YouSaid · the spoken record

Alex Shahidi

lines on the record: 87
first: 2021-03-01
most recent: 2021-03-01
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Investment managers can spend the time to get to know us as an organization and understand our needs and what we value and can connect with us on that level. That's valuable. But it's a little bit like we tend to just gravitate towards people that think like us from those values perspective, not necessarily from investment perspective, but from a values perspective. And so I'm not sure that you can do much to change your values. So I think if you operate a certain way, we're more likely to invest. And if you don't, then I think if it's more of a marketing oriented approach, then it's less likely to work with us.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Say we are more attracted to the managers that don't market at all that just do what they do at the highest possible level and that we get referred to by, as I said, clients or friends or other investors that we respect. So I'm not sure there is a, certainly not a cold call that would work. I think where”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“The worst way happens every day, which is just a cold call. I saw you on TV or I read an article and what you do is exactly what we do. That happens so often that we've become numb to it. I'd say the best way is through a referral where there's a natural fit and it's genuine. And it tends to be managers who don't typically do that. They're not marketing oriented firms. A simple measure is how many research people do you have and how many marketing people do you have? It tells you what business you're in. If you got 100 marketing people and four on research versus four and a hundred the other way, it tells you what business you're in. And so that's a really important differentiator among investment managers.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I'd set you there that or Ray Dalios Principles, which I've read multiple times. I just like the way he thinks he's the ultimate independent thinker. And this idea of always improving really appeals to me and recognizing what your flaws are, accepting them, and then trying to improve upon them is an idea that I just think makes a lot of sense and really appeals to me.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think a lot of times I don't listen enough. I think it's easy to get enamored with ideas and hearing yourself talk. I think a lot of people in our industry love to hear themselves talk. And I think you learn a lot more. And you end up a lot smarter and you end up making better decisions if you listen better. So I think early on in my career at Bridgewater, I struggle with that a little bit. And putting myself in the other person's shoes. And I think that's a constant challenge, I think, in our personal lives and our work lives. And the more you can listen and tune into people and understand where they're coming from, I think the better relationships you'll have and the better outcomes you'll have.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“A pretty conservative person just by nature. And I feel like in investing, being conservative pays off over the long run because it's all about surviving the trough. If you can survive the trough, you're going to make it over the long run. And you see so many investors just lose everything. But I'd say the mistake is it's also at the same time, it's important to take big risks. They're calculate a risk, but it's important to take big risks. I was at Maryland for 15 years. I probably could have left five years earlier. That's a big risk to do something like that. So I'd say that's probably the biggest lesson is be conservative, but take calculate a big risks when it's opportune.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's related to what Damien said earlier, and I call it crystal ball investing, which is I think a lot of people, the way they invest is they look at something and they think this is going to give me good returns. And therefore, I'm going to invest in it, which sounds very intuitive. But if you do that for all the line items in your portfolio and they're not diversifying versus one another, that actually results in a pretty poorly designed and inefficient portfolio. And so approaching it from a more of a diversification standpoint and being humbled by your ability to predict the future as opposed to assuming you know what the future looks like and then building a portfolio for that, I think is a lot more sustainable design approach than the other way.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Failure to appreciate the benefits of diversification. So, I think most investment portfolios, as we had talked about before, are full of lots of line items that actually behave very similarly and that investors would be better served by focusing on at least placing as much focus as they do on return on the diversification benefits.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you're young You think you know everything, and the reality is you know very little. So as I've gotten older and as I see things that I never thought I'd see, I realize how little I know. And so I think I would talk to my younger self and say You don't know anything. Be open minded. I think that would serve you well to be a little bit more humble and a little bit less sure of yourself.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Say challenge the status quo. Don't assume what everybody else is doing is the way it should be. I learned that relatively early on, probably when I was in college, and I wish I would have learned it very early on to think independently, don't just accept what others are doing. A lot of times it's right, but a lot of times it's wrong. And that can lead you down a very different path in terms of your discovery of the truth and try to surround yourself with people who think like that. And so that introduces you to different concepts rather than just getting caught up in what everybody else is doing.