YouSaid · the spoken record

Chas Cocke

lines on the record: 80
first: 2021-11-29
most recent: 2021-11-29
sittings or episodes: 1
sources: podcast

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“Was there 16 years, and I would have said that my job there for the first 10 years was find the best investors in the world, give them as much money as possible on the best, most supportive terms possible, and get out of their way. We were the biggest investor in Nomad, and we were a third of their capital. I think we were their first institutional client. They didn't even have $100 million. We went through a journey with them that was mutually beneficial and I learned a ton, those guys Nick and Zach, have become legends in my opinion, and quite well earned. So that's my first 10 years there. I love it, but increasingly I realize I would bet that if you looked at a $10 billion endowment in fiscal year 2021, it would shock me if they didn't pay at least.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“Just reading the news. But that to me was the most colden time for me. And so protecting that at all costs became part of my life at Investor. And if you talk to other people there, they'd say, I have this ridiculous calendar system where basically I made it look like every day was fully blocked off. Nobody would ever schedule a meeting without coming and asking, are you actually busy or are you available? But you have to do what you have to do in order to be effective and owning your time is owning yourself.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“We first started, I used to joke that out of 100 units of my day, I would spend 10 units talking to people outside the firm, 10 units talking to people inside the firm, 10 units thinking about client stuff, and 70 reading. And that evolved over time as the business became more complex. And also just as you know more people and more people therefore want to have calls on your time. you know, we went from three or four people to 43 or 44 people, I would say more and more of the business needs took up my time. But my goal was always to really work hard to preserve that reading and thinking time. It's what gives me the most energy to keep getting after it. Reading and thinking, of course, you know, it breaks down into all sorts of things, whether you're reading manager letters or reading 10Ks or reading conference call transcripts or”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're getting them earlier and earlier. We also wanted to play more and more of a true partner role. I don't like the phrase limited partner. I understand that it's a legal construct, but our view was we're partners. We can be consigliary, we can be a source of strength. We have different roles for sure, but we absolutely want to play a role of advisor, protector, and of course, a more traditional LP money provider role.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“Before they make the leap, so that when they do, we can empower them to build their investment partnership in a way maximizes the 20-year return, not the 20-month business. And for a lot of managers, that's not going to be the right answer. They really are more interested in the business side, but that becomes its own filter. So I would say coming back to your question, yes, we became very interested in the purists, the people who said the number that matters to me is not my bank account. It's my 20-year net return. If that was the thing that woke somebody up in the morning, then they became very interesting to us. And that also totally changes the type of conversation you're going to have. The 20-year net return is really different than the 20-month business, but it's also really different than the 20-month gross return or 20-year gross return. So that opens up a whole new series of conversations we can have where as we”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“How it was organized at the end, and I started to realize you know what's happening is the Goldman Sachs and Morgan Sanleys of the world are getting these guys in their cap intro department and they're creating their presentations for them, which it occurred to me what that really meant is they're building a marketing pitch around what sells maybe more than what is optimal for that fund manager or for our long-term returns. So I would joke that part of our job was to get there before the corrupting influence of Wall Street and see if we could help protect their vision. And so that became a big part of our research effort was we need to understand who the number two, three, and four are at these firms that we love, whether we're invested with them or not, and figure out the next generation is going to come from this person. And we want to have our relationship with them buttoned up years.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that increasingly led us to make a strategic decision to get earlier and earlier in the manager's life. A manager would come to Charlottesville, show up, and they would have this amazing PowerPoint deck, and we'd go through it. And then the next day, another manager would show up and they'd have an amazing PowerPoint deck.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, it definitely led us into concentrated long-term oriented, hardcore fundamental investment firms stylistically, what I would say started out as long short in one bucket and maybe long only in another, those things began to collapse together for us. And I would also say even public-private, you know, we were very early in saying that If the best investment idea you hedge fund manager are finding is in a private business, we're very open to that and we'll help build in tons of latitude for that. And ultimately, that could sometimes put us at odds with other LPs. So we began to realize that our partners were not just the manager on the other side of the table, but all the people who sat in our seat.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“Did that bias towards focusing on the underlying research process of the managers and wanting to know who's doing the work lead you into any particular either style or structure of an investment management organization over others?”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“Now wants to have their own junior analyst. We want to understand who really knows the ideas, who's really doing the work, and where does that reside. So it was much more coming at it from the stock side, so to speak. And so for my first 10 years at Investor, from the investment portfolio standpoint, I led everything that really wasn't either fixed income or private equity and venture capital. I led or co-led with hands.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“Advantage, what the environment that they compete in looks like, how the value chain that feeds into it and then flows out of it evolves, what the implications of that are, how they think about cash generation, et cetera. And while others might think about portfolio management and beta and net and gross exposure, those are things that were interesting to us, but our real angle was we're going to understand it as the investment itself. And so we own a look through portfolio of these underlying businesses in the end. And so what matters the most is how those businesses are coming into our collective portfolio. If there's a strong PM who we're underwriting when she is just leading a three-person team, how does that change when she's leading a 10-person team where each of those 10 senior analysts?”