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Neckar's Minds and Markets

Neckar's Minds and Markets

By Frederik Gieschen

Conversations about how to compound, create, and change. Hosted by Frederik Gieschen of the Neckar substack.
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Paul Podolsky and The Paradox of Financial Fiction
Paul Podolsky and The Paradox of Financial Fiction
My conversation with Paul Podolsky author of Master, Minion and the Things I Didn’t Learn in School Substack.
01:13:17
January 21, 2023
Watching Game Tapes of History’s Best Entrepreneurs with David Senra of Founders Podcast
Watching Game Tapes of History’s Best Entrepreneurs with David Senra of Founders Podcast
This conversation was originally published at Compound.
48:49
January 03, 2023
Josh Wolfe, Lux Capital: Macro, Mentors, Motivation
Josh Wolfe, Lux Capital: Macro, Mentors, Motivation
You can find a full transcript of this conversation at Compound.
01:04:04
December 22, 2022
World Building with the Most Interesting People with Patrick O'Shaughnessy
World Building with the Most Interesting People with Patrick O'Shaughnessy
You can find a full transcript of this conversation Compound (part I, part II).
01:06:14
December 18, 2022
Great Investors Build Networks and Never Stop Learning with Alix Pasquet III
Great Investors Build Networks and Never Stop Learning with Alix Pasquet III
Alix Pasquet III is the Managing Partner and portfolio manager at Prime Macaya Capital. Disclaimer: The information contained in this summary has been prepared solely for informational purposes and is not an offer to sell or purchase or a solicitation of an offer to sell or purchase any interests or shares in any of the funds managed by Prime Macaya Capital Management LP.  Any such offer will be made only pursuant to an offering memorandum and the documents relating thereto describing such securities (the “Offering Documents”) and to which prospective investors are referred.  This summary is subject to and qualified in its entirety by reference to the Offering Documents.  An investment in those funds carries certain risks, including the risk of loss of principal.    While all the information prepared in this presentation is believed to be accurate, Prime Macaya Capital Management LP makes no express warranty as to the completeness or accuracy nor can it accept responsibility for errors, appearing in the presentation.  Other events which were not taken into account may occur and may significantly affect the returns or performance of the fund.  Any projections, outlooks or assumptions should not be construed to be indicative of the actual events which will occur. This summary is provided to you on a confidential basis and is intended solely for the use of the person to whom it is provided.  It may not be modified, reproduced or redistributed in whole or in part without the prior written consent of Prime Macaya Capital Management LP.
01:27:21
December 07, 2022
Adam Mead, Author of The Complete Financial History Berkshire Hathaway
Adam Mead, Author of The Complete Financial History Berkshire Hathaway
My conversation with Adam Mead, author of The Complete Financial History of Berkshire Hathaway.
01:02:54
October 18, 2022
Julian Robertson: The Tiger Who Was a Wolf
Julian Robertson: The Tiger Who Was a Wolf
You can find the full essay on Julian Robertson at: neckar.substack.com/p/the-tiger-that-was-a-wolf-lessons
46:43
September 26, 2022
Reflections on the Investing Process with Michael Mauboussin
Reflections on the Investing Process with Michael Mauboussin
This conversation was recorded in June 2022. You can find a full transcript at manual.withcompound.com.
01:10:06
September 13, 2022
Alix Pasquet: Learning for Analysts and Future Portfolio Managers
Alix Pasquet: Learning for Analysts and Future Portfolio Managers
Alix Pasquet III is the Managing Partner and portfolio manager at Prime Macaya Capital. Notes on substack. Presentation on youtube. Disclaimer: The information contained in this summary has been prepared solely for informational purposes and is not an offer to sell or purchase or a solicitation of an offer to sell or purchase any interests or shares in any of the funds managed by Prime Macaya Capital Management LP.  Any such offer will be made only pursuant to an offering memorandum and the documents relating thereto describing such securities (the “Offering Documents”) and to which prospective investors are referred.  This summary is subject to and qualified in its entirety by reference to the Offering Documents.  An investment in those funds carries certain risks, including the risk of loss of principal.    While all the information prepared in this presentation is believed to be accurate, Prime Macaya Capital Management LP makes no express warranty as to the completeness or accuracy nor can it accept responsibility for errors, appearing in the presentation.  Other events which were not taken into account may occur and may significantly affect the returns or performance of the fund.  Any projections, outlooks or assumptions should not be construed to be indicative of the actual events which will occur.  This summary is provided to you on a confidential basis and is intended solely for the use of the person to whom it is provided.  It may not be modified, reproduced or redistributed in whole or in part without the prior written consent of Prime Macaya Capital Management LP.