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“The way my mind works is in black and white. When I see something, I try to put it in category A or category B. And one of the lessons that I learned from my parents early on is the world doesn't always work in black and white. There's always shades of gray in between. And that's actually one of the reasons I decided to go to law school because law school teaches you the shades of gray. So you ask a lawyer a question, it always starts with, it depends. Depends on this, it depends on that. There is no clear answer to your question. And recognizing that I was a black and white thinker, like a mathematical engineering type of mindset, there is black and white, just like in investing. And there's a lot of shades gray, like investing. That was a very important lesson. It led me to law school and it led me to having a more balanced thinking, which has helped in the investment world.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“And my mother just loved to travel. And that was something she imparted on me. And the aspect of it that she loved was just this experiencing different ways of thinking. And I think that actually serves me well in this capacity because, again, I think a lot of success in learning comes from being open-minded to different approaches to solving various challenges. And especially now, if you think about the investments that we source on behalf of clients, I think you need to have a global perspective and you need to think about different ways that you can generate attractive returns.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think an open-mindedness, my family actually probably like a lot of families in the US, they come from far off places and my parents, they met each other in New York. My dad's French was on vacation in New York. There was a commercial airline strike. He was trying to get home. So he walked into the nearest travel agency and there was one woman on the floor that spoke French and it was my mom and they connected. And then after a four-year love affair back and forth between continents, they ended up getting married and settled in California.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Overconfidence. There are far more things we don't know than know, especially in this industry. There's a lot of talking heads and a lot of people prognosticating. And in reality were mostly wrong with those guesses. And so I think it goes back to our philosophy of build a portfolio that can be successful across a range of different outcomes and don't be too confident in any one outcome because you're most likely going to be wrong. I think skill or success in investing isn't something you can measure over short time frames. People love to attribute success to skill. Most of your success, sorry to break it to the listeners, is probably a function of luck and some skill, but there's a lot of luck involved. So the importance, I think, of just being humble and constantly learning and constantly thinking about how to get better and evolve is an important aspect of what we do. And I think will lead to that long-term success.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“For me, efficiency is so important. If I had to describe myself in one word, it would be efficient. So I think of efficiency in so many regards. And when I see things being done inefficiently, it really bugs me because I feel like there is improvement that can be made without cost. And so I always have an eye towards efficiency. Everything I look at, I just, for some reason, that's just the lens in which I view the world.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Guess for me, it's a little every day I build a to do list. And my goal is for it to be shorter at the end of the day. And it's kind of sad because oftentimes your to-do list grows and you end up negative. It's longer at the end of the day. And the other thing that's part of this is I've always felt that you can only do one thing at a time. You have a thousand things going on. You narrow it to one thing and you do your best at it. And then you check it off the list and you go to the next thing. And if you keep doing that every day and you prioritize well, it's remarkable how much you can accomplish. And so I try to keep that going all the time.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Like golf. I have three kids under five, so I don't play a lot of golf these days, but I really enjoy it. I also love food, eating food, cooking food, tougher in a pandemic to go out and experience new restaurants, but my wife is a fantastic cook, so I'm fortunate in that regard. And it's just a wonderful thing to share with the people that you care about.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“I love sports. I guess I'm competitive by nature, so I love playing sports and I love games. As I get older, it's less sports and more games, like board games and card games. It's less dangerous to your health. So that's what I try to focus on.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd also say that we'll continue to innovate where we think we can either access more attractive returns or structure solutions to create better portfolios, more tax efficient portfolios. That is an ongoing challenge. If you think about our landscape within our industry, there's a lot of convention allocating to active equity managers and munib bonds. That is not going to justify the fees in our industry, which are frankly too high, especially now that assets are all time highs and interest rates are near zero, you're almost taking the entirety of the yield you generate from the muni bonds as your fees. So it's not sustainable to have that traditional business model anymore. You have to innovate. You have to be able to deliver attractive, differentiated returns to clients. And that needs to be attractive on a net of fees and a net of taxes basis.