YouSaid · the spoken record

Drew Dickson

lines on the record: 71
first: 2019-11-25
most recent: 2019-11-25
sittings or episodes: 1
sources: podcast

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“Especially in the kind of environment that we're all in now, even though markets have been going dead up, if you've had the wrong kind of factor exposures or if you've had the wrong positions, you get a lot of volatility and you have to have a stomach forward. It's much easier if you recognize that, hey, this is what your investors are in for. They're in for the long term. And also can we do things ourselves to debias our own decision making so that maybe the down days, the down months, the down quarters, the down years aren't as bad as they would be because we're objective about identifying where we're making fundamental mistakes.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“a culture where it's okay to make mistakes. It's okay to recognize those weaknesses and have investors with similar time horizons so that you're not affected by other folks as much as even if you don't think you're being troubled by someone that's asking you how you're doing the first week of the month, it's affecting you. So if you have folks that don't ask you those questions, that just interested in the process, not the particular outcome of this position, then it's okay for us to be more objective about things. Back to the point about launching at the bad time, we're anchored by a large US university endowment for our launch. And we had Brexit a couple months later. It was, as you know, certainly for us, it was terrible. Our investor didn't call us once, didn't check in, didn't say how you're doing. We had an update call maybe late August or September. Hey, Drew, I bet you found some great ideas. Yeah, we did. It was nice. Here's how things went. Yeah, we did obviously recover, but it's those times. It's those periods.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's twofold, and this is again hopefully a positive evolution in my career. If you would ask me that question in 2008, I would have rattled off a lot of important things, but mostly to do with Mr. Market. Here's the confirmation bias they're suffering from. Here's the ambiguity aversion. Here's the representativeness bias. Here are the things that are preventing them from seeing what we see, and we want to take advantage of that. And that would be our approach. And it still is, but we've now realized, and actually reading through thinking fast and slow, Danny Kahneman's book, this is Vaylor's mentor, and he's the one that came up with a lot of these things that we all do as human beings. And I remember the most interesting passage to me in the whole book. I was talking about how even he still commits these same errors himself. And so if Danny Kahneman still commits these errors himself, how is Drew Dixon not going to? So what can I do? I can try to set up.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you take the lessons you learn from Dick Thaler, your various investment experiences, and then you go to apply it at Albert Bridge. What have you internalized in terms of how behavior impacts the way you invest?”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“Almost two out of three right, and if you can flip that on its head, it also means you're trying to get one out of three wrong. And if you have a culture where we can look at the portfolio and say, which of these things are going to be wrong, would you buy this size position in this company today if we launch the fund today? Can we be unencumbered by where we bought the stock, when we bought the stock? Because that should have nothing to do with why we own it”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“Certainly it's a wonderful tool just to memorialize Because if you're able to write down, hey, here's where this could go wrong and have a culture where it's okay to identify something is wrong almost encourage it, then if you've predefined where it's going to go wrong, you're looking for it. And one of the biggest biases we all suffer from is this confirmation bias where I did it myself as an analyst. I probably still do it without realizing it. But it certainly is an analyst at Fidelity or at Oxif or earlier in my career. If you tell your boss that, hey, this is the greatest idea ever and you've done a deep dive, you met the management at gazillion times, you built huge models written at gazillion notes, your ego is tied to it being successful. You think you're smart if you make money. You think you'll be rewarded if this particular outcome is a positive one? And that's silly. And that's been something that I think I've gotten better at over the years and recognized that not to use too many baseball analogies, but we're trying to bat 650. We're trying to.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“To be totally frank, it was more driven by just demand of what the investors wanted from us and what we did. We haven't wanted to really change our process at all through this evolution ourselves. So having these long, short routes, I think have helped us as we transition into focusing entirely on a long-only product now. Even Benjamin Graham said to himself, you know, every single issue can be cheap in one range and deer in another. We have a strong view that you shouldn't get married to your companies that good high-quality companies you just buy and hold forever. That's not our approach at all. It's much more driven by the fundamentals in the intermediate term. And so if we can come at it with the diligence and the deep dive that you would have from a long short perspective, but then also be able to use these long short tools to help debas ourselves. One of my favorite tools that we have to help us think more clearly is we write deep dive shortcases on everything we want to buy. And this is...”