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Adrian Meli

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2025-09-15
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2025-09-15
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  1. “Goal was a terrific firm before I got here. And if Alec and I do our jobs well, it'll be a terrific firm when we leave one day. The first principles analysis of this industry are low barriers or entry, enormously talented people. If it's not the most competitive industry in the world, it's certainly one of the few most competitive industries in the world. If your strategy is, let's just be the smartest guy in the room and you want to create a structure on that, that's not going to work. That would be impossible. What we tried to do is build Eagle to have some competitive advantages and talent is one part of that. I'd like to think we've built up some barriers here that have gotten bigger over the years or a right to win, as I would call it, is first, the firm was built over 35 years ago. It has duration in its bones when all the founder cared very much about that. The investment time horizon, we hold a stock for over five years on average. We model companies out five to seven years looking at normalized free cash flow and earnings per share. We've had clients with us for many years. They trust us to think long term.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “There were so many interesting opportunities, right? Converts were cheap or lots of interesting socks, tarp warrants. There were a lot of stuff. Afterwards, it looked to me and Alec like the opportunity set was more in these bigger scale companies that people now call compounders. People weren't really looking out five to seven years on them. The way we conceptualize is if the business model is we got a large number of analysts, we got to buy circa five new stocks a year, that's less than one new name per analyst a year theoretically in this structure. How much time, energy, and research can we do to get each new opportunity? And can we bring the intensity of the hedge fund side, but the patience of a long-only side and marry the two? And so that's what we've tried to do here.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “This is like an asset gathering business and lazy cap. They would say people would use the term time arbitrage. The joke was, I just underperformed short term, but that's deferred alpha. And so that's why all the capital was seeking hedge funds, because they saw this talent intensity of research there. The key was, could you bring that intensity of research to this structure? So imagine the business model of an eagle. We have 25 to 35 securities. We have eight people on the analyst team. And you hold the security for six years. That would mean you only really need to buy four or five or six new securities a year. What if your business model was you've got all these pockets of talent trying to get at least spin-off special situations at higher fees? What do they have to do to charge higher fees? A lot of times you end up in more levered businesses or higher growth businesses. And so imagine you found a very low risk 12 or 13% IRR. It's very hard to buy that in that structure. And around that time during the financial crisis,”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “It wasn't as different as you think. One of the funny things about the industry is everybody looks at somebody at a private equity firm or Citadel or a hedge fund or Long Only and thinks they're so different. They're the same people. They're just moving around seats. You meet somebody from Citadel. They have some of the best analysts in the world or millennium. You meet somebody from a top single manager hedge fund. They're some of the smartest people you've ever met. You meet somebody from a top mutual fund. They're some of the smartest people ever met. But what was clear was that the competition set when people were looking at us was easier. That was very obvious from day one. A day before you're up against all these great people that had these great 20 plus percent return streams for the last 10 years and you're like, oh, should I give money to this firm versus that firm? And then you come here. I'm comparing you to this big mutual fund house from a relative basis. It gave us an interesting opportunity set to attack because the competition set were worse. But if you look at duration, the pejorative term for long only at the time, and I think still people think.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “At the time, it didn't feel so obvious. I joke around when we were at these retreats, and Alec and my friend group at the time, I think almost every person was at a hedge fund, they would josh us a little bit, give us greetings like, hey, someday when you're wrong, you'll be able to come back to the hedge fund world. It's not obvious to people that you want to leave a very highly compensated structure and go to the lower fee pool, but we would laugh about it and made our bet. In retrospect, it was non-consensus and it worked out really well.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Non-contestance was wrong. And so when I had the opportunity to get a senior role here and shift over, I thought, wouldn't it be interesting if I joined this world and I got to attack the swim lane of hedge funds that were higher fee? And at the same time, a lot of capital had left the long-only industry and a lot of the talent had left the long-only industry. Wouldn't it be interesting if over time Eagle were able to develop this reputation of hiring the same type of...”