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guess is that it's going to be better than it is now in terms of the portfolios that we put together for clients. I think we're going to create more innovative solutions. I don't know exactly what they are yet, but looking at our history and where our focus is, I could see that trend continuing. We'll probably add a few more partners that I think can add value to our client portfolios. We never have had the goal of being the biggest. If you're too big, you can't access the best managers. If you're too small, you're not on their radar. So you want to kind of be in the sweet spot. And I feel like we're there. So it's not so much size. It's more about adding really smart people to our staff. And so I think we'll grow in terms of number of people and not necessarily in terms of the assets we manage.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“And we've been sharing investment ideas for a long time. We've been talking about working together for a long time through a tremendously successful in their own business. And they have a very strong expertise in private assets, which is an area that we wanted more help with and more hands-on deck for. And so that was a very natural fit for us to partner together. And we merged earlier this year, our two organizations. And I think it's to the benefit of all our clients.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our goal has always been, at least for me since day one, is building better and better portfolios. When I look forward five years, I want to be smarter at investing and have better portfolios for clients and better portfolios to us means attractive returns with less and less risk. You just want to keep reducing the risk over time by being more diversified. And so part of the reason Damien was a good fit for me is because for a long time, anytime I had an investment idea, I'd share it with my colleagues and everybody would say, great idea, I love it. And nobody would ever push back. And Damien was one of the few people who'd say, that's the worst idea I've ever heard for these three reasons. And usually two of the three are valid. So it was a really good relationship. And I felt that I was getting better by surrounding myself with him. And so I've been looking for more people like that. And David Ho, Mark Sear are two people that we partner with that I've known since my early days at Merrill. I've known them for 50.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Take a step back. You mentioned that you're managing $13 billion of 19 in the group. What was the progression from Alex and you bringing your business together and then joining it up with this sort of slightly broader group?”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“The time because you may talk in isolation to a manager. It sounds like a great opportunity. But one of the reasons why Alex and I decided to partner with our partners, so the group that we actually partnered with a couple different groups, is because individually those are great investors. And they bring a ton of experience and relationships to the table. And oftentimes they'll point out things or they'll have relationships that can point out things that we missed. And so, and our clients too are fantastic sources of ideas. So a lot of the investments that we source come directly from our clients. And so we can vet things. Oftentimes, if it's in a particular space.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, so we'll do the work up front. We'll kind of gauge temperatures around those initial conversations, see if there's enough interest across the client base. And then we'll dig in, do our full due diligence, we'll make the recommendation at investment committee. By that point, Alex and I have fully vetted it. The research team has fully vetted it. And then the question is, what's the perspective from the broader investment committee? And that might lead to another turn of doing research to make sure we've answered those questions. And then ultimately we approve it or we don't. And we put on the platform.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd say also that there is a major mispricing in markets that exist today in the sense that debt is very inexpensive. It's pretty close to zero to borrow. And private strategies utilize that to their benefit. So if you think about private real estate or private equity, there's a significant component of leverage that influences the returns. As investors look at public markets and see the expected returns being historically low there, private markets can be one way to supplement those returns through prudent use of leverage.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“They all have different liquidity profiles, different fee profiles, tax profiles. So a lot of it has to do with what the preferences are of the clients, what their familiarity is with those different areas. I'd say in general, all else being equal, we tend to have more on the public side because people are just more familiar with it. It's liquid. Liquidity in environment like this is very valuable. So giving up liquidity, you have to get something that is truly remarkable because liquidity is so important in an environment that's constantly shifting. It gives you the ability to pivot as needed. But in a world where expected returns are very low on the public side, maybe you put less there. So those are kind of the levers that we're pulling across the three.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Alex across these three buckets, how do you generally think about allocating capital in that, in particular if the public markets has this sort of balanced risk approach, the hedge funds clearly balanced risk? And then in the privates, it can be a whole range of steady eddy and more market sensitive or economic sensitive. So where do you come out across the three?”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Basically, you're underwriting a business. You're underwriting, does this have a favorable return stream? And one of the biggest questions is, what can go wrong when you talk to a manager? Typically, they talk about all the things that can go right and what they expect. And our job is to balance the discussion to what are all the things that can go wrong. And when we sit in front of a manager who says, we don't really see a downside, we start running the other way because that is not a recipe for long-term success.