02:05:57
September 08, 2022
Marc Rubinstein of Net Interest: Fascinating Financials
Marc Rubinstein of Net Interest: Fascinating Financials
I am a big fan Marc Rubinstein and his Net Interest substack and was very excited to finally record a conversation with him. Marc previously covered financials and fintech as a research analyst and hedge fund investor and now shares his takes on the sector with his readers on a weekly basis. It’s a very well written and insightful lens on a fascinating corner of the market. We talked about banks, fintech, the importance of incentives and culture, payments, the need to watch regulators, how alternative asset managers have been picking up business from investment banks, and the danger of relying on the view of CEOs too far removed from the risk. You can find show notes on the substack.
01:04:02
June 21, 2022
Nick Maggiulli: Just Keep Buying
Nick Maggiulli: Just Keep Buying
“We begin our lives as growth stocks and end our lives as value stocks.” I’m happy to share my conversation with my friend Nick Maggiulli who writes the excellent personal finance blog Of Dollars and Data. Nick just came out with his first book: Just Keep Buying: Proven Ways To Save Money And Build Your Wealth. He uniquely combines his data-driven research with a personal perspective and I really like that he distills the work down into rules that are effective yet pragmatic. His advice is free from some of the guilt-driven personal finance drivel (save on avocado toast to get wealthy..). We talked about the book, his writing process, the optimal level of fame, and why he thinks people should not pick stocks themselves. “Fear has a far greater grasp on human action than the impressive weight of historical evidence.” Jeremy Siegel “You have to keep reminding yourself of that quote. It's my favorite investment quote, because it's the only thing that keeps me from letting my behavior take over from my logic.” Nick Maggiulli
01:00:40
May 14, 2022
Sebastian Mallaby and the Machine for Manufacturing Courage
Sebastian Mallaby and the Machine for Manufacturing Courage
Hello everyone, I’m excited to share my second conversation with Sebastian Mallaby. Last time, we discussed his book More Money Than God. A quote from that conversation stuck with me: “The key was to do an unreasonable amount of preparation work. It shows you're serious and not wasting people's time by asking the obvious questions." This time, we discussed The Power Law (see my write-up) in which he tackled the history of venture capital. The two worlds make for an interesting contrast: venture capitalists, networkers by nature, are more willing to meet and chat. But they’re also natural storytellers which presents a challenge in the search for truth. In his book, Mallaby tried to disentangle luck and skill in venture investing, how to build winning and lasting cultures, and the importance of VCs for silicon valley. And while he admits that individually “the story of every bet can seem to hinge on serendipity,” he argues that over the long run, “the best venture capitalists consciously create their luck.” Individual venture capitalists can “can stumble sideways into fortunes” and at times it seems like luck beats diligence and foresight. The best however, “work systematically to boost the odds that serendipity will strike repeatedly.” “The great challenge at venture partnerships is that the principals must refrain from killing each other.” Michael Moritz “When people write about the venture business, they’re always writing about the startups we back. They never write about the most important investment we make, which is in the business.” Michael Moritz. "The fast moving of ideas, people and money until they reached their optimal use, that’s what made Silicon Valley worked. That’s what made innovation turbocharged. "But where did that fast circulation come from, and my argument is it comes from venture capitalists." I had a lot of fun digging into these questions with him. I hope you enjoy the conversation.