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Think about fees in this industry as a cost of capital. If broadly the hedge fund world had higher fees and broadly this firm had more attractive fees, could we do the same thing? Why can't the net returns in this structure be higher than the other structure? Let's look at the single manager hedge fund world. What are they doing? I got to go to these great investor retreats with his family office that we're both friendly with and you'd meet these amazing analysts. I was so impressed by all of them. I would listen to how they structure the portfolios in their business. Your gross exposure is X and your net exposure is 60 to 80% and your fees are this. How is that going to work? You just have to add so much alpha to get a good net return. People in this industry are really smart and competitive. I didn't like having that cost of capital. Maybe I'm not as good as them. I like to have a lower fee. Maybe they have higher gross returns than I do, but maybe I can have higher net returns. Most of the great ideas in life are both non-consensus and right. Plenty of ideas are”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Really like my seat, and I love that world if you're lucky to have a good first employer like I did where you can learn a lot, you'll learn things that you like and that you want to do differently over time in this business. We're all wired genetically differently to be able to prosecute different opportunity sets. So I just had to learn over time where my skill set was, what I was good at. As I started thinking about it, it's like, look, what I really like to do is I'm trying to compound my own money and clients' money. I want to align myself in interesting swim lanes where I'm going to be able to generate great returns. Maybe in hindsight, it's obvious, but I think it was pretty clear at the time that if a lot of money flows into an area at very high fees, the future returns would be lower. So I started to think about what I want to do next. And my partner here, Alec and I were talking about different opportunity sets. And I had a good fortune to meet the folks at Eagle. Had a terrific track record. And I think an advantage structure. And I got to thinking about it. I was like, okay, let's.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “People come to it. Capital flows in. Lots of competition gets in there. And all of a sudden, those great grocery turns come down. And now they have a huge fee load on them. And so that created more efficiency. You didn't used to have dedicated distress funds of the size you have today. The special situations were really interesting. The Joel Greenblatt stuff. You could see a spinoff, a big fund house would get a stock, sell the stock indiscriminately, and you could buy that cheaply. Later on in my career in that world, you could see that was getting priced more rationally. And so for me, it was like, okay, capital's flowing here at very high fees. The returns are coming down. The net returns going forward will need to be lower. I'm not that skilled at a lot of things, but one of the things I think I've done pretty well in my career is trying to see around corners. It looked like to me like the net returns are going to be lower.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “So, I don't want to overstate my skill in each area. If credit is a little too cheap, I'm not the guy to do it. What I'm always doing is looking for outliers. And any asset class, today, my partner Alec Henry and I will follow late stage privates. I follow credit. I follow real estate. I follow assets all over the world. I think this is more of a generalist for specialist approach. I grew up in a more of a generalist framework. If something is really dislocated, it's pretty simple to understand a distressed debt you're buying into a pipeline at a low multiple of earnings. If you think about this, you learn pretty quickly that you got to look at where money is flowing in and flowing away. So I would look at that period and say, hey, you had this great alpha pool. What happened? There's very low barriers to entry in the investment world. So big alpha pool, highly, highly remunerated profession. Hedge funds on the front page of the newspapers, TV shows about them, houses in the Hamptons, all this great stuff. What happened?”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “Alpha pool. You had a lot of large cap stocks that were overvalued, a lot of smid cap stocks that were undervalued. You had debt in pipelines and cable systems and cell phone towers and Enron bonds, big alpha pool there. And a lot of interesting spin-offs in special situations. The capital just hadn't flown in yet. What I took from it is, look, it doesn't seem like a coincidence to me that a lot of the best hedge fund returns in history were created from the late 90s to 2010 when that alpha pool was really big. Just a really great time to learn being in an unconstrained vehicle, working around smart people and getting to go meet with company after company.