YouSaid · the spoken record

Brett Barakett

lines on the record: 94
first: 2024-05-20
most recent: 2024-05-20
sittings or episodes: 1
sources: podcast

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“Not everybody's squeaky clean. One of my brothers, Peter, runs a business called DDC Due Diligence Consulting. We hire him all the time to do background checks on management teams. There was one company we were invested in a number of years ago where I just didn't feel good about the CEO. I mean, I know this is ridiculous, but I just had a bad feeling. And so we spent a fortune doing a background check on the CEO and CFO of this company. It was what I call a yellow flag. There was no red smoking gun, but there was enough there that we cut back the position and it turned out that we were right. There was a problem and the stock was a fraud. We're lucky that we had cut back the position. So yeah, how you do one thing is how you do all things is a great way to assess not just management teams, but also investment managers. I don't know why you would ever put serious capital with an investment manager that you didn't do a deep dive on their background.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“My wife Megan says all the time, how you do one thing is how you do all things. If you're polluting rivers behind your factory, I can only imagine what else you're doing. If you're cheating in other parts of your life. So yeah, this is critical. Look at that.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“You can buy weather pattern data. Everybody knows you can buy satellites looking at parking lots. I mean, this stuff has been well written about some of that is useless, some of that is useful. A lot of it needs to be overlaid with each other. So looking at the parking lot today versus exactly one year ago may be completely useless depending on what the weather was like the prior year, whether it was raining or sunny, what the holiday was, was Easter earlier or later that month. So these things, they get complicated very quickly. The last piece I would say is I remember talking to somebody who has a very large organization and they talked about big data and we were talking about data lakes. They were going on about their ability to scrape their data. We are the opposite. We talk about little data. We want to go find that one thing that's going to drive success or failure and bring a lot to bear on that one thing. And that is where we spend all of our time.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Have to do both. So we have plenty of examples on investments over time where we just go out to the stores. You would survey a bunch of doctors. You could do a survey where somebody fills out a multiple choice questionnaire, but a lot of times more valuable surveys are, hey, can I ask you a few questions? You just ask them, hey, what do you think of this? What do you think of that? But like all things in this world, there's shared learning, but there's also a lot of copycat. And so people talk and they're like, oh, how did you figure out how to do that? Oh, you visit stores, huh? We should visit stores too. And then things more. And so what we used to call independent research or fact-based decision making then morphed into this thing called data sciences. So you look at now the world of data sciences. I think you can get master's degrees in data sciences now. Obviously 10 years ago you couldn't. Why? There's so much data now and everybody is trying to stay one step ahead of everybody else so everybody knows you can buy credit card data. Everybody knows.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“How did you sense over the years that the market was either incorporating or not incorporating this type of varying information so it's boots on the ground 20 years ago and now it's you're looking at your computer and web scraping and checking in on AI”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“So you can still do that, and we do do some of that. But now so much is sold online, the world has changed, we can scrape and create web bots that get so much information for us, which is rather than a small sample set, a big sample set. And so we can get so much more data from that kind of thing. And then you layer on top of that survey work 23 years ago when we started the fund, you actually had to gather the people. Today, hey, I want this demographic, this income level, this age group, and this type of job. And you can get a database really quickly. And even now, I'm still a little suspect on this. AI can do that for you. You can say, tell me an 18 to 24-year-old would think about this brand or this product. And the AI will tell you, I'm still old school enough, I want to do this survey. I want to ask actual people as opposed to the AI telling me what it thinks.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Or it's 80% of the store on 80% markdown. And so it was that simplistic that we would just visit stores. And so Abercrombie at one point became somewhat controversial and the stock went up and they went down a lot. And I just maintained my conviction because I had enough data points from on the ground showing that Abercrombie was actually selling really well. One of the small pieces that became controversial was people go in the stores and be like, hey, half the store is empty. They've got an inventory issue. Well, what it became was, no, half the store is empty because they sold out everything at full price. And so that was independent research back then.