58:17
May 05, 2022
Mary Childs and her book The Bond King
Mary Childs and her book The Bond King
I’m excited to share my conversation with Mary Childs, author of The Bond King (and co-host at Planet Money) on the rise and fall of legendary bond manager Bill Gross. Mary and I talked about Bill’s breakfast habits (did low blood sugars end his career?!), his card counting days, the culture of paranoia at PIMCO, how he combined multiple sources of edge into “structural alpha” for long-term outperformance, the difficulty for a founder to leave their firm, Bill’s desire for fame, and how emotions ultimately got in the way of investing. Some highlights from the conversation: Opening the door to a story: “If you're staring at a closed door … you just have to come up with a little piece of information to get that person to open that door, to crack it open. A little piece of gossip, a story that everyone's talking about. In and of itself that gossip is useless to you as a journalist, of course. But you can asking somebody, Hey, I keep hearing this ridiculous story. You have a little nugget of truth in there. You don't know what it is yet. … A lot of people want to help you understand and don't want to see the story misrepresented.” Traits of a founder: “The things that make someone capable of achieving the track record that Bill Gross did, building the kind of firm that Bill Gross was a part of, those personality traits are: you're going to be exacting. You're going to be really intense and focused. You're going to be a perfectionist, a micromanager. You're going to keep a really tight grip. These things, generally speaking help contribute to the success of the firm. … For the most part, these are things you see very frequently among founders, and also that toxic culture that can often come along with some of those traits. Those traits also make it very difficult, if not impossible, to have a graceful transition away from that founder. Because the minute they start to loosen their grip, they freak out. … The tight grip is who they are. This firm is who they are.”  Being the house: “Bill gross learned from Ed Thorp’s book called Beat the Dealer that you can count cards. … I think that this sensibility of both understanding the math but also feeling the pace of the table and knowing when you have that edge and when you don't, and also watching all the people around you who have no edge whatsoever and who were just flopping around taking dumb chances. All of that helped to inform how he approached the market and who he saw as his competitors. His competitors, aren't the dumb people doing the dumb stuff. His competitor is the market, is the dealer. This shows up when PIMCO figured out that the US government wasn't going to let certain institutions fail in the financial crisis. That there was going to be a government backstop … If I know that the US government is the house, I'm going to be the house, I'm going to try to align my own interests. … The point was to do what the government's going to do, but do it first: buy what they're going to buy and then sell it to them or ride that wave as the news of their purchase causes the price of those assets to soar. And that's exactly what happened.”
59:58
April 22, 2022
Max Frumes: The Caesar's Palace Coup and Distressed Investing
Max Frumes: The Caesar's Palace Coup and Distressed Investing
I’m excited to share my conversation with Max Frumes, co-author of The Casesar’s Palace Coup (with Sujeet Indap). I’m a big fan of the book and previously shared some notes on Twitter. It’s a deep dive into the buyout and bankruptcy of casino giant Caesar’s Entertainment and the slugfest between investors like Apollo, Oaktree, Appaloosa, GSO, Elliott, and some of the nation’s most expensive law firms. It’s a great introduction into the world of distressed investing and the prevailing culture. I’ve written previously about how distressed credit is a “knife fight over a limited number of slices” which shapes a scarcity mindset. The book illustrates the intense negotiations and explains the “creditor on creditor violence” that can take place (a recent example is Wesco). Max and I discussed how to break down such a complex story, explored key turning points, discussed the culture among distressed investors, what makes distressed investors successful, why there was no long-term damage for Apollo, how other investors were actually inspired by their moves, and how the space has changed in general. A key takeaway for me was that the participants in this game are very smart, creative, ruthless, and extremely competitive. This is a complex and difficult game to play and one should consider very carefully whether to enter the competition. A few quotes from the conversation: “It is a very rich, fascinating industry because it is a combination of chess and poker, depending on what stage a restructuring is at.” “Each of these firms does have their own personality. We go into detail about the origins of Apollo which was the most interesting because it was defined by brilliance and impunity, willing to push the bounds to the very edge of what is what's permissible under the law, under the credit docs. And that does go back to Mike Milken’s firm Drexel Burnham. That's where Leon Black was one of the senior directors at the time it went bankrupt.” “Firms who are the most successful in this industry are those who have expert knowledge and a good handle on the legal aspect, understanding valuation, and then the industry knowledge itself mixed with understanding game theory. Some people are more savvy with the press. Some people are more savvy with the orchestration of creditor or organization. Some people are more willing to be an iconoclast and go against the grain.” “Ultimately the examiners reports said they had actual and constructive fraudulent conveyance claims against and corporate governance claims … a lot of them were simply because the creditors did not have independent directors during the time these decisions … where there's conflicts of interest. It seemed like the private equity sponsor was basically controlling everything. … So the lesson wasn't, maybe we shouldn't do those things. The lesson was let's put some independent directors in there.”