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “I took the opportunity, it was like tons of field research. I would show up at annual meetings and harass business executives and board members. I would go to landfill hearings. I would pull court documents, just tons of stuff like that. After the dot combo burst, I got to do distressed debt. I got to do domestic equities, international equities, look at all sorts of different asset classes. It was just really fun. And I was pretty tenacious about figuring out who the best investors were. I would hunt them down and I would try to figure out what they did and replicate it. I would go back on 13Fs from three or four or five years lag and say, okay, let's go back to 1999, 2000. Why did this person make this investment? So it was really a great time to learn. My takeaway from that period was you had no talent there. It was early. That's why I got a job. They needed to manufacture young analysts. I wouldn't have gotten a job otherwise. You had a lot of aggressive, smart people in an unconstrained structure and a huge...”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Oh, it was terrific. And you know, because you were there, but I came out in 2002 and it was like drinking from a fire hose. It was just enormous alpha pool. The firm hired accounting professor from business school to teach me accounting when I got there. And I went right in. I still remember the looks on CEOs' faces when a 22-year-old in a floppy, ill-fitted suit would walk in. So disappointed that they had to meet with me for an hour, but there was no LinkedIn. They didn't know who I was.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Aren't those unsellable teal crocodile loafers at the designer outlet on Black Friday that everybody is tempted to buy once or twice? It's those scarce few great assets that come on sale very seldomly that you got to jump at when you see. The fun of it for me growing up today has always been the thrill of the hunt.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “So I applied. And in retrospect, when I got to Williams, I was pretty young, pretty green, pretty immature coming from Texas. I hadn't seen a lot of things in the Northeast. I had never heard of boarding school. I never heard a squash. I didn't know people had SAT tutors. I couldn't believe I was sitting in a group. I was like, you guys had a tutor. I got to grow up a little bit. That was an econ psych major. And I love the way those two intersect in behavioral finance. And I ended up taking interest in investing. And I wrote a paper about how hedge funds outperform mutual funds. So when I was offered a chance to join an investment partnership right at college in 2002, I jumped and put both feet in. It was just a terrific time to enter the world. Tied up. It's all the same for me. Whether I was buying Garfield folders or looking personally at buying hotels below replacement costs after the financial crisis or buying stocks today, I'm always looking for an arbitrage, a way to make money without taking much risk. And given the house I grew up with, what was important to learn along the way is the best deal.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Ruthless. If you didn't make a trade with him, the next round he would raise the price $100. My mom would warn people off from playing against us because it was so ruthless. I don't know how much of it's genetic or environmental, but my parents will retell the stories of when I was a kid on first grade. They got a call from the school because I had taken my birthday money and was buying all the Garfield folders at the school store and reselling them. And I think they were proud and thought it was funny. The next year was a little dicier because other parents were calling in to complain that I had started a trading booth and I was trading Chotch from my house for their parents' jewelry and clocks. So that's how I grew up my whole life doing things like this. And I ended up going to Williams College, which I had never heard of until I was a junior in high school and a kid, a year older than.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “So from there, I moved to Massachusetts to Georgia to Texas, and I grew up in the South. My first dog was named Maverick, so I'll let you guess the city I grew up in. But it was really interesting. My dad had a few traits that really influenced my upbringing. He was a very hardworking businessman who loved a good deal. And I say loved because sale wasn't enough. It was like a sale on a sale on a sale. It was everything we bought. You better believe the alarm clock was set for Black Friday early morning. We would go to auctions and I remember we bought pinball machines and we buy rugs and just to show you how deep it went. One time we went to Disney World because there were Madame Alexander dolls that were very collectible and valuable, but each person can only get one. So me and my three siblings and my parents all waited in line for hours at Disney World to get these to pay for the trip. That was growing up and all the games we played growing up were Monopoly and A Choir. My dad was”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Adrian, thanks for joining me. Thanks for having me. It's always fun to spend time with you, Ted. I would love you to take me back to when you first got interested in investing. Yeah, let me think about this. Was born in Green Bay, Wisconsin, and my parents separated when I was a couple years old. And so my mother took me to upstate New York to live with my grandmother. And a twist of fate, she ended up meeting somebody pretty quickly thereafter and married my father, who ended up raising me as his own. I mention it because it was formational in my life.