Capital Allocators – Inside the Institutional Investment Industry

Ali Hamed is the co-founder of CoVenture and Managing Partner of the CoVenture VC Fund. CoVenture is an innovative company that identifies and invests in novel assets formed by the intersection of technology and finance. The firm manages an early stage venture capital fund, direct lending fund, and crypto asset index fund, with each taking a creative twist on its market. Our conversation starts with Ali's entrepreneurial path to the creation of CoVenture, and covers examples of previously unpriced investment opportunities, including produce receivables, employee payroll loans, AirBnB accounts, and loans against employee stock options. We walk through the world of crypto assets and the state of the venture capital industry. Ali's fresh lens on the world offers a fascinating perspective on every aspect of early stage investing. If I didn't say it in advance, you'll be astounded to hear that Ali is only 26 years old. He's one to watch for the long-term. Learn More Join Ted's mailing list at CapitalAllocatorsPodcast.com Write a review on iTunes Follow Ted on twitter at @tseides For more episodes go to CapitalAllocatorsPodcast.com/Podcast Show Notes 2:22 – Ali's background 3:09 – How Ali got the bug for startups 4:06 – His time in NY without a home and where he gained the confidence to start in the entrepreneurial space 7:35 – Why their venture business is different from so many others in the space 9:12 – How Ali turned an idea into a business 11:33 – How does Ali describe CoVenture 12:10 – An example of an ideal CoVenture investment 14:53 – The transition into a specialty lending business 19:25 – How many niche opportunities has Ali identified as a place where he could create loans 22:04 – Examples of unpriced assets 24:23 – How does Ali find unique opportunities 27:40 – What's next on the horizon for Ali and CoVenture 28:28 – Looking at cryptocurrency and the business that Ali has built for the space 29:33 – Why did they create a cryptoasset index that was cap weighted 30:39 – Why should someone have exposure to a cryptoasset 35:23 – How does someone in the financial world get comfortable with the idea of cryptoassets 38:59 – Why Ali doesn't invest in ICO's 40:42 – What would an institutional cryptoasset fund look like 45:50 – How should an allocator try to address the idea of first in money in the cryptospace 50:32 – Where can someone play in the spectrum of venture investing 52:30 – What is the time horizon for venture investments 56:24 – Closing questions

Annie Duke is a renown public speaker and decision strategist. For two decades, she was one of the top poker players in the world, including winning a World Series of Poker bracelet and the $2 million winner-take-all WSOP Tournament of Champions. Her study of the science of smart decision-making began with a National Science Foundation Fellowship, which she used study Cognitive Psychology at the University of Pennsylvania. Among her charity work and television appearances, Annie was a runner-up to Joan Rivers on Celebrity Apprentice, during which she raised $700,000 for Refugees International. She is a natural teacher and storyteller with an active mind that constantly searches for accurate truth. I highly recommend Annie's new book, Thinking in Bets, which comes out this week. In her life after poker, she is a featured speaker, writes a newsletter and a blog, and advises companies on improving their decision-making process. Have a look at her website, annieduke.com, for more information. Our conversation discusses Annie's path from an Ivy League education to professional poker, the nature of a bet, how we form beliefs, why we make bad decisions, and what we can do to improve our decision-making process. Towards the end, we also talk about bankroll management, poker faces, and advice she would give the President on how to make better decisions. For more episodes go to CapitalAllocatorsPodcast.com/Podcast Write a review on iTunes Follow Ted on twitter at @tseides Join Ted's mailing list at CapitalAllocatorsPodcast.com Show Notes 2:30 – Annie's path through the poker world 6:05 – Her transition into teaching and the lesson of tilt 11:57 – How do you apply the concepts of betting and gambling broadly to decision making 13:35 – What is it about the science of the brain that prevents us from making good decisions 14:17 – Stumbling on Happiness 14:19 – Dan Gilbert Ted Talk 15:44 – Kluge: The Haphazard Evolution of the Human Mind 18:50 – Motivated reasoning 21:10 – Is there anything we can do to fix our decision-making biases (wanna bet) 28:05 – Other devices to improve our decision-making 32:29 – Value of a decision group 33:16 – Superforecasting: The Art and Science of Prediction 34:00 – Mertonian Norms, CUDOS 40:27 – Mental time travel (Marty McFly from Back to the Future) 42:55 – Jerry Seinfeld – Night Guy vs Morning Guy 44:55 – Applying these tools and the parallels between poker and investing 48:59 – Reading poker faces 49:21 – Joe Navarro books 49:34 – Joe Navarro Psychology Today 52:50 – What advice would Annie give President Trump in terms of improving his decision-making process 53:52 – Favorite sports moment 55:45 – What teaching from Annie's parents has most stayed with her 56:08 – What information does Annie read that a lot of people might not know about that is valuable 56:18 – The Greatest Show on Earth: The Evidence for Evolution 56:19 – Why Evolution Is True 56:58 – What life lesson does Annie wish she knew earlier in life 58:28 – Looking ahead, what advice would Annie give herself today from a ripe old age

