YouSaid · the spoken record

Charles Van Vleet

lines on the record: 78
first: 2022-11-28
most recent: 2022-11-28
sittings or episodes: 1
sources: podcast

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“I made a couple of bad moves in my career. I've probably had seven, eight jobs, I've been fired from two of them or laid off, same thing. Oh, it all feels horrible. But in my young years, my 30s, I really should have stuck by a couple of, you know, in the business, my rabbi, you know, somebody who would have guided me and protected me from the, particularly when I was in the investment banking world, which tends to be much more cutthroat. So I really encourage 30-year-olds. If you find somebody who's a good rabbi, stay with it. Don't get tracked away by the higher pay or the better work-life balance. Working with the right person, the most critical thing.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, goodness, my father was HVAC mechanic. My mother was a nurse, and they both had this just incredible can-do anything, can't fix anything, can take on a new project, take on a different skill set that they didn't have before. We can figure this out. Just jump in and start figuring it out.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“I try to be the last to speak, right? You wrote about that in your book, of course, the importance of leadership is to allow others to speak first.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Goodness my wife of thirty three years would say that's my husband, often wrong, but never in doubt. She's right. My strong opinions and enthusiasm sometimes can be, I think, blinding to the conversation, and that's not always healthy.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Real estate because you can touch it, you can taste it, and it's extremely idiosyncratic. Again, there is no ubiquitous single market, so it's, I find an exciting space.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Bill Gagne nineteen seventy nine got me started and he was my professional rabbi in banking and asset management. I was portfolio manager for 25 years after that. And then in 2005, Robin Diamante, who allowed me to be the rabbi coming over to the allocator side as a corporate plan sponsor. Robin is now still CIO of Raytheon Technologies.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think I'd be remiss. I'm sure we're all very frustrated about how we tend to box people. I do it myself. We tend to box people into political or economic constructs instead of being a little bit better listener. I know it's a constant struggle for me and for all of us. So that's, I think, a lesson for all of us to think about.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Investing my biggest pet peeve is the word yield. I think anybody should spend half a minute looking at the math of how you calculate yield to maturity. It's bad math. It's horrible math, this idea that you're going to reinvest at the same rate. So of course I pay attention to income returns and I pay attention to capital gain returns, but the word yield is just really bad.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“My father was always a craftsman, so I have this beautiful, dedicated workshop full of table cells and band saws. All day long we're making spreadsheets with whatever you think they're worth today, they're worth nothing tomorrow. It's always nice to make a chair that I made 20 years ago and still there”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I started back in 2013, and so I was in the middle of this whole pension protection act where a lot of people were pursuing LDI. We were increasingly an outlier that we were not. had a lot more hedge funds at the time and had with mixed success. We were evolving and we continued to evolve. Certainly don't know the answer to all this, but I don't think that capitalism or return opportunities are dead. It frustrates me so much for people to say, gee, it's going to be low for longer returns. People are reading the wrong paper. You know, you need to, maybe you need to start to pick up a little bit more Silicon Valley reading or biotech reading. There's a lot of exciting things going out there to begin with. Nuclear fusion. We might be just 20 years away. Talk about upsetting the apple cart. We might be just 20 years away from commercializing nuclear fusion. How exciting?”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Just have liquidity available. Like I said, selling my treasuries for futures at this time, building in things, I think, that are asymmetrical in risk, building all these little nickels invested so I can push in a dollar, making sure that the team we all travel quite a bit, everybody walks away with the knowledge, here's how much money we need to move to increase our equity allocation by 2% or to decrease our bond allocation by three years. So we just have those in the back of the envelope so that we're not wasting a lot of time on getting together on the phone. Everybody knows in this kind of event here is here's the kind of capital we need to move.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Most certainly since post COVID, because we just got used to this, rates are low and there's no volatility, so we can take on this leverage. So I think there's a risk out there, and I think somebody's going to break because of the dollar. I simply can't import food. I can't import fertilizer. I can't import energy because I just don't have access to dollars. And so therefore, I'm going to begin to sell my dollar reserves. This is a problem. Something is going to break out there.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you've read your Hyman Minsky, we are potentially coming up to a Minsky moment here. Remember, Minsky talked about three things. There was hedging, speculation, and then Ponzi. And then after that was the Minsky moment. The markets became so used to having no rate volatility and no real rate risk, right? Real rates were negative that you began to get used to it. So they built up leverage in the UK, they built up leverage in Japan as we take away this low rates and no rate volatility, stuff's going to break. And we're seeing that now. You know, I grew up in California, Ted, where California has, you know, hundreds of earthquakes every year, a dozen of which, you know, maybe you could feel in different parts. And I always remember growing up saying lots of little earthquakes is a good thing because that means it's not storing up that energy for one big thing. We kind of didn't get any earthquakes for the last many years.