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Thought Abercrombie was going to be that. But part of my analysis was okay, I got to get out to stores. So I spend part of my day going out to Abercrombie's and asking certain questions. And then I realized maybe if I hire two or three high school college kids in different geographies of the country, it could lever my time. So pretty much every Thursday or Friday, I would call them and say, hey, listen, I need you to visit five stores over this weekend. And it's really simple. Here's what I want you to do. I want you to go find Abercrombie. I want you to walk in and I want you to find an associate on the floor and ask simple questions. Hey, are you getting more hours or less hours? Are you guys looking to hire more associates or are you firing associates? Hey, did you get the new line in? When did you get in? Two weeks ago? How's it selling? Oh, you've already sold out half the line? Or, hey, you got in two weeks ago and half the line's already 80% marked down? These types of questions. Look around the store with the best guess just eyeballing it is 20% of the store on 20% markdown.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“So different. It's incredible. The power of technology and how it's changed that aspect of what we do. So you go way back even before I started tromblanc when I was working at another hedge fund. It wasn't like I had some like big idea. To me, it was just like, well, I got to do this. So there was a company called Abercrombie and Fitch, the retailer. And I thought Mike Jeffries was a brilliant CEO. I thought his product was great. I thought he found a real niche for what he was doing. And so I did the model and I said, oh, these guys are going to bang out stores. So what we call the self-funded in retail investing, meaning that they're generating enough cash from the existing store base to open new stores. So the self-funded organic grower. So let's say that they're going to grow the store base 10 or 15% a year and then they're going to put another 10 or 15 percent same store sale on top of that. So then you get to 25, 30 percent top line and then they're going to get leverage. So that's really attractive because if you get a good retailer that can do that, that can grow for a long period of time.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“All of them in a perfect world. You'd find a company where something changed, you'd say, well, the moat around their competence has just increased. I love when people say like, oh, back in the day, Amazon trades at 150 times earnings and they don't generate any cash. And like, what are you talking about? They're generating an insane amount of cash. They're just reinvesting it all back in the business. So we love finding things like that. There's some controversy. So we try to isolate. We try to figure out that one factor. Chris Shumway gave me great advice years ago. He's like, you're not going to outmodel the other guy. We're going to build models. Figure out the one driver that will dictate success or failure to your thesis and then spend all your time on that one thing. And that's what we try to do.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“It could be a new CFO comes in and they have a new financial strategy and things that they want to focus on. It could just be we saw very recently both with Elon Musk and Tax and with Zuckerberg and Meta two great examples of CEOs saying, yeah, we don't need to spend all this money. What did X go from 8,000 employees down to two? And so I think so many companies were like, wait a minute. Yeah, we don't need all these people. So the cash flow that then spits out the other side. And then the last part, which is probably the most important, goes back to what I said about being fact-based decision makers, is what independent research can we bring to bear that is outside of the financial statements, outside of normal financial analyst work that we can bring the bear that would help us make a decision here. And that's where we spent a lot of time.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“It trades a five times free cash flow. It's so cheap. Well, obviously things were changing and Blockbuster ceased to exist. I mean, Blockbuster traded three to five times free cash flow until it went to zero. And so you got to look at change. And change comes in many ways. It could be something as simple as a new product launch or it can be a competitor that launched a new product. It could be AT&T, Verizon, T-Mobile, and Sprint, which is a four player oligopoly all of a sudden Sprint and T-Mobile merge, and now it's a three-player oligopoly.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“I paid $100,000. Well, in Gap accounting, we then get to choose whether we depreciate that piece of equipment over five, ten, or 20 years. And depending on what you choose will impact your Gap BPS. So if I choose 20 years, well, my earnings will be higher than if I chose five years. Well, as analysts, we just want to make sure we're understanding what assumptions were made and bringing everything back to cash accounting. And then finally would be valuation. Okay, what kind of cash do I think they're going to generate out into the future, bring back discount back today, and compare that to other stock? So business model assessment, financial model assessment. Third is we want to know what's changed. So what is changing in the world or what is changed in this company or was changing this company's industry set that will tell us why this is interesting now? It's an old example, but for those of us over the age of 30 might remember Blockbuster. When we started back in 01, I can't tell you how many deep value guys you got to own Blockbuster.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Based off of the financials. Okay, that's a good exercise. So, what would you look at? Well, I'd look at cash flow. How much is cash is being spit out of the business? What's being reinvested back into the business to have it grow? What's left over as free cash flow? And then how are they allocating that free cash flow? Number two, I look at the returns on invested capital. So let's take two examples. General Motors has a lot of CapEx. And so ROIC is lower than, say, Nike, which has almost no CapEx because they outsource all the production to somebody else. So we look at ROIC and then we would look at what we call the ROIC, the return on the incremental investor capital so that the incremental dollar bill that's being reinvested into the business is at a higher or lower rate than the prior business. You'd look at what we call QOE, quality of earnings, gap accounting GAAP accounting is assumption-based. Now, in the real world, we're cash people. Well, I bought that piece of equipment for, I don't know, $100,000.