01:10:12
April 15, 2022
Evan Tindell of Bireme Capital
Evan Tindell of Bireme Capital
I’m happy to share my conversation with Evan Tindell of Bireme Capital. I’ve enjoyed Evan’s thoughtful letters over the past couple of years and it was time to talk about this approach to investing. We dove into Evan’s background as a poker player, how he looks to exploit biases in his investment process, and how he navigated the ‘20-’21 bubble in growth stocks as a short-seller and value-oriented investor. Disclaimer: This content is for entertainment purposes only. This is not investment advice. I am not your fiduciary or advisor. Do your own work and seek your own financial, tax, and legal advice before making any investment decisions.
01:03:56
April 07, 2022
Jimmy Soni, his book The Founders, and the many lessons of Paypal
Jimmy Soni, his book The Founders, and the many lessons of Paypal
“PayPal started off as a product with no use case. Then we had a use case but no business model. Then we had to build a sustainable business.” Amy Klement I’m very excited to share my conversation with Jimmy Soni, the author The Founders: The Story of Paypal. [00:01:00]: Introduction, how did Jimmy find the story and go about the research process? [00:17:00]: Paypal’s unique team and recruiting. [00:24:00]: Paypal’s journey of pivoting and iterating the product and business model. [00:34:00]: Culture of truth-seeking and debate, workaholism, “Paypal PTSD.” [00:42:00]: Paypal’s three leadership coups. [00:49:00]: Risk-mitigation and timing were key to survival. [00:57:00]: What were the lessons for the Paypal diaspora? [01:061:00]: Culture of ownership and giving people a lot of responsibility quickly.
01:13:24
March 25, 2022
Will Thomson of Massif Capital: A Reshuffling in Real Assets
Will Thomson of Massif Capital: A Reshuffling in Real Assets
This is my conversation with Will Thomson of Massif Capital, a long-short fund in real assets, and particularly the “sectors most important to a low carbon economy: Energy, Basic Materials and Industrials.” It complements a written Q&A on the firm's process and thematic outlook. A few highlights: Will is fairly bearish on the current setup of a stable, globalized world. He believes we’re moving from a highly integrated world to a multi-polar one in which “spheres of influence” play a much greater role and affect commodities and trade. Energy and food are example sectors in which nations will increasingly to protect their own interests and create resilience. “What comes next is going to be very different from the past 30 years. And it’s going to be very good, I think, for real assets and natural resources.” “We're gonna see a fundamental re-working of trade flows along different geopolitical lines.” Political acumen will become more important for management teams. (An anecdote from Disney on its philosophy operating abroad: “We always ask, ‘how does it reflect on the Mouse?’”) The collapse of the USSR led to a decline in Russia’s industrial capacity relative to its commodity production, leaving global commodity markets well supplied. That stability has come to an end. Europe’s decarbonatization efforts could go into overdrive and lead to attractive long-term opportunities among utilities and industrials. Will doesn’t believe he can forecast commodity cycles but his best guess is that we’re in the "first third."
41:13
March 15, 2022
Dan McMurtrie on Resilience, Recovery, and Longevity in Investing (Re-upload at higher volume)
Dan McMurtrie on Resilience, Recovery, and Longevity in Investing (Re-upload at higher volume)
This is a re-upload of the episode at higher volume after some feedback that the conversation was difficult to understand on some devices. I’m very excited to share with you all a conversation with my friend Dan McMurtrie of Tyro Partners. The entire interview is about a topic that I believe is under-discussed but of vital importance to any investor: resilience and recovery when dealing with sustained pressure and stress. I believe this is crucial to longevity in investing. A number of great investors have commented or hinted at the mental and physical strain from a combination of market volatility and personal or business issues. Many retired because they were simply too exhausted and burned out to continue. You can find detailed show notes, examples, and a transcript on my substack - neckar.substack.com. "The goal of investing under stress is serenity. If you can, in times of extreme stress, get your life to be mundane that's a victory." "You'll hear a lot of managers say, Hey, I bought the market in the financial crisis, but they're probably not going to get on TV and say, and I threw up in the trashcan for it.” "When things go wrong, you're short a put on your own time.” "Think about it like a team, like a sports team. We need to have players who can execute plays at all times. And in order to have people who can execute plays at all times, some people have to have some Gatorade on the bench and let's just accept that and engineer around it.” [00:01:00]: Introduction. Why is resilience important? [00:07:00]: Where to find good advice? How to broach the subject? [00:20:00]: What are the different dimensions in which this matters (i.e. individual vs. team)? [00:37:00]: Which non-investment areas offer useful insights? [00:50:00]: What are specific best practices? Are these idiosyncratic or are there universal themes?