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, so I belong there's a group called SIBA Committee for the Investment of Employee Benefit Assets. There's 105 of us and we meet four times a year. I have a lot of respect for my peer group in those meetings. We mostly talk about governance, accounting, regulatory attracting and retaining talent. We don't talk so much about investing because everybody's often a different investment path. And I think that's, I think the endowment foundation equally spends a lot on governance and accounting and perhaps a little bit more investing as well.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Down 48% year to date. This was two weeks ago. How do you call that risk reducing? They said, well, your liabilities are also down. I said, no, no, no, that's not how we invest. We're investing for total return. I said, you know, I just really want to scrap those words. Guilts are just guilts. To call them risk enhancing risk reducing is you're setting things up wrongly. I want my board to look at the holistic of just where in the cap structure do you want to participate and let's not put labels on it”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“My peer group is kind of down this path to kind of giving away their job. And again, it's not the CIO, it's often the CFO and has concerns about contribution volatility, balance sheet volatility, says this is not my core competency. I make widgets for a living. Why am I also running this hedge fund over here called a pension? I fully respect all those. But my pre-group is very deeply down that path. I'm the chair and trustee of three UK plans. The UK were required to have a consultant and we're required to have participant beneficiaries on the committee, which are two problems that also led to this little fiasco in the UK around their LDI programs. You have too many amateurs in the room. And so you can't move fast enough in these committees. But the consultant there was always, they'd always take this my portfolio and they divide it into risk seeking and risk reducing. So last time I was there, I said risk reducing, you have guilts on your risk reducing guilt.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“While most of my peer group is again down this LDI path where cash match your portfolio, your assets with your liabilities, and then you build this up to 105%, and you, as you know, it's called pension risk transfer. You give your liabilities and your assets credential. You know, we're just not in that school. Prudential provided me out a couple years ago to speak at the conference. I said, well, listen, I have a lot of respect for you as a firm, but as you know, I don't practice LDI, this pension risk transfer PRT thing. They say, well, that's exactly what we want. So I got up and talked about how do we approach why do we feel this way? Why are we still absolutely return focused? But I kind of told this audience of 300 people potentially. I said, but, you know, things change. A new CFO might have a different opinion about this. If I ever transfer my assets to you, though, it's going to be a staple deal. Well, I had 300 people going to say a staple deal. Yes. Stapled in the last page of that contract is my resume. You're taking my assets, you're taking me too. I don't understand a lot.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“I've always been concerned about board tenure. I've always been concerned about litigation and rules around child labor laws and around civil rights and around OSHA standards. And I've always been concerned around if I buy a building, is it sitting one foot above high mead tide in Miami? How is that something new? We've always been concerned about environmental issues for buildings in Miami and companies that have poor voter access, proxy access, and companies which have”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's probably okay to mention we're invested in Rourke Capital, Rork Capital. Invest a lot in franchises. And one of the franchises they apparently invest in is RB's fast food chain. RB's serves chicken sandwiches and pita was not happy with the way Arby's slaughtered their chickens. So Pita got a hold of the list of who are the LPs. And I was one of the many LPs that overnight started getting a flood of emails from PETA. As an investor in this fund, you are enabling humanity to cruelty to animal behavior. And so they're sending emails off to my chairman. My chairman's calling me in the middle of the night saying, what are you doing down there? And so this is where activism can flow back to even an LP. These are some of the ESG pressures that are still, it will flow back through private company formation as well. Much of it, Ted, is it's old wine and a new bottle. Of course, I've always been concerned about shareholder proxy access.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have a couple of great long time relationships where they will come to us with ideas and say, gee, we're looking at this. You think you'd be interested in seed capital, or we'll reverse inquiry back to them. I'm not going to go to four guys in a shoebox and give them a mandate where they're using derivatives and prime broker. And, you know, you go to large firms, you give them a sharp knife, and you trust them to use it. I have no problem seed capital, something at Wellington or seed capital, where it's a room full of adults that can handle a sharp knife.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“You populate your portfolio with a bunch of specialists. How do you go about finding the interesting either adjacencies or the things that you said earlier that fall through the cracks when the people that you have outside are really just looking at their own thing?”