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“I want to compound my own capital. That's been my North Star since we started, which is what would I want to do with my money? The process by which we invest falls into following four parts. Number one is an assessment of the business model. So it's basically if you brought McKinsey into a business and said, hey, is this a good or bad business? What would they do? And this is overly simplified, but basically they'd say, okay, what product or service does that business offer? What competitive advantage do they have relative to their competitive set? And is that competitive advantage sustainable over time? Michael Porter, buyer power, supplier power, these types of things. But basically that's the idea is competitive advantage and why is it sustainable? Part two would be an assessment of the financial model. And here to make it a little more colorful, what I say is, hey, Ted, how about we give you the financial statements of a company? We'll white out the name of the company so you can't see what company it is or what industry is, but we'll just give you the income statement balance sheet and cash flow. You have 15 minutes to tell us whether or not it's a good business or bad business.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“I love smoking gun shorts. When you find that smoking gun in the accounting where you're like, wait a minute, they changed the appreciable life of their average asset from I make it up ten years to twenty years in the course of the year. Why would they do that? If they hadn't done that, what would their earnings have been? So you look at that and you say, okay, that's a smoking gun. I got you. Or you told me you rented a car for, would you pay $45 to rent your car for the day? I'm like, it was a really nice car. And I'm like, we're now working on is there a short in the rental business because if that's the price, that's not normal. Just in your travels all the time, we come across stuff and you go, oh, that's interesting. That's different than what I thought. I should follow up on that.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Because they've been cutting rates since nine eleven at a rate into a level that none of us ever could have predicted. Shorting became less and less attractive. The market just kept ploughing ahead for a bunch of reasons. The debate now is why would you want long short? Well, now there's finally a real cost of capital again. And we think it's a phenomenal shorting environment. Why? Because there's a whole bunch of people out there carrying a ton of debt that was basically for free, which is not for free anymore. And so what we believe is there'll be a culling of the winners and losers. The strong will get stronger and the weak will get weaker. The strong balance sheets will get stronger and the weak balance sheets will get weaker. I do think there's a world given what we see today that makes a lot of sense for long and short. That might change again if all of a sudden something happens. They blow up buildings and we start cutting rates to zero again. Now we've learned the lesson that long short might not be the most attractive place. But as it stands now, Longshort, I think, is very attractive.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Positions for a product that is lower margin. That doesn't make any sense to me. But I was like, man, but he's a really smart guy. And I kept pondering that. And then bit by bit, people would say, hey, do you have a long only fund? Hey, do you have a long only fund? And then we had one client, a guy named Matt Stefan, and he calls me and says, hey, I just got this new job and they put me in charge of Long Only. And I want to invest with hedge fund guys who have long only funds. Do you have a long only fund? I said, Matt, we're launching one tomorrow. Why didn't you say I was investing in it? I just saying, do you have one? I said, but no, Matt, we're going to launch it tomorrow. And so we did. In 2011, we launched along only strategy and we went from there.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“I should have seen it in oh one after nine hundred eleven because that's when they start cutting rates and then after 08 they really cut rates and then in COVID man they really cut rates and so if you just sort of looked and said it's easy with the benefit of hindsight right there's going to be inflation and so when money's for free and there's no rebate anymore particularly after 08 in hindsight long short to a degree became less attractive and you know in hindsight long only has become more attractive as evidenced by the markets have gone up quite a bit. For us the long only strategy that we decided to get in was quite simple. I was in a room with a bunch of guys and Steve Mandel mentioned that Lone Pie was going to launch a long-only fund. I was like, why would you do that? That doesn't make any sense. Put it in context. I think Steve's a genius. He's one of my favorite people on the planet. I think he's so smart, so thoughtful and such a nice guy. He's talking about launching his long only fund. I'm like, but you're going to suck up your liquidity in your big.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Didn't know anything about Lehman, but we had some of our investors' money there. And in the final decision, it was basically, hey, we don't get paid to take that risk. You may be perfectly fine, whoever was running Lehman at the time, but the risk we get paid to take is what stocks we buy. And I don't get paid to take counterparty risk. So we took all our money out of Lehman, which turned out to be a very good decision. Then 08 hit and yeah, it got really ugly.