Odds on Open

Ethan Kho

Conversations with leading thinkers on trading and investing. Hosted by Ethan Kho. Produced by Patrick Kho.

  1. HACE 8 H

    Now Is the Best Time to Become a Junior Analyst - Ex-Citadel and D. E. Shaw PM Brett Caughran

    Get 10% off on Fundamental Edge: https://www.fundamentedge.com/odds-on-open-podcastIn this episode of Odds on Open, Ethan Kho sits down with Brett Caughran, founder of Fundamental Edge and a former Portfolio Manager at elite Tiger Cub and Multi-Manager (MM) firms.As generative AI and agentic workflows commoditize the "desktop research" layer of investing, the bar for generating idiosyncratic alpha has never been higher. Brett breaks down the specific frameworks—including ETIC (Everything There Is To Know) and the Focus 5—that top-tier pods use to identify mispriced securities and isolate key drivers before they are priced in by the market.We dive deep into the market microstructure shifts caused by the rise of indexers and factor-based quants, explaining why increased volatility is a gift for fundamental investors with the stomach for Bayesian updating. Brett also provides a roadmap for the "New Junior Analyst," shifting the focus from manual model-cranking to high-leverage primary research and AI orchestration.00:00 Intro01:29 Frameworks for developing a differentiated variant perception05:16 Financial drivers vs. narrative cycles: The Focus 5 framework08:29 Analyzing the stock vs. business: Bayesian updating in public markets12:52 AI as an intellectual power tool vs. consensus "alpha slop"17:21 Accelerating the hunch-to-hypothesis pipeline with AI sniff tests21:52 The evolution of junior analysts: From data entry to primary research28:46 Why market microstructure and behavioral alpha prevent index efficiency34:48 New meta-skills: Debugging models and the expectations gap muscle38:44 Training junior analysts: Earning the right to use power tools44:34 High-value workflows: CEO credibility analysis and guidance tracking48:28 LLMs as orchestration tools for human primary research54:55 Teachable scientific process vs. revealed investment judgment57:54 Common threads across Multi-Managers, Single Managers, and Tiger Cubs59:49 Curiosity as a meta-skill and the art of system thinking

    1 h 1 min

  2. 2 ABR

    "Positions Can Be LESS Risky at Higher Prices" - Derek Pilecki on Finding Edge in Financials

    In this episode of Odds on Open, Ethan Kho sits down with Derek Pilecki, founder of Gator Capital Management, to deconstruct his 20%+ annualized track record in the financial sector. While many generalist PMs view financials as a "sleepy backwater" or overly complex, Derek explains how he extracts alpha from regional banks, brokerages, and insurance companies by identifying fundamental business changes before they are reflected in the tape.The conversation moves from the microstructure of bank underwriting in a post-Dodd-Frank regime to the practicalities of portfolio construction, including why Derek has expanded his concentration from 25 to 40 names and his strict discipline against "averaging down" on losers. We also dive into the private credit narrative, the actual risk of systemic leverage in non-bank financials, and how generative AI is shifting the valuation multiples of moaty info-service businesses like Morningstar and FactSet.00:00 Intro01:06 Derek's +21% annualized return track record02:50 Fundamental business change vs market noise in Robinhood05:25 Portfolio construction: Concentration limits and adding to winners09:09 Sourcing alpha and identifying three-year doubles in financials12:44 Developing edge through repetition and management team cycles14:16 Why the post-GFC regime fundamentally changed bank underwriting17:07 Assessing tail risk and leverage in the private credit market21:23 AI-driven market dispersion and identifying moaty businesses24:11 Why shareholder base turnover matters for timing broken charts25:57 AI disruption vs trust-based moats in financial services29:37 Integrating AI into fundamental research and SEC filing analysis32:31 Scaling regional bank positions and managing liquidity constraints35:39 Risk management: Permanent capital loss vs mark-to-market volatility37:12 Capacity constraints: Optimizing for returns over AUM scale44:14 Behavioral edge and avoiding the "degree of difficulty" trap50:39 Career risk and the reality of active money management54:18 Breaking into the industry via public stock write-ups

