Three edges to underwrite: investment, ops, commercial

Welcome back to the Alt Goes Mainstream podcast.

Today’s episode dives into what it takes to start, build, and scale an alternative asset manager.

We sat down in Stable Asset Management’s London office with Erik Serrano Berntsen.

Erik is the CEO of Stable, where he defines and executes the firm’s investment strategy. Stable is one of the largest and most tenured GP stake builders globally. The firm manages around $5B in assets and has built over 40 firms since 2006.

Stable makes strategic seed and acceleration investments to launch and scale alternatives GPs across public and private markets. With offices in New York, London, and Palm Beach, the firm backs investment firm Founders who understand that extraordinary performance requires building exceptional organizations.

Committed to education as a catalyst for change, Erik supports the LSE Alternative Investments Conference — the world’s largest student conference for alternatives, which is how we met 16 years ago — as well as Girls Who Invest and Girls Are Investors. Stable backs 100 Women in Finance and is a Founding Partner of the 10,000 Interns Foundation.

Erik holds a BA in Politics, Philosophy, and Economics from Keble College, Oxford, and an MBA with honors and a concentration in Finance from the University of Chicago Booth School of Business.

Erik and I had a fascinating conversation about what it takes to be a great investor and build a unique investment firm. We discussed:

• How the business of asset management has evolved since 2006.
• The incentives gap between LPs and GPs — and how that evolves as GPs scale.
• How GP seeding and GP stakes can be a solution to LP / GP misalignment.
• How to discern a manager’s “edge" and how “edge” can change with firm growth.
• The most non-obvious trait that makes for a great asset management founder.
• The nuances of evergreen structures and which strategies might be better suited for evergreen structures.
• The merits of the GP stakes investment strategy for LPs.

Thanks Erik for sharing your wisdom, expertise, and passion about GP stakes and asset management.

Show Notes
00:00 Likeability Wins

00:37 Welcome to the Alt Goes Mainstream Podcast

01:50 Introduction to Erik Serrano Berntsen and Stable

04:08 Why the Name Stable

06:26 From Benchmarks to Solutions

05:31 Branding as Alts Evolve

08:11 Stable’s Two Market Gaps

08:47 Fixing LP / GP Misalignment

09:29 GP Stakes Alignment Model

09:59 Non-Market Risks vs. Operating System

11:15 How Edge Changes with Scale

14:06 Three Edges to Underwrite

16:18 Founders Think in Decades

19:53 Timing Cycles and Strategy Drift

23:31 Seed vs Acceleration Playbook

25:39 Evergreen Capital Goes Mainstream

29:01 Smaller Managers Winning Evergreen

31:19 Wealth Channel Core vs Specialist

33:25 Evergreen vs Drawdowns Debate

34:03 Evergreen by Asset Class

35:47 GP Stakes Lifecycle 

38:29 Picking Tides and Boats

39:03 Specialist Strategy Edge

40:15 Podshopification in Private Markets

41:55 What Drives New GP Formation

44:52 Self Awareness as Edge

46:31 Always Be Sourcing

48:23 Founder to Founder Trust

50:37 Lessons Running Stable

53:23 Building the GP Operating System

59:00 Capital as a Service

01:01:43 Stigma Fades in GP Stakes

01:05:18 How to Spot Manager Edge

01:08:47 Founders to Emulate

01:10:35 Communication and Closing Thoughts

A Word from Our Sponsor, Ultimus

This episode of Alt Goes Mainstream is brought to you by Ultimus, the full-service fund administrator and transfer agent powering asset managers in private and public markets. As alts go mainstream, you need real expertise to handle complex fund structures, connect with key distribution partners, and handle sophisticated compliance, reporting, and transparency demands.

That’s Ultimus: high-tech, high-touch solutions for over 450 clients and 2,500 funds with $775B in assets under administration. Backed by an expert team of over 1,200 employees, they place client service at the core of their business, helping you navigate complexity during your fund structuring or launch and then supporting you through every stage of growth. Whether you’re already in the market or thinking about entering private wealth, you can trust their team’s deep expertise in retail alternatives to help you reach your goals.

Learn more at ultimusfundsolutions.com or email info@ultimusfundsolutions.com.

We thank Ultimus for their support of alts going mainstream.

Editing and post-production work for this episode was provided by The Podcast Consultant.