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“If we come across something that looks interesting, we'll obviously spend a lot of time with that manager digging in, understanding the strategy. We talk to the peer group, understand what the competitive landscape looks like, make sure we understand the risks. We do reference checks. We want to make sure we're working with high quality people that we can trust. There are operational aspects that we spend time on, taxes, structuring. It's a pretty long checklist, but we have a pretty efficient way of moving through different opportunities. And then obviously those things compound from a learning perspective. So the longer you're looking at things, the more knowledgeable you are, the easier you can evaluate things. That's how it works.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“With. I can't live with losing significant capital. And I feel like that's our biggest responsibility. So I'm always focused on controlling risk. And I guess the biggest lesson is sometimes it's okay to take more risk, but you can't always take risk all the time because you'll suffer those terrible losses.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Thinking differently and trying to build these portfolios that we think are really focused on the downside. I think over the long run pays off. So most of our clients have outperformed equities over a long period of time with half the risk or so. But during the bull markets, it's the toughest. It's almost the opposite for us as it is for everybody else. We struggle during the bull markets and we thrive during the bear markets typically. So 2008, 2009 was a great time for us because our clients held up relatively well. Everybody else took a big hit. And when you look at long-term returns and you include those bear markets, you come out ahead. And then during those strong bull markets, we tend to trail until you get the next bear market and we pull ahead. So that's probably the biggest challenge. And that I can live with because I feel as fiduciaries and as trusted advisors, our primary goal is to protect our clients. And there's always the fear of missing out. That's something I can live with.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's pensions, endowments, foundations on the institutional side. We have some labor union funds. We're in Los Angeles, so there's a lot of entertainment type clients. And then there's high net worth clients. Our minimum is 10 million, and they go all the way up into the billions.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“And on the private side as well, we have a whole operations team that helps with the structuring aspects. And so that is also a heavy lift because there's a lot of documentation and administration around that aspect that has to be handled.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, the world really shrinks when your criteria is a little bit more strict. So on the public market side, we're looking for sustainable long-term alpha infrastructural investors. We think of a net of taxes. That really shrinks the universe right there. On the hedge fund side, we talked about there are a few managers who are really truly low correlated. And then on the private side, you need more resources there. So actually that's where most of our people spend most of their time.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“So Alex and I oversee the group. We have three dedicated professionals full-time. And then we have an investment committee of maybe 10 members who have part-time research responsibilities. So it's a pretty significantly sized group and operation.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's interesting. I'd say reinsurance fell into the camp of becoming too popular a few years ago because you went through this 12-year period where there were essentially no major hurricanes hitting the US. So 2005 was a very bad hurricane year. You had Katrina Wilma Rita. And then you went through 12 years with no hurricanes. And so everybody entered the space. And I think the smartest investors entered right after 2005 and they made a lot of money. By the time everybody caught up to that and institutions started allocating significant capital to reinsurance, I don't think they accurately understood the risk profile of what they were buying. And at the time, because there was a lot of capital coming in, premiums were getting compressed. And then you just went through a really terrible three-year stretch. And now all the capital is leaving. It's probably a good time to come back into the space. So there is an aspect of that that we'll think about. But, you know, with things like reinsurance, anything that's different, you have to be careful because”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think part of it is when everybody's talking about something, we tend to shy away a little bit because that's more of a qualitative assessment of getting crowded when they start launching multi-billion dollar funds in a certain space. We shy away a little bit. So that's part of it. It's challenging because there aren't that many low or uncorrelated assets. So when we find one, we tend to really dig in. And to this date, we haven't seen any that really are becoming too popular.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Actually, it has the potential to generate very attractive tax exempt yields. Or earlier this year, we did healthcare royalties. And so that's a constant focus for us. There aren't that many things that really fit into the category of perfectly uncorrelated. And you have to be careful when you go into new spaces that you really research it and you're talking to folks that you can trust. But that's an ongoing focus for us as well.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“More recently, we've done a feeder into industrial real estate because we think that's a sector within the real estate space where clients are generally underallocated and there are a lot of secular tailwinds to building e-commerce infrastructure, last mile type of facilities. If we think going forward, what we're focused on, you know, we're looking at distress within the real estate space as well, so opportunistic real estate. We're looking at earlier stage investing within equities. That's obviously not an out of favor asset class. It's very much in favor, but we think through our relationships, we can find managers with an edge, whether it's in life sciences or other verticals we think can generate an attractive return profile. And then we are always looking for uncorrelated investments. So as I mentioned a few of them, but we sort of dig into niche-year territory there. For instance, right now I'm looking at affordable housing bonds, which is a very unfollowed space.