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“Thinking at that time was best ideas win. And we are not going to put tons of top-down structure onto it. We may in the end look at our bottoms up collection of ideas and make some tweaks if it seems like we're missing big opportunities or taking certain kinds of risk. But in general, it's compete for capital, opportunity cost is the bar and ideas need to compete in against the next best idea. So very bottoms up. And the way to differentiate, and for me, frankly, to enjoy it, was to sit co-pilot with our managers from the diligence process on through when we were partners. And that meant if we were going into a meeting with a prospective manager, it might be that we spend three hours talking about one business and just the research, the competitive.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“Fourth partner who joined us right at the beginning. And I was 25 and just had an incredible opportunity to help build a business from scratch. My dad was very entrepreneurial. I would have never said that I have an entrepreneurial bone in my body. I was just someone who, when to put my head down and work and think, and as long as I could do those things and feel rewarded for it, I thought I was going to be fine. And as soon as I scratched that entrepreneurial itch, I basically realized I can never work for somebody else ever again. This is off to the races. Like there's no chance I need this freedom. I need to be able to paint my own picture or paint alongside my partner's. There was just no going back from moment one.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“Talked to Hans and me about potentially joining her in that. And for us, it was a layup. I mean, I was 24, not married, no kids, got to be a founding partner in this college endowment management structure. And so we made this leap a year later. We launched a firm called Investure at the beginning of 2004, end of 2003. And the mission of Investor really was to serve these incredible not-for-profit institutions that were big enough where their endowment had become a really core asset, but we're not so big that running it in-house made sense. And so Alice's reputation obviously is what that business was built on. And sometimes in life, half the goal is just partnering with the right people and letting them drag you along. And that's really what it was for me with Alice and Hance and then Bruce Miller, who is our.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“That the governance structure at that time, which has evolved since then at UVA, was creating. And I think it was making it a very difficult operating environment. And if you know Alice, I mean, she's just one of the most wonderful, hardworking, ethical, trustworthy, intuitive people. And she just sense, you know what? We are not going to be empowered to execute this the way that we think we should. And I, Alice, have an opportunity to go basically do whatever I want. I think she could go be CIO of effectively any endowment that was without a head. And she had a conversation with Smith College where they basically said we'll back you. We'll become your first client. Why don't you go create this kind of OCIO, this outsourced chief investment officer model?”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then a month later, made worse, so to speak, by the fact that he took my best friend with him as his co-founder. So Tim Davis and Michael left to start Bluestem. I was extremely excited for them, but obviously it raised questions for me about, well, what am I going to do? You know, I'm 24. Do I want to do this? What does it mean? And as I said, fortunately between Alice and Hance and Beth Snyder, who was there at the time, I had some great mentors who stayed Michael and Tim would go on, launch Bluestim. My younger brother was officially their first employee. He was actually an intern for them. And so they went on to great success. And then Alice took over as not just president, but as CIO. And she, Hans Beth, they had a chance to really run with the endowment for a bit. But Alice really began to notice the phrase.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“I started Labor Day of 02 and basically Jan 1 of 03, Michael said he was leaving. So I had moved to Charlottesville, been there three or four months. And the person who I sort of had attached my wagon to detached my wagon and said he was leaving to start”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“A lot of funds are fairly short term trying to pick quarters or events or trades or macro. And I often think that forfeits a big part of the competitive advantage that endowments have. So we stayed really focused on that long duration edge. And that narrowed the universe to a manageable size. And I think it allowed us to have a brand in that space that was differentiated.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“And all of a sudden, you have a network. I'm actually very naturally an introvert and not extroverted, but somehow I managed to stumble into building great relationships on the one hand. And then on the other hand, I was extremely clear about what really investing meant to me, not trading, not macro, and that allowed me that I think they zoomed in and focused on a certain type of approach that allowed me to narrow the world. I really believe in the power of focus. And so by trying explicitly to not do everything, but to do a few things really well, I think we ended up being able to get our arms around most of the universe of people who thought the way that we thought. And endowments in theory have perpetual time horizons. How do you take that duration and empower investors to use it on your behalf?”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“When I was 24, it was the things that were handed to me. I walked in and very fortunately it just happened that UVA had established a franchise, so to speak, in exactly what you were talking about, these very best long short equity fundamental managers in the world. From there, I almost had this sort of ignorant view in the sense of I didn't know what I didn't know and I wasn't afraid of what I didn't know. And within two months, I was proposing a manager into the endowment and I had sourced with Tim and then ran the diligence basically on my own and ended up getting in the endowment and who today is a multi-billion dollar fund. And so my view was always just go, build your network, figure out sort of the nodes that go out from the first person you meet that should lead to five more and those five should lead to five more.