay investor doesn't really understand that. Like, there's this perception that, oh, my guy, or, you know, Whoever is right, 80 or 90% of the time, it's …”
Success Academy operated five top-10 NY schools despite bottom-10% wealth demographics
“Success had, I think, something like five or six of the top 10 schools in the entire state of New York last year, and the demographics of our population were
Are typically in the bottom 10% of wealth.”
Endowment investment committees should add operating CEOs alongside Wall Street professionals
“So I met with David a couple months back, and one of the interesting things he talked to me about with his investment committee was getting non-financial people involved on the committee. And I think there's huge value in that. Like, at Tufts, we have CEOs of …”
Galbraith: Trump tax cuts eliminated major brewery excise tax on Narragansett
“Because believe it or not, Gansett was viewed as a major brewery under the old tax laws, and so we had a huge excise tax that was actually ascribed to the company, and that's going away.”
Galbraith: Functional boards rise during crises while dysfunctional boards deteriorate
“The other observation I'd have is different boards have wildly different degrees of efficacy, and what you find is the ones that are most functional actually tend to rise in and around crises or transitions, and the more dysfunctional ones tend to do the oppos…”
Galbraith: Institutions should issue 100-year bonds at 4% interest
“Well, I thought of it as quasi equity. And if you can raise a hundred years at four percent, you damn well better do it.”
Galbraith: Large investment committees fail because members lack ownership
“What you'll find on a committee structure is large is bad, and mainly because what happens is people can feel like someone else will take care of it. There's not a sense of ownership. If there are only four, five, six of you on the committee, there's nowhere t…”
Galbraith: Tufts is lowering its endowment spend rate to 3.5–4.5%
“We actually took our spend rate down, which is very unusual in higher education today, and we're doing it in a gradated fashion over several years, but we're taking it down to three and a half to four and a half percent from four to five.”
Galbraith: Buffett turned a $5M TV station investment into a 10-bagger at Grinnell
“He put like a third of the endowment into TV stations. And he did it on a highly levered basis, so they put in, like, five million dollars of equity to make a seventy million dollar investment, and it was like a ten-bagger.”
Said Holdings pivots from fund managers to direct company investments
“They're actually pivoting the investment structure to become much more direct investing, and so this is an interesting dynamic. So you have a father who made all his money doing stuff, and the actual corpus of the endowment, if you will, was invested with peop…”
Galbraith: Direct investing in compounders beats public market returns
“We actually think a way of compounding capital better will be direct investment in companies that are long-term compounders.”
Galbraith: UK mortuaries are great, predictable businesses for permanent capital
“UK mortuaries. They're great businesses, right? And it's like one of these things where, where you know, it's actually highly regulated. It's very predictable.”
Galbraith: University boards need a 10-person executive committee to operate effectively
“So the typical university board will probably be 30 to 40 people, and then what you really need is a strong executive committee where you have about 10 people that are kind of running the corpus day to day with the administration, and then you try and get expe…”
Galbraith: Family office outsources financial research to analysts in India
“We were actually currently working with a group of Indian analysts where it's an outsource effort where we have very, we give them very specific marching orders.”
Galbraith: Taking any outside capital requires managing it 24/7
“The minute you take a dollar of outside money, you have to be on it 24 seven. That's just the way I feel. I mean, it's just the way I believe to do it.”
Galbraith: Value vs momentum return divergence matches dot-com bubble levels
“So if you look at the factor returns to value versus the factor returns momentum, they're about as divergent as they've been since the tech bubble.”
English football clubs are money-losing operations reliant on TV and sponsorships
“Then on top of it, we didn't fully understand that these are at their core money losing operations. The way you do make your money is through the sponsorships and the TV, so on and so forth.”
Time of possession and shots on goal most reliably predict soccer victories
“The two most prominent features were time of possession. So if you control the ball, you tend to win. And secondly, shots on goal.”
Basketball superstars like LeBron James are worth almost any price
“So it's total contrast to like American basketball, where if you have a stud like LeBron James, you almost can't pay him enough.”
Taking consensus investment views guarantees net underperformance after fees
“If you're just gonna have the mean view on everything, you're gonna get a mean outcome, except when you add in fees, you're gonna underperform.”