    56 min

  3. 27 MAR

    How Billionaire Hedge Fund Managers Are Using Generative AI to Invest

    In this episode of Odds on Open, we analyze the technical architecture of the data science layer within fundamental hedge funds. Guest Matei Zatreanu, founder of System2, discusses the tension between generative AI and the search for outlier-driven alpha. We move beyond the hype of LLMs to discuss the practicalities of expert network automation, the causal mapping of second-order macro effects, and why the most successful PMs treat their investment process as a craft rather than a business operation. The conversation also explores the structural shift from single-manager funds to multi-manager platforms and the specific incentive alignment strategies used to retain quant talent in high-stakes environments.(00:00:00) Intro(00:00:53) Talent constraints and outlier detection in the data science layer(00:05:38) LLM customization: Differentiated alpha vs. the consensus echo chamber(00:10:18) Automating the mosaic: AI interview agents and qualitative data synthesis(00:20:33) Mapping causal relationships and second-order macro effects via graphs(00:26:33) Curiosity as the ultimate constraint for information-rich investors(00:31:43) Multi-manager platforms vs. the rise of independent single managers(00:37:58) Solving incentive alignment and analyst retention via internal fund-of-funds(00:44:03) Managing negative network effects and custom research one-offs(00:48:33) Whale hunting: High-ticket pricing and the billionaire value mindset(00:54:58) Zero-to-one incubation: Leveraging unique market access for business spin-outs(00:59:08) Romanian roots to billionaire circles: Mentorship and aiming high(01:07:48) PM as "Doctor": Why founders prioritize craft over business operations

    1 h 15 min

  4. 19 MAR

    How the World’s Largest Oil Derivatives Trading Firm Is Navigating the Iran War

    This episode was filmed on Thursday, March 12, 2026. Greg Newman, founder and CEO of Onyx Capital Group and the largest liquidity provider in oil derivatives markets, on what it actually looks like to run a market-making book when liquidity breaks down entirely. What most participants misunderstand about oil vol is that the outright price — Brent, WTI — is a proxy, not the market; the real information lives in time spreads, regional diffs, and niche contracts that only a handful of firms have visibility into. Why fair value discovery in a dislocated market requires abandoning automation, reverting to manual process, and using physical market participant behavior — refiners, producers, airlines — as a real-time signal rather than a lagged one. Greg co-founded Onyx Capital Group in 2016 after a decade trading crude and refined products across increasingly niche oil derivatives contracts. Onyx built its position by stepping into the vacuum left by banks exiting commodities post-Volcker, becoming the dominant liquidity provider across European, Middle Eastern, and Asian oil markets with an estimated 20–50% market share in several key contracts. The firm now operates market-making desks across London, New York, Dubai, and Singapore, and has expanded into data services, a single-dealer platform, retail brokerage, and physical trade finance — building a vertically integrated oil markets infrastructure business from a pure prop-trading foundation. In this episode we cover: •⁠ ⁠Why trading oil outrights during the dislocation was a losing game — and where the real edge was •⁠ ⁠Fair value discovery on Sunday night: how Onyx priced contracts when every historical model broke •⁠ ⁠Physical market reflexivity: how refiners, producers, and airlines all become forced actors at key price levels •⁠ ⁠Geopolitical signal extraction: options open interest and off-hours order flow as an information edge over Polymarket •⁠ ⁠Regime-break risk: why government intervention in exchange mechanisms is the tail risk that keeps Greg up at night •⁠ ⁠Countercyclical talent investment and why Onyx's worst years built its best crisis infrastructure •⁠ ⁠From prop shop to platform: data, single-dealer, retail brokerage, and credit as extensions of liquidity edge •⁠ ⁠Why Onyx is building toward a hedge fund — and why track record discipline is holding them back Timestamps: 00:00 Intro 00:48 Oil market volatility: making sense of the dislocation 04:05 Outright vs. spread positioning: where the real edge was 05:10 How Onyx manages process when liquidity breaks down 10:18 Pricing fair value on Sunday night with no precedent 16:48 Physical market participants and the reflexivity of hedging behavior 20:22 Prediction markets as an information signal — and why Onyx stopped using them 25:26 Options flow as the real tell for informed geopolitical positioning 28:17 What it feels like running a global market-making book through a crisis 33:05 Regime-break risk: when exchange mechanisms themselves fail 36:25 Countercyclical investment in talent and infrastructure 42:20 From prop shop to liquidity infrastructure: building a durable valuation 48:50 Why Onyx is building a hedge fund — and what's holding them back 57:50 Media, brand, and market disruption as compounding assets 01:05:47 The most surprising thing after 14 years of building Onyx