Retired Investment polymath Seth Masters talks about China's transformation, contrarian career paths, flaws of benchmark-based investing, potential causes of the next crisis, and angel investing in fintech.

Bill Spitz was the longtime head of Vanderbilt University's endowment before retiring, for the first time, in 2007. He has received numerous lifetime achievement awards for his work and is one of the legends in the business. After failing in his retirement, he joined Diversified Trust Company, a wealth manager with $6.5 billion in assets under management that he co-founded back in 1994. Our conversation discusses managing an endowment in the early years, implementing unconventional investments, creating an edge as an allocator, selecting managers and conducting due diligence, exiting managers, challenging current landscape, and working with families. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides Show Notes 1:21 - (INTERVIEW STARTS) 1:30 – Early days at Vanderbilt and the landscape for university investment offices 3:17 – Career before working at Vanderbilt 3:59 – Transition from Wall Street to going back to his alma mater 4:48 – Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment 5:23 – Out of the box ideas when he first got started 6:25 – Convincing the board to approve unconventional ideas 8:28 – Why Bill retired 9:28 – Diversified Trust White Papers 9:31 – What is the edge that allocators have when it comes to investing 9:33 – Paul Johnson and Paul Sonkin podcast episode 9:35 – Pitch the Perfect Investment: The Essential Guide to Winning on Wall Street 10:05 – Gaining an Edge in Investing 12:30 – Where can skill from an allocator perspective be applied 14:32 – Judging the skill of managers as an allocator 15:16 – Looking out to the future, how will the endowment model stack up against the traditional 60/40 portfolio 17: 47 - How do you manage clients when your strategy may not be keeping up with the S&P 500 in the short term 19:15 – Thoughts on bitcoin 20:00 – How Bill was able to get involved with Diversified Trust while working at Vanderbilt 21:47 – Differences in managing endowments vs taxable pools of capital 23:22 – Stories that either derail an investment process or educate someone to stay the course 24:23 – Manager selection process and what Bill looks for when choosing the right one 28:01 – Bill's view on exiting managers 29:55 – How do you measure the evolution of a manager's investing strategy, especially as the market changes 31:41 – What is different today about investing vs when Bill first started 33:56 – Do alternative and emerging investment streams deliver the returns that many hope for 35:13 – Why don't endowments, foundations, or pension funds feel comfortable with moving chunks of their portfolio to cash 37:00 – How does Bill think about the balance of investments with higher return potentials against their higher costs 38:13 – Any categories that really pique Bill's interest 39:22 – What does the asset management industry look like in 10-20 years from now 41:56 – What should aspiring money managers think about as they move forward in this business 43:09 – What Bill is most proud of in his career 43:54 – Favorite sports moment 45:01 – What teaching from Bill's parents has most stayed with him 45:14 – Battle Hymn of the Tiger Mother 45:18 – The Triple Package: How Three Unlikely Traits Explain the Rise and Fall of Cultural Groups in America 46:10 – What information does Bill read that he gets a lot out of 46:20 – The Economist 46:33 – Wall Street Journal 46:34 – Bloomberg 46:45 – Life lesson that he wished he knew a lot earlier 47:29 – In his waning days, what advice would Bill give himself today