01:16:32
March 11, 2022
Dan McMurtrie on Resilience, Recovery, and Longevity in Investing
Dan McMurtrie on Resilience, Recovery, and Longevity in Investing
I’m very excited to share with you all a conversation with my friend Dan McMurtrie of Tyro Partners. The entire interview is about a topic that I believe is under-discussed but of vital importance to any investor: resilience and recovery when dealing with sustained pressure and stress. I believe this is crucial to longevity in investing. A number of great investors have commented or hinted at the mental and physical strain from a combination of market volatility and personal or business issues. Many retired because they were simply too exhausted and burned out to continue. You can find detailed show notes, examples, and a transcript on my substack - neckar.substack.com. "The goal of investing under stress is serenity. If you can, in times of extreme stress, get your life to be mundane that's a victory." "You'll hear a lot of managers say, Hey, I bought the market in the financial crisis, but they're probably not going to get on TV and say, and I threw up in the trashcan for it.” "When things go wrong, you're short a put on your own time.” "Think about it like a team, like a sports team. We need to have players who can execute plays at all times. And in order to have people who can execute plays at all times, some people have to have some Gatorade on the bench and let's just accept that and engineer around it.” [00:01:00]: Introduction. Why is resilience important? [00:07:00]: Where to find good advice? How to broach the subject? [00:20:00]: What are the different dimensions in which this matters (i.e. individual vs. team)? [00:37:00]: Which non-investment areas offer useful insights? [00:50:00]: What are specific best practices? Are these idiosyncratic or are there universal themes?
01:16:32
March 11, 2022
David Tepper: The King of Bouncing Back
David Tepper: The King of Bouncing Back
I'm reading my full piece David Tepper: The King of Bouncing Back and key takeaways from the second part, What I Learned From David Tepper. You can find both pieces with all quotes and sources on my substack: neckar.substack.com. “For better or worse we’re a herd leader. We’re at the front of the pack. We're one of the first movers. First movers are interesting; you get to the good grass first, or sometimes the lion eats you." "In the outside world, I’m that easygoing person. But if I’m on the field, I wanna win. And we win a lot.” Sections: Growing up in Pittsburgh Republic Steel The Goldman Setback The Horse Leaves the Barn Emerging Market Adventures Dotcom Distress The Delphi Distraction The Crisis Hits Inflection Epilogue Lessons: Don’t do it for money alone. Lazy competitive. Be smart enough to get lucky. Find your own style. Ahead of the herd. But don't bet the firm. Bouncing back in life and markets. Unemotional under pressure. Staying nimble. Optimists win in the long run. Keep having fun.
47:58
February 19, 2022
Tom Morgan: The Voice Telling You It's Time To Move
Tom Morgan: The Voice Telling You It's Time To Move
Today I’m joined by my dear friend Tom Morgan for a wide-ranging conversation around finding flow, recognizing resonance, the idea of moloch and slack, prophets and truth in the modern world, embodiment, and connecting mind and heart. Tom is one of my favorite writers and idea synthesizers. You can find his work at the KCP Group and on Twitter. It was a deeply personal conversation because I struggle with a lot of these questions as I’m trying to navigate this new stage of my life. You can tell from the way I struggled to formulate some of the questions. So, don’t hold it against Tom that we spent a lot of time on ideas such as following your curiosity, being vulnerable, and navigating personal crises. I hope you find the conversation as interesting as I did. Tom managed to articulate his mission in life towards the end. So it was definitely worth it. You can find full show notes on my substack.