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“Michael is incredibly balanced. He wants all sides. He wants to hear all sides of a challenge, of a risk. He believes in people and he believes that special people who put together special teams and really stay disciplined and focused have the chance to outperform. And I don't believe he just means that in the investment realm. I think he views that as in basically every part of life. And it just happens that in investing, if you can go hunt, find, and build relationships with those people, I think he believes that that is a pathway to long-term excess return. Obviously, he's gone on to build, I think, an incredibly successful second or third act, whatever we want to call it for him, around that thesis.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“Running structures where they can get paid the most, where they can have the most creative freedom, and where they can attract and surround themselves with the best talent, the best investors. And at that moment really was hedge funds and to a lesser extent private equity and venture capital. So almost everything I did from the beginning was fundamental long short equity hedge funds. So you can picture the tiger structure, the blue ridges of the world. And then that evolved also, I'd say, to include long-only funds that really took a differentiated perspective to the world. So what has now become much more common to find a concentrated long manager who might only have 10 positions at that time was distinctly uncommon, but that was also the kind of thing that would have fallen within my purview. And, you know, I was”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“When I took the job at UVA, I was telling the guys at the investment bank that I was leaving. And this guy, Paul, goes, oh, what are you going to do there? I said, well, I think I'm going to spend a lot of time on hedge funds. This is 2002. They have 55% of the portfolio in hedge funds. And he said, no, they don't. I said, I think they do. And he said, I'm sure they don't. That's completely inappropriate and risky. Like nobody could actually do that. That's, I believed, and to be honest. I was like, I must misread something. I got down there and they had 55% in hedge funds and it was going higher. Almost nothing in long only and the rest in private. And so yes, my start was really we're going to get to know the best investors in the world, the best investors in the world are generally.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hence West, just really wonderful people. So that's where my professional investing career began. And I would say that's where the passion for wanting to be a stockbroker really lasered in on saying, no, I want to spend my life trying to research and understand mispriced opportunities and how people uncover and get their arms around those and have the courage to have the conviction to ride through the ups and downs. And so that's really where it began.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then I think he jokes that Julian made him an offer he couldn't refuse. And he went back to Tiger to be the COO in the late 90s. And he had just retired from that when I met him at UVA as a professor. And so he was running the endowment. I picked up the phone and called him and basically said, I see this job opening. What is it? And he said, we need to talk. And truly within two weeks, I had a job offer. And it was an incredibly fortunate landing spot for me, both due to the fact that I went to UVA and love UVA, but really driven by the people who were there. In addition to Michael, the cast of characters, they're really influenced my life from dear friend of mine, Tim Davis to Alice Andy, who was a longtime leader of UVimco, who my story becomes entangled with for some period starting.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I got an email forwarded to me from my mom of all people. And it was about a job opening at the University of Virginia's endowment management company, which is called UVimco. And I didn't know anything about it except that the chief investment officer at the time was a guy named Michael Bills, who Was the one professor from UVA who had done a pretty good job staying in touch with and was someone who I really admired and looked up to. And his background was he'd been at Tiger, the old Julian Robertson Tiger for years and years, had actually, I think, retired as head of the”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, I would have said when I was 10 or 11 and all my friends wanted to be like a policeman or a fireman or a superhero, I wanted to be a stockbroker. I didn't know what that meant. I just knew that it somehow involved trying to take money and turn it into more money. And that always seemed like a fun and remunerative profession if I could somehow pull it off. And when I went to UVA undergrad, I put myself on the investment banking manufacturing line. And I always joke that it's a little misleading because investment banking is neither investing nor banking. But I found that out after arriving, so to speak. Obviously, investment banking has a great set of tools that it teaches you, but it certainly wasn't the destination that I wanted in the end. And I was there. I just started my third year of investment banking. I was in New York.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, that would definitely be my first set of investments. My first stock purchases in my young teens were not well researched, not surprisingly, I guess, but included GE and Microsoft and Cisco Systems and a company called Fiacall, which is a defense contractor that made boosters for the space shuttle, but also had a propulsion system for airbags and airbags were beginning to roll out. So I had a thesis that, oh, that's going to be a thing.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, as a kid, I was a passionate baseball card collector. And so if I were going to somehow locate my very first investment work where I was actually doing research and trying to understand how prices interacted with air quotes fundamentals, that would be it in the 80s and early 90s, which turned out to be a bubble for baseball cards. The key price input was something called Becket's baseball card monthly. That was sort of the Bloomberg of baseball cards. And it really was a once-a-month magazine that arrived in your mailbox. It had primarily a list of every baseball card that had ever been printed and what it was worth if it was in mint condition and how that compared to the prior month. And so I was obsessive about tracking, collecting, and managing my baseball card collection.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guest on today's show is Chaz Kock, the founder of LB Partners and a former co-founder of Investure, one of the original scaled OCIO businesses. Chaz has followed an atypical path from a decade as an allocator to a focus on stockpicking, first building an internal direct team at Investure, and then launching LB in 2019. Chaz opened and closed LB to new capital on day one and recently created a digital infrastructure index that trades as an ETF under the ticker BYTE. You can learn more about it at IO Digitalindex.com. Our conversation covers Chaz's path to allocation, lessons learned at UVimco, key aspects of successful manager selection at Investure, and his passion for and transition to direct investing. We close with the application of lessons to his investment process. Please enjoy my conversation with Chaz Cox.”
2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source