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Lot on the strategy. I have them the credence behind my desk. It was given to me 20 years ago by good friend Claire. It's one of those military plates where the corn separated from the peas, separated from the mashed potatoes, separated from the meatloaf, you know, with a little dividers. That's the way I think about my portfolio. I do not want to hire somebody to manage my corn or to discover the next day they mix it up with mashed potato. In other words, I don't want my equity manager saying, gee, I didn't like equity, so we built up a 10% position in cash. That's my job. I don't like my fixed income guy saying, well, I know that you hired me to manage a portfolio of US mortgage bonds, but there's this great thing going on with Danish mortgage bonds. You're mixing your meat loaf with your potatoes. So it's very, very important to me that managers stay in their box. So for that reason, we don't hire any multi-asset managers. We don't have any macro hedge funds because I go to bed on Tuesday thinking I got a portfolio of this many people.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sellers and GP led secondaries and LP-led secondaries. So these are people who, for whatever reason, they have strong desire for liquidity. I'm more than glad to stamp and say, you know, I'll bridge that for you. And so we call a motivated seller portfolio. So when our motivated seller portfolio, we have these closed-in funds.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is all very seasoned. We've all been around for a while, so we don't need a consultant to bring us three or four people. I advocate for my team to be out, involved in the community. We have open doors to anybody and everybody who wants to come in and have coffee. I consider that to be my job is to invite and listen to smart people all day long. I'm surrounded by these brilliant people willing to come into my office coffee. What's not to love about that? We're a good size. We're about 10 billion in defined benefit assets. If I was 1 billion, I might not get attention. If I was 100 billion, I have that diseconomy of scale. So I can still get involved in things like we've been for years involved in a great strategy out of Richmond, Virginia that only buys closed-in bond funds. So I call it closed-in equity funds and bond funds. I call it my provided liquidity to motivated sellers. That's a great area to be in. So you get motivated sellers in closed-in funds. These are retail sellers. You get motivated sellers in BDCs.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“These are mostly kind of small niche managers, to be honest. We tend to be a little bit more tactical than most, and it isn't that we're any smarter or insightful. A lot of it is because we're at a size of 10 billion. I can do that. Again, I really feel for the people at CalPurst, who you just can't move the needle, and I feel badly for the firms that are 500 million to a billion, you're not going to have enough staff focus on it. So eight to ten, I feel lucky is a great sweet spot”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“I warn them, so they have to be aware of it. They're glad for nickel, they're happier with the dollar, but they'll take any of it in between.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, there's easy six different strategies. We will run it up to a dollar like we did in March of April of 20, and then we ran it back down to a nickel in 21. And so we continue to sit with those. I think there's often a kind of overlooked part of the strategy. You need to have the structure set up.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“And treasures or in the equity market. I have cash on hand. So some of this is just thinking ahead of time about work and I find cash and the other is Ted really important. I just will have a lot of niche strategies that I leave a nickel in so I can push in a dollar later. So for example, I keep a nickel in fallen angels. I keep a nickel in these closed-in funds. I keep a nickel in BDCs because when you get a banana moment, you just can't move fast enough to get the legal docs and get the IMA and get the signature and get the bank account set up and some of these things you only have a two-week window. So you need to keep incubating these small things along with liquidity ready for those moments.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there's an environment building up here. There's something clearly going on in the US Treasury market, lack of liquidity. We're getting gapping, price gap that we haven't experienced before. Some of this has to do with, like what happened in the UK, you need to sell what you can sell for margin coal. You're going to sell U.S. treasures. It's happening in Japan. Japan just did another 25 billion worth of intervention. That's the second 25 billion in order to raise capital for that. They're selling U.S. treasury. So we have something going on in the U.S. Treasury market where could we get another one of these taper tantrums? So we have been actually just taking treasuries out of the market and replacing them with futures being more liquid than treasuries in one of these taper tantrums. There's an opportunity cost to get rid of treasuries and buy futures. There's a 25 to 50 basis point mismatch futures being expensive relative to cash, which is quite common. So it's costing me 25 basis points to fit the basis points to sit with futures. But I have that now that if we get one of these Ben Bannon appeal moments.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Intrinsic security is probably at the top of that list. We've been in and out with some success in converts. We're back in at this time again. It's one of those things I think has an asymmetric reward around it. We've tried some quant strategies, you know, back tested quant strategies. Boy, you only make that mistake once, you know, buying a back test. And you think, well, I got Mark, I got smart quants in the room. They'll never let this go too far astray. So you learn those lessons the hard way.