01:22:50
February 09, 2022
Conversation with Rob Wertheimer: Studying Great Industrials & Searching for Compounders
Conversation with Rob Wertheimer: Studying Great Industrials & Searching for Compounders
I’m very excited to share my conversation with Rob Wertheimer of Melius Research and one of the co-authors of Lessons from the Titans (my notes) I really enjoyed digging into the book’s big themes around the culture, business systems, and leadership of some of the most successful industrial companies. Rob shared his lessons on finding other compounders, evaluating leaders, digging into incentive structures, touring factories, and the best research note he ever wrote - but never published. Show notes, quotes, and transcript on neckar.substack.com. “You know, my job is a tricky one. You have to be arrogant enough to have an opinion, and humble enough to know you're probably wrong most of the time.”
01:00:28
January 28, 2022
William Green: Mastering Your Mind, Resilience, and Great Investors as Practical Philosophers
William Green: Mastering Your Mind, Resilience, and Great Investors as Practical Philosophers
I’m very excited to share my conversation with William Green (@williamgreen72), the author of RICHER, WISER, HAPPIER: How the World's Greatest Investors Win in Markets and Life. It’s one of my favorite investment books this year because it is so much more. William called it a “stealth spiritual book” and I put a sticker on my copy: “This is not a book about investing.” This conversation was a about William’s own journey, his search for worldly wisdom in everything from Zen Buddhism to Stoicism to the Kabbalah, and the many lessons he learned from great investors. You can find the full highlights and a full transcript on my substack.  Highlights: 2.00: Introduction, William’s journey to the book. 7.00: William’s study of everything from Zen Buddhism to the Stoics to the Kabbalah. “Tell me about what you're reading and why and how it's influenced your life?” "I dip into the Zohar almost every day" 24.00: Sometimes life has to burn down? “We can get subtly misaligned and feel that we're going in the wrong direction, but you keep going. Sometimes you need it all to fall apart in a fairly dramatic way, whether it's a marriage or a job health, a career or reputation, you kinda need it to collapse.” William’s own setback and dealing with being laid off during the financial crisis. 31.00: How did he pick the subjects and ideas of the book? "One idiosyncrasy of this book is that I’ve focused almost exclusively on investors whom I like and admire." 43.00: “I write at some point in that epilogue, I say there is as great honor in the simple virtue of perseverance. And I don't say that lightly. I think that really deeply, I mean, there's something, one of the things about writing is that when, when you really simplify and distill things, you're always worried that people will see how banal your mind is and how trivial you are. But, actually truth is pretty simple, I think. And so for me, when I'm condensing it down to that, I mean, I said there are two great lessons for me from Miller's Miller's downfall and recovery, because his recovery has been equally spectacular. One of them is about the simple virtue of perseverance and [00:44:00] one of them is everyone suffers.” 48.00: How do I regain sort of control or semblance of control of, of the inner game or if my mind? Is reading enough? 58.00: “And, and so I'm not super impressed just with the ability to make money and not live a more thoughtful life. I think I was more impressed with that when I was younger. I liked that aspect of the [00:58:00] game of just being able to outwit the crowd. There's something about that, that I found very, very appealing.” 59.00: What is it like to write about people who are very successful financially? Is there a downside (envy)? “Why their lives resonated with me, whether it was a Bill Miller or a Nick Sleep, or a Monish Pabrai or Charlie Munger, in some ways they were all outsiders who had diverged from the crowd. And they were thinking in a very, in a very free way, they were questioning conventional opinion and they had constructed their lives in a way that was very true to who they are. So that resonated deeply with me because I could see that I was also an outsider who at least in my own mind who didn't naturally want to go with the crowd.” 1.11.00: Self awareness and lessons for non-professional investors. “Stumbling” into the right strategy. 1.20.00: Writing a substack vs. a book.
01:31:04
December 10, 2021
Kirk Kerkorian and the Lessons of Leverage
Kirk Kerkorian and the Lessons of Leverage
“Life is a big craps game. I've got to tell you, it's all been fun.” This is a companion piece to my writeups of Kerkorian's story (part I, part II). Kirk Kerkorian was a self-made billionaire, aviator, entrepreneur, casino developer, and investor. It's one of my favorite rags-to-riches stories.