    1 h 10 min

  5. 12 MAR

    Annie Duke on Thinking in Bets - And Why Winners Can Be Wrong

    Legendary poker champion, decision scientist, and author of "Thinking in Bets," Annie Duke deconstructs the mechanics of decision-making under uncertainty, shifting the focus from high-variance outcomes to the rigor of positive expectancy and robust process. Leveraging her background in professional poker and cognitive psychology, Duke explores how loss aversion and resulting—the cognitive trap of equating outcome quality with decision quality—can degrade a trader's edge and lead to suboptimal portfolio construction. The conversation moves beyond theory into the practical application of base rates, reference classes, and mental time travel to combat temporal discounting, providing a masterclass for quants, PMs, and analysts on how to refine their probabilistic worldview and neutralize the noise of short-term volatility.00:00 Intro01:12 Defining bets as resource allocation under uncertainty04:52 Positive expectancy vs. outcome-based evaluation06:11 Resulting: Why outcomes are not proxies for decision quality15:19 Calculating expected value in high-variance career paths18:55 Moving from implicit intuition to explicit decision modeling24:27 Using base rates and reference classes for startups30:26 Psychological traits of elite risk takers and traders31:33 How prospect theory and loss aversion distort risk45:12 Deconstructing gut feel and the role of intuition49:36 Evaluating optionality and impact in fast-moving environments57:13 Mental time travel: Tools for managing temporal discounting01:01:31 Quantifying the intersection of luck and hard work01:04:43 Internalizing a probabilistic worldview for long-term edge

    1 h 8 min

  6. 5 MAR

    Meet the 25-Year-Old Running a Multi-Manager Hedge Fund

    Zachary A. Levitt joins the pod to break down the architecture of a capacity-constrained multi-manager platform designed to harvest high alpha loads in niche, idiosyncratic markets. We dive deep into portfolio construction beyond the "Big Four" pod model, focusing on inverse-volatility weighting, discretionary risk overlays during regime shifts, and the mechanics of screening for relative value arbitrage strategies with minimal factor exposure. Zach explains his transition from a data-driven biotech alpha capture book to running a center book, detailing how he identifies micro-regime persistence and manages the microstructure of a lean, performance-aligned firm. This conversation is a masterclass for allocators and quants on building a non-correlated return stream by targeting the liquidity gaps and specialized incentives that larger, multi-billion dollar funds are forced to ignore.00:00 Intro01:02 The primary constraint for a young multi-manager03:13 Screening for niche strategies and consistent track records06:03 Maximizing idiosyncratic P&L through relative value arbitrage08:19 Tactical sizing and capturing micro-regime persistence12:43 Balancing inverse-vol weighting with discretionary risk overlays15:41 Case study: Rebalancing small-cap L/S during market corrections17:37 Distilling signal from noise in multi-manager portfolio oversight22:02 Coachability and removing emotion from the PM feedback loop25:52 Alpha capture in biotech via options market data30:20 Scaling the boutique multi-manager business model34:02 Disrupting the "Big Four" pods with capacity-constrained strategies42:21 Unit economics of a lean, performance-driven platform53:09 LP management and optimizing the business development funnel1:00:19 Moving from portfolio management to operational process efficiency1:05:10 Future of the industry: Consolidation vs. niche boutiques1:08:53 Roadmap for launching a niche multi-manager fund

    1 h 11 min

  7. 26 FEB

    Alpha Comes From a Differentiated View - Ex-Point72 Prop Research Head Kirk McKeown on Edge in 2026