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think the insurance business property casualty in particular is just going to be impossible to judge how much premium you should charge given the climate change issues. Who would have thought you have wildfires from California? So it's a real challenge, I feel, for those underwriters. So there's places we've tried, cut my losses, move on. I have very little memory for the book cost on things. I spend no time thinking about it. Just pull the ripcord and move on.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“My CFO correctly will chastise me correctly. Again, in all fairness, when he pointed out that, look, you spend a lot of time, maybe you spend too much time on these little things, but you're not going to move the needle, and you should be spending more of your time on, these big, chunky things, your US large cap, for example. And it's a fair point there. But again, it's these small things which can grow into big or these small things which have a greater dispersion of opportunity around them. The dispersion of performance in large cap core is very, very tight compared to dispersion around private equity or hedge funds or real estate, the dispersion. You're rewarded for spending time there. But I take your point. We've tried things. For instance, we tried insurance link securities, ILS. It was mostly a portfolio of quota shares. It was, you know, LIBOR plus 800 or 900. And it just loads the first year, lose a little bit the second year, make a little the third year, and finally just pull a ripcord. I've come to recognize.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“How do you balance the desire to have certain things that you believe in, certain micro strategies with the other broad opportunity set that you're not investing in? If you're in data centers and cold storage, there's a lot that you're not investing in, almost kind of like active management versus the index across the portfolio. How do you bring that together?”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Good point because there's a lot of bid offer involved, you know, set up time and disposal time. So yes, I think these things need to be done with a three to five horizon for real estate and for CLO equity. That's not a six-month trade. That's a three to five year opportunity.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Just take such a broad portfolio of single B rated loans and throw it into a CLO structure, lever 10 times where I don't have any idiosyncratic risk because it is so well diversified. Those are two great areas for us right now that we lean into.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we have people come pitchless buildings or stock range buildings time to buy ourselves. I'm a big advocate. You find people you trust and you, you know, they earn that trust. They keep that trust and you're willing to work with them. We have advisors who come in with advice about what sectors of the economy or the country. And this is all US-based. You know, real estate is one of those places where you can still have, I think, a lot of idiosyncratic opportunity. There is no such thing as one real estate market. Now, the market in Richmond, Virginia is very different than Duluth. And so the two places I like going here right now are where you get this idiosyncratic opportunity in real estate. The other place, Ted, I think, is great was where you have such incredible diversity. And that's in single B-rated CLO equity. So CL equity, we gather 200 single B-rated names and throw them in. And I buy the bottom slice, the equity slice. So just the opposite of real estate.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“We outsourced a firm called Stockbridge Advisors. We outsource lease underwriting maintenance. Is it time to repave the parking lot? What's the TI, the tenant improvement budget for the new industrial tenant? So those are easy things to outsource to a good expert.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“I have Keith Watson on the team's pretty much focusful time on alternatives and real estate's a big part of it. In fact, he and I are off to San Francisco tonight. We're going to tour some properties out there that are already in the portfolio, but we make it a habit to what a real estate guy's called the Walk The Tar Bea Beach. You have to go and see the product”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're 80% direct, so we own a portfolio of 20 garden style apartment buildings and data centers and a lot of industrial warehouse and cold storage. But for the other 20%, we have funds. And those funds tend to be pretty focused where we have some private REITs, again, that are focused on cold storage and data center or private reads that will focus on value-added multifamily coming to buy a B grade and fix up to B+, not an A, just a B plus, because you don't want to compete with new product. These are areas, I think in spite of what's going on here right now with a little bit of softness in rents, the shortage is there, unless household formation, household formation slows down when people have less kids, we have less immigration, people stay in bad marriages longer, and those things happen around recessions. And so we will see a slowing of household formation, but household formation running at a million units a year. We're only making 850,000 a year. So the shortages.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have very few hedge funds. I've read through your book, I'm familiar with your background. If I'm looking to prove my one ten upside, my naughty downside, that's where a lot of people say, well, that's where hedge funds can help you, particularly on that downside. I just think it's an expensive downside. We talked about my best downside is structurally long US dollar. That's actually positive carrying. It's not costing me one in ten to get that downside capture. So I just can't get past the fees. An area that we had a lot of and we're leaning into in this environment is real estate. And we specifically think there's just a structural mismatch. I think data centers, cold storage, that's a structural mismatch. Multifamily, single family housing. We've been underbuilding for a decade. It's a structural mismatch, so we continually lead into those sectors.