16:39
December 02, 2021
Gratitude, Desire, and a Money Paradox
Gratitude, Desire, and a Money Paradox
I'm reading my latest piece, Gratitude, Desire, and a Money Paradox. “Desire is a contract that you make with yourself to be unhappy until you get what you want.” –Naval
07:19
November 27, 2021
Sebastian Mallaby: Understanding Legendary Hedge Fund Investors
Sebastian Mallaby: Understanding Legendary Hedge Fund Investors
I’m very excited to share my conversation with Sebastian Mallaby, the Paul A. Volcker senior fellow for international economics at the Council on Foreign Relations and author of several books including More Money Than Good, The Man Who Knew: The Life & Times of Alan Greenspan, as well as an upcoming book about the history of venture capital (The Power Law). I’m a big fan of More Money Than God and tweeted about the gems in its footnotes. This conversation was an absolute treat and I hope you will enjoy it as much as I did. Disclaimer: this podcast is for entertainment purposes only. It does not constitute an offer to sell or the solicitation of an offer to buy any securities mentioned or discussed. Seek your financial, tax, legal, accounting, or other advisor’s advice before making any investment decisions. Do you own work. I am are not your fiduciary or advisor. Conversation highlights: 2:00: Sebastian’s journey to the book and topic (hedge funds, also Alan Greenspan) 5:15: How to gain access and build trust. “The key was to do an unreasonable amount of preparation work.” “You win people's respect by doing a ton of homework. It shows that you're serious and you're not wasting people's time by asking the obvious questions.” 7:44: How to decide what questions to ask? “What you really want to know from them is specifically what their thought process was around a particular important or interesting trade. How did they make the call? How did they develop conviction? How did they hold onto the position during the inevitable hiccups and adversity? So it's that reconstruction of the case study.” 11:00: Where to look for information? “The answer is you've got to look everywhere.” 12:20: Finding memos in which Greenspan “described the creation of the Federal Reserve as one of the historic disasters in U.S. history.” 15:00: George Soros who joked "I can only remember the future." Learning the division of labor in the Soros team and the Thai Bhat trade. 20:00: “The culture within an investment company matters almost as much as the analysis that the company does of the market or of the trade.” 21:00: The Korean bank trade. 27:00: Different cultures and investment styles, contrasting Soros, Druckenmiller and Robertson. 31:30: Culture at Tiger and the Tiger cubs. 34:00: Julian Robertson outgrowing his original strategy and the loss of “supercharged incentives.” 39:30: Can investors evolve and adapt? 42:00: Mindset and personality. 47:45: Understanding Paul Tudor Jones. “Genius does not always understand itself.” Vic Braden 49:00: Jones tried to replicate his system with a quant. 52:00: The Lehman Brothers 2008 trade. 56:50: Jones’s process and his ‘market scripts.’ “Sometimes causation in human actions works in a weird way.” 59:45: Reflecting on the industry and book from today’s perspective, a decade later. 1:03: Rise of quantitative trading. 1:08: Sebastian's upcoming book, The Power Law.
01:09:27
November 19, 2021
Author Dominique Mielle: Damsel in Distressed
Author Dominique Mielle: Damsel in Distressed
Dominique Mielle was a partner and senior portfolio manager at Canyon Capital, a $25 billion fund, where she worked for twenty years. In this episode we discussed her career in the world of distressed investing, her book, and the hedge fund industry in general. 3:00: The WorldCom bond trade. 6:30: Dealing with a losing investment. 9:00: Importance of expertise and networks in distressed investing. Distressed investing as a game of chess. 11:40: Distressed investing as an apprenticeship business. 14:15: Generalist vs. sector specialist model. 17:30: Hertz bankruptcy. 20:40: Airline bankruptcy investing and Equipment Trust Certificates. 28:00: How distressed investing changed over the past decades. 32:00: Navigating the financial crisis in 2008 35:00: Mental resilience and losses. 38:00: Losses are unavoidable. 39:20: The business of investing: building a CLO business, raising capital. 40:59: Pitching, fundraising. 45:00: Women in hedge funds. “In 20 years, I only met one other female partner who was doing distressed. And she's a friend of mine.” 48:30: Implications of hedge funds as a mature industry. 51:25: Pitching and communicating ideas. 53:45: Managing a team of analysts.
56:20
November 03, 2021