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“Paying for the beta component of those returns was aligned with how we think the world should work. Very much in line with how they think in terms of their long-term goals. So that was one of the first things we did there.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, at the time Imprella, they have a big brand in the banking business, and at the time they didn't have a huge brand in asset management, but it was a known group, particularly here in the US. And our target audience for what we do is the U.S. University endowment cadre of long-term investors. And with the front office that they had, some very good guys on the marketing team and a really big platform that was going to take some of the operational burden off of us, we made the decision to not be independent anymore, but with a sort of independent flare. We turned Dixon Capitol's office into Prella Weinberg's European Asset Management Office. And with that began having conversations with some of these longer-term thinkers. And one of the first things we did, as a lot of other London-based funds and even funds over here had done, is make the long book its own investable vehicle. The combination of having discussions with the longer-term thinkers and having this vehicle where people could get exposure to Europe and best ideas without”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“But the folks that you want to manage money for when you do that have to have similar time horizons. And any PM you speak to say, oh, we want longer-term money. We want longer-term money. But in our case, when you have your top 10 positions or 70% of your fund assets and your top five might be 40 or 45, you really need to have two and three, four-year, five-year money on your side, people with similar aligned interests. And that was something that I didn't recognize the importance of until after the financial crash. after we got on our feet from a business perspective. And that's what led to the merger with Perla Weinberg.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“Europe originally as an independent company three months before the financial crisis showed up. We launched Albert Bridge three and a half years ago, two months before Brexit. But as it turned out, we did reasonably well back in the day. We made money in 08 and 2009 and grew the business nicely, but we were lacking something. And this is part of the learning process for us. We by definition have best ideas portfolio, very concentrated positions. It's going to sound sort of sacrilegious to some folks, but we almost seek volatility. We want to be exposed to idiosyncratic stories where there's a lot of risk. And if we can objectively analyze where Mr. Market might be overreacting or underreacting to particular developments in the business because of some behavioral bias, then we can really jump on our fundamental research and help it to drive conviction. So by design, the goal is to generate significant excess returns over two to three years.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's exciting. I had kind of been doing it in something similar in smaller versions previously with Oxif and with the guys from Fidelity. And the whole goal was just to, and it still is, actually, is there a way we can do this a bit better, a bit smarter. And I hope, actually, I hope in 10 years I can look back to this day and say, well, look how stupid I was 10 years ago. And if you can stay on that path to try to get better and learn more. With that, though, there's still always been this overriding view that, hey, we're in the business of generating alpha. We're not market timers. We're not going to be dialing our gross up and down because we have a view of the market. This is about bottom-up idiosyncratic stock picking. Can we identify businesses where we can objectively analyze information we're gathering and see if they're going to beat numbers? Let the fundamentals lead you and then let valuation come in to help you size the positions. We started off with a long short fund. I have the worst track record of when to launch funds.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I covered several different sectors and it was there for a few more years, and then I got lifted out of there by the guys at Oxif, brought an analyst with me over there. At the time, Oxiff was a much smaller beast than it became later, and it was much more focused on merger arm and wrist arm. And great experience with those guys, a little bit of difference in philosophy in terms of difference between fundamental investing and some of the more event or catalyst-oriented stuff. And then with a couple other fidelity alumni, thereafter, we manage money for the man group externally. And then combining all those experiences, starting with the Thaler Behavioral Backbone and the deep dive fundamental investing of fidelity and the sort of more nimble, focused investing that you do at a hedge fund, we put together Alpha Europe and in 2008, we launched our big fund. Well, our small fund at the time.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“Was by design both personally and professionally. Professionally, Fidelity's office in London was the one that was really to me very exciting. Back then, remember it was still Deutschmarks, French Franks, Lyra, that Euro was just getting ready to start. You could see this equity culture developing. The German banks owned everything in Germany. You could see things getting spat out. So there was going to be a big chance to do some stockpicking in Europe, which was exciting to me. Hong Kong was also super exciting, but it was a little bit more of a top-down market, the money that would flow into our funds in Asia. It's US retail investors at the time, mostly. And if they're going to invest in the Pacific Basin Fund, it's because they want emerging markets. And it's interesting. I like macroeconomics as well, but that's just a bit more top-down. I'm not a top-down guy, more of a bottom-up guy. So the London office was interesting professionally from an interest perspective and also from a fidelity perspective. And my wife's Italian as well. So being in the UK was kind of a halfway house between it.