Opto Sessions – Invest in the Next Big Idea

Ted Seides - How the World’s Elite Money Managers Invest, a Bet With Buffett, & Interviewing Sam Zell

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Jul 28, 2022

Ted Seides, founder of Capital Allocators and former co-CIO of Protégé Partners, draws on his extensive experience in hedge funds. He discusses how elite money managers, like Sam Zell, cultivate contrarian views and conviction. The conversation dives into the implications of Ted's famous wager with Warren Buffett, reflecting on lessons from the challenge. He also shares insights on portfolio construction, market dynamics, and the future of crypto, urging investors to adopt a long-term perspective and remain open to learning from failures.

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ANECDOTE

Yale Training Shaped A Generation

Ted trained under David Swensen at Yale and credits that period as foundational to his investment career.
Many peers trained by Swensen went on to lead major endowment and institutional investment programs.

INSIGHT

Three Pillars For Portfolio Construction

Think in three pillars: stability (cash), market portfolio (broad exposure), and aspirational (concentrated bets).
Concentration suits aspirational bets while diversification underpins the market portfolio.

INSIGHT

Look Down Before You Look Up

Allocators emphasize downside and risk while managers emphasize upside due to differing incentives.
Focus on downside first to appropriately size concentrated upside bets.

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Ted Seides founded Capital Allocators to explore the processes of elite money managers. Having launched the Capital Allocators podcast in 2017, by April 2022, the show had recorded over 10 million downloads, with Barron’s, Business Insider, and Forbes each naming it among the top investing podcasts.

Having run his own multibillion-dollar hedge fund, Protégé Partners, from 2002-2015, Ted was profiled in ‘Top Hedge Fund Investors', a book authored by Larry Kochard and Cathleen Rittereiser in 2010. Ted has subsequently distilled his vast knowledge of premier investors’ strategies in his second book, ‘Capital Allocators: How the world’s elite money managers lead and invest’, published in March last year.

We discuss some of Capital Allocators' most popular episodes, including interviews with investing legends Sam Zell, Chamath Palihapitiya, and Joel Greenblatt. We finish, by unpicking Ted’s bet with Warren Buffett, where Ted aimed to demonstrate the benefits of hedge funds on institutional portfolios, pitting 5 hedge fund of funds against the performance of the S&P 500 from 2008-2017. Enjoy!

Some of the interviews referenced in today’s episode:

- Sam Zell: https://capitalallocators.com/podcast/common-sense-and-uncommon-profits/
- Chamath Palihapitiya: https://capitalallocators.com/podcast/the-social-capital-flywheel/
- Joel Greenblatt: https://capitalallocators.com/podcast/common-sense-for-value-at-gotham-capital/

Capital Allocators: How the world’s elite money managers lead and invest: https://www.amazon.co.uk/Capital-Allocators-Worlds-Managers-Invest/dp/0857198866

Thanks to Cofruition for consulting on and producing the podcast. Want further Opto insights? Check out our daily newsletter: https://www.cmcmarkets.com/en-gb/opto/newsletter

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The content in this podcast is for informational purposes only. Opto Markets LLC does not recommend any specific securities or investment strategies. Investing involves risk & investments may lose value, including the loss of principal. Past performance does not guarantee future results. Investors should consider their investment objectives and risks carefully before investing. The information provided is not an endorsement of this product and is for information and/or educational purposes only.