Michael Mauboussin currently is the Director of Research at BlueMountain Capital, a multi-billion dollar hedge fund and asset manager. He spent the majority of his professional career thinking and writing about decision making, behavior and complex systems, with long stints at Credit Suisse and nearly a decade alongside Bill Miller at Legg Mason. Michael has been an Adjust Professor at Columbia Business School for 24 years. Our conversation covers Michael's early career, the paradox of skill, academic research more favorable to active management, decision-making, optimal size and composition of teams, unsettling features in the market, data analysis in sports, career risk, the Santa Fe Institute, and Michael's new research on the horizon. Every time I speak to Michael I come away thinking better and feeling smarter, and this time was no exception. For more episodes go to CapitalAllocatorsPodcast.com/Podcast Write a review on iTunes Follow Ted on twitter at @tseides Join Ted's mailing list at CapitalAllocatorsPodcast.com Show Notes 1:48 - What was Michael like as a kid 2:26 – How Michael found his way to Wall Street 6:18 – His start as an analyst in consumer and packaged goods 7:52 – Why there are no .400 hitters in active management and the paradox of skill 8:15 – Full House: The Spread of Excellence from Plato to Darwin 14:26 – Why have there been massive flows into index funds over the last 3-4 years 15:44 – Academic research supporting active management 16:09 – Mutual Fund Flows and Performance in Rational Markets 16:25 - On the Impossibility of Informationally Efficient Markets 22:52 - Indexing and Active Fund Management: International Evidence 23:12 – Do these trends also apply in global markets 24:01 - The Mutual Fund Industry Worldwide: Explicit and Closet Indexing, Fees, and Performance 25:22 – What has Michael discovered in his new role at Blue Mountain through his new credit lens 27:49 – Amazon, the world's most remarkable firm, is just getting started 30:02 – What are some of the lenses that Michael uses when dealing with allocators 35:02 – How does Michael go about interviewing for a team while taking into account their biases 36:19 – The Rationality Quotient: Toward a Test of Rational Thinking 36:37 – Biggest risks in the markets today 37:31 – Banks to Funds: Have Some Leverage With That Deal 39:45 – Liquidity in the markets 41:26 – What's most interesting to Michael about the merging of data and sports 41:34 – The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing 43:42 – Big Data Baseball: Math, Miracles, and the End of a 20-Year Losing Streak 44:32 – Scorecasting: The Hidden Influences Behind How Sports Are Played and Games Are Won 45:57 – Psychological bias in sports 46:16 - Malcom Gladwell Podcast: The Big Man Can't Shoot 47:23 – Psychological bias in investment management 47:40 – Scott Malpass on Capital Allocators 48:44 – Michael's work with the Santa Fe institute 53:08 – Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies 54:40 – Next big piece of research Michael is working on 57:53 – The End of Theory: Financial Crises, the Failure of Economics, and the Sweep of Human Interaction 57:59 – Should Michael be using his skills elsewhere in the context of a world where so many advocate for just indexing 1:01:36 – Charley Ellis on Capital Allocators 1:02:31 – CLOSING QUESTIONS

Margaret Chen is the Head of CA Capital Management, Cambridge Associates' $20 billion Outsourced Chief Investment Officer (OCIO) business. She has spent twenty years at Cambridge Associates, which was her first and only stop in the investment business after getting started in the working world as a management consultant at Coopers & Lybrand Consulting. Our conversation covers Margaret's career path, her evolution from a consultant to a principal, the value proposition of an OCIO, measuring performance, and the tension between being the same and being different for clients. Margaret has the ear of almost everyone in our field, and brings incredible perspective to addressing the key issues allocators face. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