Galbraith's Sanford Bernstein research launch featured more sell ratings than buys
“So my initial launch report, I had more sells than buys, which was unheard of on Wall Street. And the reason we could do it is we didn't have any corporate finance arm. So they had an investment arm. They had no traditional underwriting arm.”
Asset managers being wrong for 18 months is functionally mutually exclusive
“Investment horizons have shrunk to the point that running a commercial business and being wrong for 18 months is almost mutually exclusive.”
Active asset management is doomed in aggregate to underperform by its fees
“In aggregate, the industry is doomed to underperform by the extent of its fees.”
Tufts University endowment will track the performance of fired fund managers
“I'm on the board of Tufts, and I'm chair of the investment committee now, and one of the things I've spent time with Sally on, and we're going to start doing, is actually tracking the performance of people we've redeemed from, to see, in fact, if we're making …”
Two partners generated 130% of total P&L at Galbraith's startup hedge fund
“If you statistically looked at our performance, We were basically contributing 130% of the P&L, and while that's okay, it's not necessarily a sustainable enterprise, which proved to be quite correct in hindsight.”
Success Academy Charter Schools aims to educate 100,000 students within a decade
“We're going to have something in the forties in terms of the number of schools, and within the next decade, we'll be
Teaching a 100,000 kids.”
Galbraith: Narragansett Brewing is budgeted for its first profitable year in 2018
“We're budgeted to have our first profitable year in 2018.”
Galbraith: Pre-planning downturn living wills reduces family office emotional tension
“So one of the things we introduced, for instance, with Said Holdings is we wanted to introduce kind of a living will, meaning what, how are we going to behave in the next downturn? And actually map out kind of a game plan. Okay. Because it's inevitably going t…”
Galbraith: Average net cost for a student at Yale is around $24,000
“The average person at Yale is being charged about 24,000 dollars a year.”
Galbraith: Families earning under $40,000 pay nothing to attend Yale
“So people making between zero and 40,000 actually pay nothing to go to Yale, right?”
Galbraith: All 17 students in Success Academy's inaugural graduating class gained college admission
“This is our first graduating class of success. It's 17 kids, so I got involved 10 years ago. That seventeen's gonna be 5205 hundred within five years. All 17 got into college.”
Galbraith: Reading The Economist beats following CNBC or The Wall Street Journal
“You know, I come back to what Barton used to say, is you're much better off reading The Economist cover to cover than listening to CNBC or The Wall Street Journal.”
Galbraith acquired Derby County for stadium value after previous owner panicked
“We're like, we're basically buying this team because the seller panicked. He saw the future cash flows of this team imploding, and he said, I'm out of here, and we basically bought the team for what we thought, ah, was the value of the stadium. So we're like, …”
Winning Championship promotion playoff was worth around £150M to Derby County
“Teams play off, and the winner of this play-in game gets promoted, and it literally would have meant probably a hundred and fifty million pounds to us had they gotten promoted.”
Galbraith: Working overseas early in finance makes you a better investor
“I do think any young person thinking about a career in finance, if you get a shot to work overseas, do Just A, you get a lot more responsibility, and B, just learning how things are done elsewhere, it can't help but make you a better investor.”
Rhode Island Governor Gina Raimondo angel-invested in Narragansett Beer's revival
“In fact, the current governor of Rhode Island, Gina Raimondo, another Yaley, Was the angel, and they needed money, and frankly, the angel had overpaid, or the company hadn't delivered as they thought”
Narragansett Beer's revenue grew from $87,000 to $15 million under new ownership
“We, when we bought the business, when it was originally bought, It went from, as I said, current dollars of a billion had 87,000 dollars in revenue. I mean, it's just amazing. And today we're up to about fifteen million.”
Morgan Stanley fell from 4x book value in 2000 to 0.5x
“I picked up the broker dealers in 99, 98, 99, when they were all the IP ago, you know, and I joined Morgan Stanley when it was trading at about four times book value. And as we well know, it went to, I think it troughed at .5 a book.”
Writing down investment theses exposes discrepancies with actual portfolio holdings
“Even if you're just, if you're not a portfolio manager or not responsible to outside investors, I would still argue it's worthwhile writing down your thoughts on what you're doing. Because it just clarifies where true north is. And so what I found through the …”