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Back in April on episode 497, I sat down with Randall Stutman, the executive coach behind admired leadership, whose advised more than five hundred CEOs, including some of the most respected names in asset management. Randall introduced me to Alex, an AI leadership coach his team built on forty years of proprietary research into what the best leaders actually do. Investment professionals, that means your entire team gets on demand coaching grounded in the behaviors that drive results and build the kind of followership that retains your top talent. We use Alex and our team at Capital Allocators swears by it. Try Alex for yourself at the link in our show notes, try Alex. admired leadership dot com. Enjoy my conversation with Adrian Mell”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “You by ridge line. Ridgeline makes your day unrecognizable. That's how refreshingly different it is from legacy investment management technology. With ridgeline's front to back AI native platform, your typical tech pains disappear. No integration headaches, no data discrepancies, and no upgrade cycles. Instead, you get real-time data flowing through everything from portfolio accounting to reporting to reconciliation, trading, compliance, and more. In the AI era, asset and wealth management firms moving to Ridgeline gain a decided advantage. That's why customers call it miraculous, game changing, and an awakening. If that's not how you would describe your investment management tech, request a demo at ridgeline dot AI. Capital allocators is also brought to you by Admired leadership.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “A minor concern. A missed filing, incorrect source or context that gets lost somewhere in the retrieval chain aren't edge cases. They're how decisions go wrong. Alphasense is the AI platform built specifically for this. They own the content over five hundred million curated documents from broker research and expert transcripts to filings and earnings calls. And they own the retrieval layer on top of it. That means every answer can link back to an exact verifiable source because the answer is only as good as what's underneath it, and with AlphaSense, you know exactly what that is. See it for yourself. Try a free trial at alpha hyphence dot com slash capital. That's alpha sense dot com with a hyphen in the middle slash capital. Capital allocators is also brought to you.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “That one's just mean. The Cleveland Browns are famous not for winning, but for testing your character. Year after year, heartbreak after heartbreak. And yes, I made her a Browns fan anyway. Some might call that cruel, I call it parenting. That's the thing about young minds. They believe what you repeat. So, just like forcing your kids to cheer for your favorite football teams, now's the time to plant another seed. Share the capital allocators podcast with friends, family, and colleagues in their formative years. Because if you get to them early enough, they'll be lifelong fans too. Thanks so much for spreading the word. Capital Allocators is brought to you by Alpha Sense. Here's something for you. Most AI tools today are very good at sounding right. But can you actually trace it back to a filing transcript or specific passage that drove the answer? Or are you just trusting the confidence of the output? For allocators, that's not.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “Now that's an easy one. The Georgia Bulldogs are a college football powerhouse. Three national championships in recent years, tons of glory, who wouldn't want to be a dog's fate. But on Sundays,”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “The growing inefficiencies in the public markets and exciting current and potentially future opportunities. Before we get to Ted's interview, it's football season, which in my house also means it's indoctrination season. Because let's face it, young minds are malleable. And when you've got kids, you've got a once-in-a-lifetime chance to wire them the right way. With your favorite football teams, just ask my four-year-old.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “My guest on today's show is Adrian Melly, the co-chief investment officer of Eagle Capital Management, a 36-year-old firm that manages $34 billion using a style agnostic long-only strategy. Adrian joined Eagle in 2008 from the hedge fund world and has helped build the team almost entirely comprised of analysts with similar DNA. Our conversation covers Adrian's early passion for finding value, path to investing, and transition from the hedge fund world to long only at Eagle. We discussed Adrian's rationale for moving towards Long Only, building a team of similar-minded analysts, finding a right to win, seeing around corners to identify outbuyers and research non-consensus ideas, and constructing a portfolio. Along the way, we discuss overcoming the challenges of active management,”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “Best deals aren't those unsellable teal crocodile loafers at the designer outlet on Black Friday that everybody is tempted to buy once or twice. It's those scarce few great assets that come on sale very seldomly that you got to jump at when you see. I'm Ted Sides, and this is Capital Allocators.”

    2025-09-15 · Capital Allocators · Adrian Meli – Active Equity Excellence at Eagle (EP.459) · IDENTIFIED FROM THE TRANSCRIPT · source