I've received several emails over the last bunch of months asking for my take on the investing world and the topics we cover on the show. Fortunately, I've had a chance to appear as a guest on a few other podcasts, and thought I would share some of those conversations from time to time. About a year and a half ago, Patrick O'Shaughnessy interviewed me to discuss the book I wrote on his amazing podcast, Invest Like the Best. The discussion quickly turned to a deep dive on hedge funds - past, present and future. We subsequently recorded two other conversations. For the first, I asked him to interview me about the Buffett Bet. You can find that conversation on Episode 5. In the second, Patrick interviewed me alongside our friend and star micro private equity investor, Brent Beshore. You can find that entertaining conversation at Invest Like the Best, Episode 30. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Chris Acito is the CEO and CIO of Gapstow Capital Partners, a credit-focused investment organization. Chris started his career as a management consultant and traversed to focus on asset management consulting around the founding of Casey, Quirk, and Acito. He switched to the buy side focusing on hedge funds in the years leading up to the financial crisis and started Gapstow in 2009. Our wide-ranging conversation starts with Chris' background and moves to the formation of a credit focused firm in the thick of the financial crisis. We discuss the credit landscape today, shift from legacy to new issue opportunities, existential crisis in investment grade paper, liquidity, ETFs, credit as an asset class, credit-specific due diligence, and the next distressed cycle. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Paul Sonkin and Paul Johnson are investors, professors, and co-authors of Pitch the Perfect Investment. Paul Sonkin is an analyst and portfolio manager at GAMCO Investors and has researched small, micro, and nanocap companies for a quarter century. He taught for 16 years at Columbia Business School. Paul Johnson runs advisory firm Nicusa Investment Advisors, and previously was a top-ranked sell side analyst, hedge fund manager, and an investment banker across 35 years. He also taught 2,000 students across 40 classes at Columbia Business School and Fordham University, and has received a host of awards for his prowess in the classroom. Their recently released book is the first I've come across that reverse engineers a portfolio manager's thought process. It starts with crystal clear first principles of business analysis and covers everything an analyst needs to know to identify a great stock. Then, Paul and Paul describe how portfolio managers assess ideas. Their framework is targeted for analysts starting their careers in the field, but seasoned portfolio managers and allocators both will also learn a lot about communication with their teams from the clear descriptions and colorful examples in the book. Our conversation covers the concept of the book, the wisdom of crowds, getting an 'edge', the four questions every portfolio manager needs to answer, and the role of creativity in investing. These gifted professors offer clear terminology for investment first principals and along the way offer a renewed appreciation for how difficult it is to beat the markets. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Meredith Jenkins is the Chief Investment Officer of Trinity Wall Street, where she oversees $5.5 billion of the church's endowment and real estate assets. Before taking the helm as Trinity's first CIO, she was the co-CIO of Carnegie Corporation of New York, Andrew Carnegie's foundation, from 2011 to 2016. She joined Carnegie in 1999 as its first investment associate and was an integral part of the build-out of the Corporation's investment capability under its first CIO. During the period, Meredith spent four years in Asia as the Corporation's special representative focusing on opportunities in China, Japan, India, Southeast Asia, and Australia. Meredith started her career at Goldman Sachs in investment banking, Sanford Bernstein in research, and Cambridge Associates in consulting before attending Harvard Business School. She currently sits on the Investment Committee of the Wenner Gren Foundation and the Board of Directors of the University of Virginia Investment Management Company. Our conversation starts with Meredith's early career lessons and discusses alignment of interest, standing by managers in difficult times, markers of success, manager research in Asia, the co-CIO structure at Carnegie, and governance in her new challenge of starting an investment office from scratch. Fun loving and smart as a tack, Meredith offers pearls of wisdom through our conversation. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides