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George Michelakis

lines on the record: 62
first: 2024-01-15
most recent: 2024-01-15
sittings or episodes: 1
sources: podcast

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“But that's like trying to build a Formula One racing team and not making the car fast. It doesn't make sense because you really have to be pushing the envelope intellectually, risk management, portfolio construction, seeking out alpha on the short side in a very persistent methodical way. You can't really just have this diluted, long-only product with skillful stock selection on the long side and safe shorts that make the product look like a long short product, but the math is showing you, is that it's just a diluted, good long product.”
2024-01-15 · Capital Allocators · George Michelakis – Chess Master's Approach to Long-Short Equity at Gladstone (EP.362) · IDENTIFIED FROM THE TRANSCRIPT · source
“Short an index. So you're running a 150 gross product which is effectively a long product with a short fifty index. Over time, why is that worth anything? And that very elementary math is at the heart of the problem. Too little gross, too little short alpha, and you end up being a diluted good long manager. Again, I think when the market's so healthy, your lungs are working, that product seems okay, but have some flat years in the markets and some challenging years where you're just short the index and the product doesn't work. And so over time that construction is timid. It's almost too safe to begin with. And it's probably a reflection of the challenge of running long short makes people want to keep it safe and simple in terms of the portfolio construction.”
2024-01-15 · Capital Allocators · George Michelakis – Chess Master's Approach to Long-Short Equity at Gladstone (EP.362) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there are different models that can work and that platforms have clearly exhibited success in one type of model. I think on the flip side, when you look at the single manager construct, I think there's been hidden flaws in what most single managers gravitate to. That isn't entirely obvious. And over time, the lack of success there, it's been relatively consistent. It comes down to portfolio construction and short alpha. And think a little bit the simple way to do the math is if you're running a one fifty gross long short fund and you've got good long alpha but no short alpha and you end up with 150 fifty what I mean as one fifty gross fifty net exposure, that means you're a hundred long, so you're long manager on that side of the balance sheet. And on the short side you're running a fifty short book which produces no alpha which means you're basically”
2024-01-15 · Capital Allocators · George Michelakis – Chess Master's Approach to Long-Short Equity at Gladstone (EP.362) · IDENTIFIED FROM THE TRANSCRIPT · source
“Top down ideas, and I'm actually grateful for that because a lot of the emphasis, be it private equity or hedge funds, in the initial five years of one's career, is bottom up. And that's a bit commoditized. People now know how to use a spreadsheet. People know how to read 10Ks, and you're not going to make better assumptions on a two-year view than most other people. So you have to differentiate in different ways. And I think what we've done well is combining top-down thinking, thematic thinking, understanding maybe even, an ambitious word with that bottom-up analysis and looking for where those two coincide.”
2024-01-15 · Capital Allocators · George Michelakis – Chess Master's Approach to Long-Short Equity at Gladstone (EP.362) · IDENTIFIED FROM THE TRANSCRIPT · source
“It was a nascent industry back in 2003. So most of how his learning was reading books and talking to people who were involved in the business, I'd say the best training I got at Lansdowne was risk management portfolio construction, which is totally not what you experience or see in private equity. There's risk management in underwriting the securities and the diligence and the efforts there, but you don't think of things in a portfolio sense, and you try and steer away from macro debates or macro risks and try and underwrite dull assets, predictable assets that should prove secure over long periods of time. Going to the public markets, I think the most informative was really learning about how to think about portfolios, what are the risks from a portfolio construction point of view, and what are the themes that the market's trying to capture.”
2024-01-15 · Capital Allocators · George Michelakis – Chess Master's Approach to Long-Short Equity at Gladstone (EP.362) · IDENTIFIED FROM THE TRANSCRIPT · source
“Private equity, it's a patience game. You do a lot of work three months potentially on a single company. You learn a lot, but often things don't happen. There's a lot of binary outcomes at the end of three months of work. As soon as I was in public markets, I think the fact that you get multiple opportunities to use your knowledge either long or short and that steady flow of opportunities had, in a sense, and your ability to monetize your thinking both ways was extremely appealing. And really you're pitting yourself against other minds, similar to chess. I think there was something more like chess about it that appealed. Which is fine, it's entrepreneurial, much more process driven, but hopefully you do a deal here.”
2024-01-15 · Capital Allocators · George Michelakis – Chess Master's Approach to Long-Short Equity at Gladstone (EP.362) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think long short equity, it's similar, at least in Europe, it's still somewhat unproven fundamental long short single manager. There's just not many of us left in a way. A lot more opportunity to not be number fifty at best, but rather excel and get to the top.”
2024-01-15 · Capital Allocators · George Michelakis – Chess Master's Approach to Long-Short Equity at Gladstone (EP.362) · IDENTIFIED FROM THE TRANSCRIPT · source
“Met somebody in my university time that we discussed a lot what do we want to do with it? That person is Rolf Boeter, who runs Sequoia globally, he went on his path, and I went the London private equity, longshore equity path. I think we were motivating each other or at least discussing what's interesting, what's challenging, where's the opportunity set? Coming full circle back to chess by the time I was in my late teens, it was obvious that there was some limit to how far I could progress in the chess world. Maybe you can get to the top fifty if you live and breathe it. But that's as good as I would have been able to achieve. Whereas I got into private equity in the late nineties, it was a cottage industry. It's hard to imagine today, twenty-five years later, that private equity was literally teams of five or ten people doing handcrafted deals and the fund sizes were all one to five, and the firms were nascent in terms of just where they were in their development.”
2024-01-15 · Capital Allocators · George Michelakis – Chess Master's Approach to Long-Short Equity at Gladstone (EP.362) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's all about characters, but like the series on Netflix. It's not specific events, but I think the characters involved are so unusual in many cases. I just enjoyed the travel going to places. I went to Armenia in nineteen ninety six, found myself in the middle of a coup d'etat, was walking around with whatever hard cash and my passport in my pocket for three days. We had no idea what was going on. And I think the coup was repelled. And then the next thing we saw was the tanks. The army marching in the square and I go, it's over.”
2024-01-15 · Capital Allocators · George Michelakis – Chess Master's Approach to Long-Short Equity at Gladstone (EP.362) · IDENTIFIED FROM THE TRANSCRIPT · source
“Cam the South African champion. That happened relatively quickly, came third in the world on twenty, played internationally, very reminiscent of Queen's Gambit. If people watched that series on Netflix, but that history to her for me, clearly I'm not her, and she's not me, but when I watch that, there's a lot of reminiscing. That was my mispent youth is the way I like to think about it.”
2024-01-15 · Capital Allocators · George Michelakis – Chess Master's Approach to Long-Short Equity at Gladstone (EP.362) · IDENTIFIED FROM THE TRANSCRIPT · source
“You are most passionate about when you were a kid Probably solving problems? Became passionate about chess that carried me intellectually when I was younger, and competing, I think, actually, hindsight. I enjoy competition.”
2024-01-15 · Capital Allocators · George Michelakis – Chess Master's Approach to Long-Short Equity at Gladstone (EP.362) · IDENTIFIED FROM THE TRANSCRIPT · source
“I guess on today's show is George Michelakis, the chief investment officer of Gladstone Management, a $2 billion longshort equity hedge fund based in London. George found a Gladstone in 2006 with Sea Capital from, well, me, Protege Partners, and six years later bought back the stake when still managing less than $100 million. In the dozen years since, Gladstone has won awards for European Hedge Fund of the Year and the top performing five-year fund for three years in a row. Long before that, George became an international chess master and took third in the 1992 World Under-20 Chess Championships. We discussed Georgia's path from chess to investing alongside his college friend Roloff Bertov Sequoia, the challenges of the fundamental longshore equity model, the culture required to make it work, and how he does it at Gladstone. Before we get going, 2024”
2024-01-15 · Capital Allocators · George Michelakis – Chess Master's Approach to Long-Short Equity at Gladstone (EP.362) · IDENTIFIED FROM THE TRANSCRIPT · source