Capital Allocators – Inside the Institutional Investment Industry Ted Seides – Allocator and Asset Management Expert

Adam Shapiro is the Managing Partner of East Rock Capital, where he oversees $3 billion on behalf of a handful of families investing primarily in hedge funds and private deals alongside early-stage sponsors. Adam has recently begun sharing his insights on a LinkedIn newsletter entitled “From Star to Founder.”
Our conversation covers Adam’s background, his investment objectives for families, and his process for achieving them. We discuss East Rock’s assessment of managers, portfolio construction, and risk management from their carefully selected set of ideas. We close with Adam’s thoughts on family offices and the future of East Rock.

Show Notes
04:33    Background
06:48    Goldman Sachs special situations group
12:46    Founding East Rock
17:28    Evaluating emerging managers
26:49    Sourcing managers
27:58    Portfolio construction & risk management
38:17    Managing liquidity
39:28    Family offices
44:02    Alignment
48:07    Future of East Rock
49:55    Closing Questions

Listen to Mavis Tire Express Services on Private Equity Deals.
On Private Equity Deals this week, our 7th and penultimate episode of season 2 features the purchase of longstanding independent tire dealer Mavis Tire Express Services by recently launched private equity firm BayPine. Mavis is a great business with steady cash flow, economic resilience, and a great management team that was a widely sought after asset in an auction process. You might imagine that it commanded a full price and the attention of some of the biggest players in private equity. So how did upstart BayPine win the deal and what does it plan to do to make the deal work?  Tune in to Private Equity Deals to find out.

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Today’s episode is a true hedge fund master class. We convened a panel of three longstanding investors in the space - Craig Bergstrom, CIO and a Managing Partner of Corbin Capital Partners, Adam Blitz, CEO and CIO of Evanston Capital Management and a past guest on the show, and Dan Fagan, portfolio manager at GIC, Singapore’s sovereign wealth fund. All three have been in the space the better part of two decades and have both a wealth of experience and nuanced understanding to share.

Our conversation covers their respective investment approaches, impact of the higher rate environment, managing liquidity, and the potential for contagion. From there, we canvass perspectives on platform hedge funds, long-short equity, credit, and macro strategies. We close discussing fees, the most interesting opportunities, and places to avoid going forward.

Show Notes
04:36    Firm and investment approach overview
11:07    Impact of higher rate environment
14:41    Asset allocation vs. manager selection
17:32    Market liquidity and contagion risk
23:54    LP liquidity
31:35    Platform hedge funds
43:52    Long-short equity
50:44    Credit opportunities
52:54    Macro strategies
57:56    Fees
1:04:29 Best ideas
1:08:22 Risks
 
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Adam Blitz is the CEO and Chief Investment Officer of Evanston Capital Management, a $4.5 billion hedge fund of funds manager with a decade and a half of experience managing hedge fund portfolios. Adam joined Evanston at its inception in 2002 and leads investment research and portfolio management. Previously, he worked in the Prime Brokerage area and Asset Management Division of Goldman Sachs and served as head trader at AQR.  Adam earned a B.S. in Economics at the Wharton School.
Our conversation dives in the hedge fund category of investing, covering how a leading allocator in the space thinks about strategic asset allocation, portfolio construction, risk management, manager research, decision making, and monitoring managers. Adam’s perspective on the evolution in how allocators perceive hedge funds and the resulting unattractiveness of the “average hedge fund” today resonate strongly with how I’ve viewed this widely discussed and recently scrutinized corner of the markets.
 
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I share a bunch of questions on my mind for which my best answer is “I Don’t Know.”  These include issues around sovereign debt, asset allocation, an economic slowdown, the stock market, private credit, and life itself.

Today’s sponsored insight is another empty room, an opportunity ignored by most investors because they either don’t want to or can’t participate. This time around, we’ll discuss investing where capital is truly scarce - the frontier of the frontier markets.

Kiyan Zandiyeh is the CIO of Sturgeon Capital, a +$300 million private investment firm that backs bold founders building the leading technology companies in countries early into their digital transition, including Bangladesh, Central Asia, Egypt, and Pakistan.

Our conversation covers Kiyan’s early entrepreneurial and investing experience, venture and operating experience building two businesses in Iran through 80% currency devaluations, and Sturgeon’s venture strategy from there. We discuss Sturgeon’s investment process across country selection, targets, founders, valuation, risks, and investment examples. We close touching on Kiyan’s ambition in the coming years.

Show Notes
02:04    Kiyan’s Background
10:58    Joining Sturgeon
12:40    Operating businesses through 80% currency devaluations
15:19    Investment strategy
18:21    Investment team
19:45    Target companies
24:27    Sourcing deals
25:38    Valuation
26:17    Risks
31:55    Competition
32:49    Investment examples
44:07    Ambitions going forward

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