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you're right. It was a good time period to be long and short. There was opportunities on both sides. There were things to do. For me, as a manager, I was young. I don't want to say I was insecure, but I was worried about what I didn't know. All knowledge falls in three buckets. I know what I know. I know what I don't know. Third bucket is what I stress about. I don't know what I don't know. That's the part that I was always stressed about. And people would tell you, oh, you should be doing this. And you're like, should I be? We learned a lot particularly about risk management. I'd buy things and you're like, whoa, that stock's going up. That stock's a great investment. And our hit rate has been quite good, actually. But every now and then we're wrong. And so I learned about, hey, what to do when you might be wrong and how to think about that. And then so one through 07 into 08 was fine. It was really summer of 07 we started to get nervous about certain things.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Into 2002 where the market was down and we actually delivered. By our one year anniversary, we had just under a billion dollars AUM and then we grew from there.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“But we used to call around to the companies, what's going on? What are you seeing? Not, hey, how's the quarter, but just what's the chatter out there? And one of the retailers told us that paint sales were just exploding. And what do you mean paint sales? Yeah, we have no idea paint sales are exploding. We don't know what's going on just in the last two weeks. And so we ended up doing a bunch of primary research. And what we realized is that people certainly weren't going on airplanes and they weren't going on cruises. They were staycationing, but they were fixing up their homes. And so it became this thing where people were buying couches and painting their houses and buying flat screen TVs. And so in October of 2001, we bought Best Buy and William Sonoma and all these other retailers and providers that were going to be impacted by this trend. And so in the six months of 01 that we had been in business, we ended up making pretty good money and the market was down. And then that carried over.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Bad and really scary, and the market didn't open for a week, and then the markets open. Then we lost real money. And so it was just really trying and stressful. And I remember one night when I'm walking through Central Park at like 11 o'clock at night carrying my little briefcase, wearing my suit and tie. And I realized I'm walking through Central Park in the middle of the night, and that's probably not the smartest thing. And I sat down on a bench and I cried. And I was just like, man, I suck. And this is just a disaster. I got up, went home, got up at six the next morning, went back to work because next shift, just like in hockey, and I'm never going to tap out. If you've seen the movie Officer and a gentleman, the peak scene where he says, why won't you quit? Because I got nowhere else to go. Burn the ships. That's just the way I was wired. It's like, okay, let's get back in there. And then something really fascinating happened. Look, 9-11 was a horrible thing. The Marcus did what they did.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we started July 1st, two thousand one. We had just sort of me and my brothers who gave me a bit of money. Who else? Bob Jaffe, Glenn Dubin, I think Chris Shumway, Scott Bomber, Joe Dowling. I mean, there's a list of people who give me bits of money. And then we took non-friend and family money, August one. And so I think on August 1st, I think we had 72 million AUM, which was pretty good. I was pretty happy with that. The problem was we had lost money in July. Not that I'm a monthly investor, but I was just so stressed out and obsessive. I just didn't want to let people down. I wasn't scared of failure for my own sake. People believed in me. They gave me their money. I've got to produce. So we lost money in July. We lost money in August. We were losing money in September. And then you found out that 9-11 was happening. And of course, I didn't have a TV set in our office. I didn't watch CNBC. It wasn't what I did. And you found out what was happening. And then it was really bad.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Was that I'd fund the business for 24 months. And if by month 25, I was not cash flow break even, then I should shut down. Interestingly, there was a friend of mine, I won't mention his name, but he started a fund. And about nine, twelve months into it, he called me and said, unfortunately, we're shutting down. I'm like, what are you talking about? Your numbers are good and you got a great process. You're a smart guy. What are you doing? And he said, just tired of arguing with my wife because every month we take money out of our bank account to fund the business. I'm like, but did you guys agree on that up front? He was like, he's like, no. He goes, I thought we'd raise a bunch of money by month one or two. I was fortunate again that I'd been around smart people like Ivy Business School that they had coached me on that. That's how you think about starting a business.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Terrifying because I take in my life savings and put it into this business. I took down an office space. I got computers, chairs, desks. I hired five or six people. You had to pay lawyers. You had to open counterparty agreements with all the people on the street. There's a lot that goes into it. And then you had to go raise money. I had a bit of money and I put in the fund. And my view was if I could just do 10% on that money a year for the rest of my life, I don't need a lot of money to live on. I'm a pretty simple guy. That was my thinking at the time. And so if no one else invests, I'm good. Number two was separate from that money that I put in the fund. I'd invested a chunk of money into all the things hiring people and desks and all that sort of stuff. And there would be a burn rate. And my view was when you start a business, how long do you want to fund it for before you pull a plug? Know in advance what the failure plan is. And so what I conclude.