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's definitely a thematic aspect to what we do. So we try to focus on things that are timely given the market environment. So earlier this year, we did a multi-manager allocation within distress credit. This was basically immediately following that dislocation. And we believe that credit with the right managers was a great way to play the recovery because at the time it was very uncertain how things were likely to proceed and credit, we thought, was a downside protected way to generate attractive returns, regardless of how this played out. Because if things go poorly, you have more ways of generating an attractive return. You can take over the underlying business or own the underlying assets and sell those and still generate an attractive return.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“We always look at everything net of fees. And for taxable clients, net of fees and taxes. So, in that light, if it's a three and 20 fee structure or a three and 30 fee structure, they better be delivering something that's really attractive net of that. And there are firms like among the ones you mentioned where the fees are exceptionally high and the returns net of fees are exceptionally attractive. So it's possible, but it just raises the bar.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“You also talked about the efficiency of accessing, and there's one thing to have a commingled fund. It's another when a lot of these organizations are high fee and well-discovered where capacity might matter more than terms. How do you think about that within hedge funds?”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“You do it over and over again. And there aren't that many people who totally grasp that concept and invest with that philosophy. And so when we find these managers and we start talking to them about how we invest, how they invest, all of a sudden we become best friends. And we've run into some of these managers who've been close for years and we start talking to them. And magically, they open for us because all of a sudden we look like a desirable client to them because these are the types of clients they want. They're not going to have those same conversations of, hey, the S&P's up 20, you're up 10. What's wrong with you? So it is a small universe. And in some way, we're on a journey to find more of those investors and start working together.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's exactly where we end up. Because if you take the entire universe and your first screen is have a low correlation to markets, you throw out a large percentage right off the bat without even looking at the names. Then you want managers who have a long track record and that you throw out a lot because a lot of them started in 09, 2010 after they blew up their previous firm and they erased the track record. And you want managers who've held up during bear markets. So now your universe is tiny. And what's really interesting is when you sit down with these managers and you do the normal introductions, they're telling us their philosophy. We tell them our philosophy, there's a significant overlap in the way we think. And I think a lot of it is what you describe as really being independent thinking and recognizing that low correlation is the ray dalia calls it, the holy grail of investing. You find a bunch of low correlated assets, you put them together and you just leave it alone. You buy low and you sell high.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“You mentioned at the top that you really try to be independent from others. And Damien's walking through this, and I can't help thinking in my head. Perhaps for good reasons, but those types of criteria end up in a very similar shortlist. And I'll throw out the names. You don't have to, but an Elliot, a Millennium, a Citadel, D. Shaw, Bridgewater, there's a certain subset of managers, not many, that have this kind of absolute return low volume. In one sense, you can say all the different things about what you're looking for. On the other hand, there's only a small subset of them. And I'm kind of curious how you bring those two things together, and if that is indeed where you end up.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then you have discretionary managers who are up 50, 60, 70, 80, 100% this year. It's wild. And I would have never envisioned that this could have ever happened. And yet it happened. And that's investing. And so those are the things that we think about when trying to source alpha and evaluate alpha.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a very small percentage that's all risk parity. Those tend to be the most sophisticated clients. And those are really the only ones we would feel comfortable going that far because they're just asking for it and they want it and they understand it. So we feel that they can actually hold on.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“So let's just say of those 70 clients just within the public markets, what's the range of, let's call it as a percentage of the public market exposure that is the most, that is just in risk parity to the least or the most that has other traditional active management 6040 type stuff alongside risk parity.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source
“Behavior that's probably counterproductive. It also heightens the importance of education. We spend a lot of time educating clients. We write. We speak. The meetings are mostly educational in nature. And that helps them make better decisions.”
2021-03-01 · Capital Allocators · Alex Shahidi and Damien Bisserier – Uncorrelated Return and Balanced Risk at Evoke-ARIS (Capital Allocators, EP.179) · IDENTIFIED FROM THE TRANSCRIPT · source