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, from grad school, I started off as an analyst with Fidelity Investments. I first started off in Hong Kong for the summer between my first and second year, and then I came to the London office full time, almost exactly twenty years ago this year. And if Fidelity, our approach was to sort of cover a sector for twelve to eighteen months, get to know it, and then just as soon as you got a grasp of things, they would move you to another sector. And I love that. That's what by design. It helps you to see a lot of different types of companies across different sectors. It trains you to become a better portfolio manager. Now, other folks have been successful, capital, for example, with this sort of analyst for life model where you become a specialist. It's not my approach to things now. We want to be specialized in sectors, but we also want to remember what the ultimate job is here. It's to pick stocks. It's not to become an expert in that particular field. My initial stop was at Fidelity full-time in the London office 20 years ago.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“The debate about this is an efficient market risk, and that's why there's returns. This is a behavioral thing, and that is creating these excess returns. Or neither, but having that training from both of them was very helpful and then the whole behavioral economics movement was something that is in fact increasingly become more and more a part of my investment process as I have been in the industry over.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I wanted to go back to business school, and as soon as I saw that happen, I said, well, if I can get into Chicago, that's where I want to go. I want to be a part of that. I was lucky enough to be one of the MBAs that was able to take FAMA's course, which allowed me to take Dick Thaler's course on behavioral economics. He also taught a course with the MBAs that was more decision-making. I took that too. So I got pretty close to him there. It was during the tech bubble by now, so this is 98, 99. And so we worked a little bit together outside of class on some other things and got to know each other. So from that point forward, it was sort of the Morpheus Neo moment where you take the red pill or blue pill, and I really fell into this behavioral finance hole to get myself unplugged from the matrix. Not that I didn't really enjoy the financial side of things, the theoretical side of things. And pharma, I mean, this guy outside of maybe Douglas Hofstadter and Carl Sagan, he's the smartest guy I've ever met. He's a French major for crying out loud. He's not like even a mathematician. And he was an incredible person to learn from in that experience grounded me as well. And I love having...”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“I've always been interested in financial theory. Why do things work the way they work and interested in psychology? In the mid eighties, late eighties, early nineties there was this heretic group of economists, one of them being Richard Thaler, who was up at Cornell at the time that was they were poking holes in this what was known as the official market theory, still is. Eugene Farmer, this paragon and pillar of efficient market theory, thought it was really interesting what he was doing. And he had an idea in the mid-90s that let's try to get Richard Thaler down at the University of Chicago. Let's have this place be the battleground for this efficient market versus behavioral debate.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“I didn't have enough money to buy enough shares of stocks. I thought that this thing was going up. I might as well just buy some calls. Literally the first trade. That was all during this sort of going way back then when I'm in college and the market's going crazy. It's 86, it's 87. And then when the market crashed, at that point, I was hooked. We had an original copy of security analysis at Purdue's library and go back and read through that and trying to build all these models to try to see where markets are going to go and all this silly stuff, which in hindsight is stupid and naive. But it was always something that captivated me. And so as I progressed in my career, that was always broadly the focus.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was, even as a kid in high school, captivated by the stock market and made my first purchase. I think they were AT&T, $22.5 strike calls, probably paid $40 or $50 in commissions for a $200 option premium and learned a lot of lessons about how to overpay and what things not to buy. What was it?”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guest on today's first meeting is Drew Dixon, the founder of Albert Bridge Capital and Chief Investment Officer of the Alpha Europe Funds, where he manages $350 million in European equities. Our conversation covers Drew's early career across the Chicago School, Fidelity and Oxiff, and his perch in Europe. We then go through Albert Bridge's investment process, portfolio construction, assessment of risk reward, and client communication through blogging and tweeting. All told, Drew offers a deep dive on how to blend fundamental research and behavioral finance in taking on the stock market. Please enjoy my first meeting with Drew Dixon from Albert Bridge Capital. Great to see you.”
2019-11-25 · Capital Allocators · Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13) · IDENTIFIED FROM THE TRANSCRIPT · source