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Start to get frustrated a little bit, the firm that I was at. There was some change going on. I remember I had a conversation with somebody standing on the street in New York, and I said, I know I'm going to launch my own fund. I just don't know if now's the right time. And the quick answer was, there's never a right time, so get going. And I was like, you know what? That's a good answer. And so I got going.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Observing everybody else and how they did it. And I'd be like, really reading charts helps you pick stocks? So telling me that the relative strength indicator is breaking out above the 200-day moving average. And that may work for someone. I'm not disparaging them. But that doesn't work for me. I prefer to figure out a company's competitive advantage and why it's sustainable and how much cash they're going to generate over time and figure out a mathematical valuation and then bring really deep research to bear as to why I think I might be right.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a lot of talking. There's only so much research. So I found that the really well run buy side shops did light years more deep research. In my observation, and this is almost 30 years ago, but back then, people did research, but they also spent a lot of time talking to clients. So there's only so much research they could do. And so that was the biggest observation. And actually flash forward from the sell side and then from ultimately my buy side experience. And the reason I started Metal Fund is I just want to do it the way I want to do it. There's many paths to the waterfall. There's many different ways you can invest. But I just realized that I just want to do it my way, the way that I invest. I have a very specific process by investing. And that's the only way I believe it. And that was it.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's wild because I had no clue what I was doing. I'd never worked at a bank. I never worked in finance. I was very good at accounting. You know, I'd gone to the Ivy Business School at the University of Western Ontario, phenomenal school. And to do that, they're very rigid about your accounting skill set. And I was good at accounting and I enjoyed it. But I hadn't done that kind of financial math in years. And so go back to think about, okay, how do you calculate working capital again? How do you do days receivable, days inventory, doing all this stuff again, and then just learning who's who, how does it work is one of these things I was in the deep end not knowing how to swim, but you eventually figure it out.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Not linear, you learn in life that your friends and the people are close around you, you go with them for advice. And so a lot of the people that I've mentioned gave me advice, tried this, talked to this person, my brother was extremely helpful. I have another brother, Peter, who's also very successful, very smart guy. So bit by bit, I start to understand that there was a buy side and there was a sell side. And which would I prefer doing? I was fortunate enough to get offers on both the buy side and sell side early on, but I decided that I should go the sell side so I could learn more about the buy side. So I joined the sell side and to me that was a great perch from which to leap. So now I go out and meet with all the clients and then I could decide if A I want to do that and B with who I'd want to do it.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“In those early years, you had this idea, because some of your classmates from school were doing this thing that looked interesting. How do you get from you're in this operating rebok to you're going to become an investor?”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“They knew it was going to be successful because they had done so much research and had been so disciplined and so methodical about executing it. And so one of the things I learned from them that we still use today is we want to be fact-based decision makers. It's not just your opinion of my opinion is that stock's going to do well. We need judgment in investing, but it's what other research can we do outside of reading the cues and K's, building a spreadsheet, talking to the treasurer, CFO, or the IR. That's just table stakes. Now, what can you bring to bear beyond that? And that's where we get creative. And that's been a large aspect of how we invest. And frankly, if somebody looked at our business and said, well, what's one of your competitive advantages? It would be our independent research aspect.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Great question so much two parts. One is just running a business and how hard it is in my travels on Wall Street and Infinance and Sellside and Buy Side, people's assumptions about, oh, well, you just do this. Take those machines and put them over here. Take the equipment out of wherever China and just move it to the Philippines. It's like, it's not that easy. Oh, that's a better product. So just get listed at retail and off you go. No, you got to go sell it to a bunch of different people. The creation of product and packaging and manufacturing of it and listing it and convincing consumers to gain the product from the factory to the trunk of your car into your house to use the product and then have you come back to the store and buy it again. That's really, really hard. The other aspect that I learned, and this was all Procter& Amble, was just how disciplined they were in executing their business. They hated mistakes. By the time they brought a product to market”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“more important to me as what they were doing intellectually every day. It just seemed really interesting. They were looking at the world differently. They were thinking differently. And so I slowly evolved to, I think that's what I want to do, to leap to the end. The reason I still do it today is some people like doing crossword puzzles. To me, this is just doing puzzles. I'm excited to go to work every day and solve another puzzle.