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

Today’s Sponsored Insight features Jim Falbe. Jim is the founder of Saguaro Capital Management, a newly launched value-oriented investment firm spun out of Vulcan Value Partners that blends traditional value investing with modern AI and data science inputs.

Our conversation covers Jim’s path to value investing, experience at Vulcan, introduction of AI automation into the investment process, and founding Saguaro. We discuss sourcing the best businesses in the world, researching investments, making decisions, constructing portfolios, and applying technology tools to value investing. We close discussing the foundation for long-term investing at Saguaro and an investment example.

Show Notes
02:42    Path to value investing
14:13    Experience at Vulcan Value Partners
18:55    Integrating AI into the investment process
26:51    Founding Saguaro
32:15    Investment beliefs
33:50    Sourcing
36:17    Researching and evaluating investments
39:40    Portfolio construction
43:50    Risk
44:36    Options strategy
47:45    Applying tech tools to value investing
52:34    Investment example
57:05    Closing questions

 
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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.