    Check out Carbon Arc here: https://www.carbonarc.co/ Kirk McKeown, founder and CEO of Carbon Arc and former senior investor-facing operator across Glenview and Point72, on how alpha migrates as market structure, tooling, and competition evolve. What most investors misunderstand about “edge” is that it is rarely static and often lives in process design, information capture, and interpretation of small narrative inflections. Why hit-rate systems, decision trees, and data structure matter now as models commoditize and the marginal advantage shifts toward differentiated inputs and synthesis.Kirk started his career at Tudor Investments during the late-1990s cycle, then worked at Glenview Capital under Larry Robbins where he built and led primary research capabilities supporting a concentrated, long-horizon portfolio process. He later spent 8.5 years at Point72 supporting a multi-manager environment optimized around catalyst-driven, variant-view investing, high at-bat volume, and repeatable organizational process. Across these seats, he worked directly with investment teams on improving idea generation, hit-rate, and conviction through compliant information collection, supply chain and value chain work, and rigorous feedback loops. In this episode we cover:- Why alpha “moves” over time and how competitive advantage migrates with market structure and tooling- Hit-rate vs slugging frameworks across concentrated portfolios and multi-manager platforms- A research function’s only mandate: lift idea flow, hit-rate, or conviction without contaminating decision-making- Building edge via compounding domain knowledge, field research, and leading indicators before consensus data prints- “Main Street becomes Wall Street”: model-driven decisioning, data decimalization, and pricing data like a utility- Inventory as the core causal variable behind boom-bust cycles in fundamentals and supply chains- Factor frameworks as a scaling mechanism for research: market structure, business model, and decision-tree priorsTimestamps:(00:00) Intro(04:47) Tutor vs Glenview vs Point72: how edge differs(12:29) How to build “lift” for PMs: at-bats, hit-rate, sizing(18:44) Building research edge: outwork, read, fieldwork(27:16) Personal moat in 2026: analogs, history, decision trees(40:08) “Main Street becomes Wall Street”: what that actually means(44:30) Carbon Arc thesis: “decimalization” of data market structure(46:43) Why the edge migrates to data plus domain context(51:00) How to win in commoditized research: sample size beats anecdotes(01:03:26) Factorizing everything: themes, market structure, business models(01:08:37) Pruning decision trees: signals, scale points, inventory dynamics(01:14:18) Contrarian 2026 take: hedge funds launching enterprise AI labs(01:23:32) Final question: one habit to build career alpha Follow Kirk McKeown:LinkedIn – https://www.linkedin.com/in/kirk-mckeown-400607214/

    1 h 28 min

  8. 19 FEB

    What Druckenmiller Style Investing Gets Wrong - Alfonso Pecatiello on Edge in Macro Trading

    My Substack: https://ethankho.substack.com/ Alfonso Pecatiello — known as "Alf" and founder of The Macro Compass and founder of Palinuro Capital, a macro hedge fund— joins Ethan Kho to break down the frameworks behind global macro trading, real economy money creation, and what it truly takes to build a macro hedge fund from the ground up. Alfonso Pecatiello spent years as a senior portfolio manager at ING overseeing a multi-billion dollar fixed income portfolio before founding Palinuro Capital. In this episode, Alf shares the macro investing edge that drives his process: why central bank QE and bank reserves are largely irrelevant to real economic outcomes, how commercial bank lending and government fiscal deficits are the true engines of money creation, and why tracking the second derivative of real economy money printing is one of the most powerful signals in global macro trading today. But Alfonso Pecatiello doesn't stop at markets. The Macro Compass founder opens up about the brutal reality of launching a macro hedge fund with no seed money, no GP stake deal, and an 80% industry failure rate. He shares the moment Palinuro Capital nearly didn't survive — and the risk management mindset that carried him through. This episode covers global macro trading strategy, hedge fund position sizing, portfolio diversification, tail risk management, factor-neutral mandates, and the real process behind founding a hedge fund from scratch. If you're interested in macro investing, hedge fund careers, global macro strategy, money creation, central bank policy, or fund management — this is essential listening.

    1 h 6 min
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Conversations with leading thinkers on trading and investing. Hosted by Ethan Kho. Produced by Patrick Kho.

Información

  • Creador
    Ethan Kho
  • Años de actividad
    2025 - 2026
  • Episodios
    52
  • Clasificación
    Explícito
  • Copyright
    © Ethan Kho
  • Mostrar sitio web
    Odds on Open

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