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“And it was only after I'd been at Reebach for about three, three and a half years that the slow wheels in my brain realized like, wait a minute, there's something else that I see a lot of my peers doing that was interesting. So you go back to this was the early to mid-90s. As you know, hedge funds were starting to become a thing. And I think in my year 800 people graduate HBS, I think off the top of my head, I think roughly two went into hedge funds. I'm going to get this late wrong because Ian McKinnon, but I think he started in 94-95 with the Ziffs. But you had Chris Shumway, brilliant investor and my brother Tim, another brilliant investor were the two guys that I remember going to hedge funds, but very quickly you had a bunch of other guys, Joe Dowling, Scott Bomber, one of my roommates, Mark Bader, Gona Capital Group. And so he started to see all these people going to hedge funds. And what was interesting to me was not just that they're making a lot of money, certainly more than I was making at the time, but what was”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, obviously, I didn't because I didn't take investment management. I don't know about your year. So there's a bunch of people who may have applied for the investing course and didn't get in. Doing investing is my occupation was nowhere in my lens. I viewed myself as an operator. That's what I want to do from a young age. So even when I was in college, I had no guidance. It's like, okay, what do you want to do when you graduate? I'm like, I don't know. I just know I want to work in a business and eventually one day run a business. And so a professor in college said, well, Procter& Gamble is one of the best-run companies in the world. They only promote from within. So go work at Procter& Gamble. They're incented to develop you. If you're any good, they'll make you a brand manager and you'll be running a business. That's what I did. And I became a proctoring al brand manager. And then I got an HBS. I love Proctor. Everything I know about life, I learned in the hockey ranks and everything else I learned. I learned to Procter and Gamble. They were phenomenal company. But at HPS, I decided to try something different. I ended up at Rebach. I had a great experience there.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Historically one of Canada's great exports was hockey players. One of my siblings was a particularly good hockey player. He ended up down in the US to play for a US college. One thing led to another and that some point he was applying to the Harvard Business School and he said you should really consider applying the Harvard Business School. I was working in Toronto at the time. And when you applied to HBS, there's different rounds, one, two, three, four. I think he'd been accepted the first round. but harassed me enough that I eventually applied, I think, the third or fourth round. And so I figured, okay, if I get in, then I'll seriously consider going. And so we both got in. We end up going the same year at HPS, which was a great experience also for a zillion reasons, but one of them personally is because we went the same year and it gave me a chance to reconnect with my brother for a couple of years.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Little Canadians are nice people. It's a beautiful country. People wait by the red light before they cross the street. Education is heavily subsidized. Healthcare is heavily subsidized. Canada is a beautiful, beautiful country with beautiful, beautiful people.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I've learned stuff from those guys just the way they think about a little kids hockey game is so insightful to me. I remember Mark saying to the kids, you got to win every battle. I feel the same way about investing. I got to win every battle. Every single thing that you do. And so hockey has been so fundamental in how I think about life.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“Everything. Honestly, and I can't exaggerate this enough, so much of what I know about life comes from hockey. All the lessons you learn, you try hard, that your teammates are relying on you, you get knocked down, you got to get up. Every shift is a new shift. That's probably one of my favorite ones. All of us have something go wrong in life or go wrong in a hockey game. It's because of you that they puck one in the net against your team. You know what? The next shift is a new game and everything starts again. And I keep learning because I think you know I've coached with a bunch of different guys.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“There was a lot of commotion in my house. I think my parents had five kids before the age of 25, and we were Canadian and hockey was very important, and there was a lot of snow, but we had a happy childhood, and I was very close to my siblings and my parents. What did you tell me?”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source
“I guessed on today's show is Brett Barricet, the founder and chief investment officer of Treplant Capital, a 23-year-old long short and long-only firm focused on deep fundamental research. Brett works with the senior team that's been together for almost 20 years. He's invested through rising and falling tides in the industry and ups and downs in fund flows. He's also watched many friends and peers retire in that time. Yet he keeps skating to where the puck is going. Our conversation covers Brett's path to launching Tremblan, including lessons from hockey, operational experience, and the early days in a terrible market for the strategy. We discuss the long short and long only models, primary research, portfolio construction, cell decisions, risk management, compensation structures, and Tremblan's launch of TOGA.”
2024-05-20 · Capital Allocators · Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386) · IDENTIFIED FROM THE TRANSCRIPT · source