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think the union bug is a perfect example. We're really at an interesting junction here around some of these issues.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Just move on to the next one in that relationship and move on. All very cordial. And people have different focus. I congratulate KKR the other day. We got a couple of small things for KKR. I'm making a practice, and everybody comes in. I count how many pages in the pitchbook before the word ESG shows up. And I said, congratulations, you're the winner. It showed up on page one. And so we had a chat. They said, well, they get a lot of pressure, particularly when they go to continental Europe. And I said, well, I'll make a forecast for you. I said, I think someday, just like back in the 80s, you used to have to carry two business cards, one with a bug on it, union bug, and one without, and never get them mixed up. You're going to have two pitch books. You better not bring this pitch book to Texas.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“And now back to the show. How do you handle these various challenges? There are the things that you believe and you would like to see through your manager. And then there are opportunities where you either have to decide you're going to sign up or move on to the next one.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, probably best not to name affirms. I'm going to a mid-cap buyout fund raising $500 million with $500 million with a Coinvest. So they're going to go hunting for a billion dollar kind of opportunities. So they are kind of forced into what is perhaps an unnatural part of their cap space because they'd love to spend the $500 in co-invest. And that co-invest that I'm subsidizing and is being a distraction to and perhaps dragging that 500 million GP into a territory they're not comfortable with. So we spend a lot of time talking to them about is this forcing you into hunting grounds that is outside of your comfort zone? And of course, there's no, no, we got this handled, but those are the kind of challenges, I think, that is still going on.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Curious how you reconcile the theory that these other LPs who are doing this co-invests are free riding on your capital with the reality that that's happening. And so should you consider figuring out how you participate pro rata so there is no free riding going on?”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Looking at who are my fellow LPs? We are in a partnership together after all. A lot more attention needs to be paid to that.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“We will go into a mid cap buyout firms. We do not do any convests. I'm simply not large enough for that. I don't have the expertise. Because of that, I'm not real thrilled when our GPs will raise $500 million and then raise $500 million worth of opportunity for direct co-invest. And my pushback on that is, well, so I'm really just subsidizing the other guy who's taking the co-invest slice. He doesn't care so much about the 20 million that he invested. He cares about the $500 million worth of access and co-invest. So the firm has become his sourcing agent. And I'm subsidizing the whole thing. I think there is a little bit of rub between medium to small guys like myself and the large state plans. The large state plans like CohenVest, the large state plans can cut their own conditions, large state plans are going to push back more on ESG things that is less important to me that they have a different set of stakeholders than I do. They have different conditions they want to bring. So I spend a lot of time.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Couldn't be better. I think they're all running for opportunities, ways to get this into not only the 401k channel, but into the private channel. And I challenge people sometimes to think about how they spend their money every day. You know, I woke up this morning and I bought coffee and then about a paper and then I stopped at local bagel shop and then the wife sent me out to the local fish store. You know, I spend, gosh, probably easy 40% of my money on private firms. Now that might be a private firm, you know, one guy with a fish shop. It's a private firm. We've all forgotten how prominent a part private firms are in our life every day. And so it is, as you know, very well, Ted, it's exploding with opportunity now trying to figure out ways to get into the retail channel.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“Have some growth and buyout mid cap, and we just never went deep into venture, you know, seed or A round, partially because we just, you know, we're not interesting money to sequoia and to Sandhill Row because Sandhill Row says you're not going to be here in the long run, as I like to remind my team, I said, I was chatting with the actuary the other day and was reminded that in the year 2092, we're out of a job. I mean, one way or another, guys, this is, you know, that's when the last participant dies. And so, you know, Sandhill Row knows that as well. They got corporate money just does not necessarily sustainable, particularly those down in LDI path, that are going to give the money back to prudential. So I'm not going to necessarily get into the best venture. And so we had never pursued that.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source
“We really only talk about two kinds of fixed income we have rates and then we have spreads my favorite spread product as I said before is leverage single B, very little IG and my favorite rate is going to be U.S. treasuries because again I'm not completely without thought to my liabilities, but that will speak more closely to my liabilities US Treasury rates.”
2022-11-28 · Capital Allocators · Charles Van Vleet – Thinking Differently with Pensions at Textron (Capital Allocators, EP. 283) · IDENTIFIED FROM THE TRANSCRIPT · source