YouSaid · the spoken record

Jeff Assaf

lines on the record: 58
first: 2024-07-29
most recent: 2024-07-29
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Probably would have moved me further along sooner. I was a little too impatient. Patience is a virtue. I think it is, an expression. I think it's a saying. It really is. I could use more of it, by the way, but I'm definitely better than I was when I started.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Breathe, meaning slow down, think before you speak. Don't be reactionary, take your time. Don't hit send. All of that is encapsulated in breathe. It's good advice”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably Art Laugher, The Economist. He was the guy that told me to go to the money center bank. Because without that whole start, I really don't know what I would have done. I kind of wanted to go into politics, actually, but my wife to be was not going to have that. And she is my wife, and I've been married for 37 years. And the other one's probably, you remember at the beginning of this, I told you I got to Bear Stearns and this broker came downstairs on the very first day. His name was Joe Leach. And he did not know me. And he goes, Jeff, Joe Leach and just went crazy with us. And the confidence he had in us, people follow. They lead by example. He was a big guy up bear because he was throwing all this business at us. Others started to do it. And so I don't know really right to say Joe would be number two or number one. He's one of them for sure. God rest his soul. He passed away 12 or so years ago.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Stupidity drives me nuts. It does. There's this expression I've used for literally forever. I've got a very short, stupid views. Actually, I'd like it to lengthen a little. It just tries me nuts and stupidity. People who should know certain things, and it makes me crazy. That's the answer. I'm not necessarily proud of it, but it's the truth.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Who don't know me don't know that I'm the oldest of six kids and we're all one year apart. What is a fact that they don't know about me? I'm probably mushier than most people realize. People who know me well know that, but the average person probably doesn't know that.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Camaraderie, it's not the actual golf because I'm not that good. But it's like being out with my friends or with my nephew or with whoever. It's the social aspect of being with people and golfing and it's probably that”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's synergistic for them. But it's not adding anything for us. We have this research process. They don't say, no, they'll get our research process. And they have one portfolio reporting system and we have another one. Okay, whatever. We could get that portfolio reporting system if we actually thought it was better. We haven't found synergy. But the calls we get, the emails we get cold and warm, eventually that'll slow down. There's definitely a thing going on today where there's a lot of demand for firms in our business. And our firm is even more attractive than the average firm because of the clients you refer to. Well, obviously, I'm not going to talk about on a podcast, but you're familiar with some of them because you've met with some of them over the years.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“And if we ever find that and we are sympatico in the way we view the world and the way we think about clients and taking care of them and allocating capital and that whole thing, and it was symbiotic, we would entertain it. But what we've generally found is this is going to sound arrogant and it's not meant to be, but I don't know how else to say it, most of the times we've taken a look at that, what we've concluded is”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, there definitely is. We get calls all the time from shops. We actually entertained one of them. This guy called us, wanted to talk about combining. And we have this view that there probably are some consolidations, some combinations with other firms that really are synergistic, that actually us added on to some other firm, that one-on-one is more than two, and that our clients would benefit from it, the research process would improve, efficiencies would be realized.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think more of the same. We don't know what our capacity limit is. And we imagine our capacity limit is more likely to be hit by the number of clients than the amount of dollars because I don't see us being the kind of firm that's going to be managing $200 billion. I'm exaggerating. But I'm trying to make a point. A lot of the managers we use, we couldn't even think about if we had to allocate huge sums of money. But if we were allocating $20 billion, we could do it. So would it be nice to be a $20 billion firm? Sure. As long as it's a $20 billion firm with $150 or 200 clients, not if it's a $20 billion firm with 7,000 clients. That's just not our business model and not something we'll ever, I don't know. Never say never, but that's pretty high up on the list of what I would say never to if I was going to ever say never.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Me to come in? And he said, No, I was calling you to get restaurant recommendations. I'm like, you've been our client for seven years. If you're going to be in Los Angeles, you have to come in. And they did. So my point is, we have clients that they almost never call. We call them because we need to do things. And we have clients who we talk to. And it just depends on the client.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“So that whole game that goes on in the world of insurance doesn't happen with us. We don't get paid a penny for any of that ever. And it matters to do those things Think the clients appreciate it. So there's a pretty healthy relationship. Some of our clients I talk to a lot every day or every other day, sometimes just for a joke or something or for work. We have a client, I won't say who it is, think they've been clients for 20 years. When we get hired by them, they met us. We speak to them on the phone when we need them, but we've never gone to their home state and they had never come to our office in seven years. Seven years into the relationship, they called to say they were coming to California. It's like, great. A long time since I've seen you, I'd love to set up a time. When are you going to be here? I want to find time. I'd have you come into the office and go over your portfolio and just catch up. And they said, oh, and the guy says to his wife, he's on the phone and he's yelling to her. I can hear her. What's your schedule? Jeff wants us to come in. And I said, weren't you calling?”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“You have 100 clients or 80 clients or 150 clients, you can have a relationship with them. When you have 1,500 or 15,000 or 150,000 or whatever, you can't. We've got a pretty good ratio of investment professionals to clients. We just do. We naturally can speak with them. But we get paid to do is build their portfolios and manage their risk and manage their money. But we don't get paid to help them find a mortgage, but we help them find a mortgage. And we don't get paid to help them finance an airplane, but we do help them finance an airplane. And we don't get paid when they need to buy some insurance for their estate plans. But we understand insurance and we speak it. And so we can talk to their insurance people or find them insurance people to get them what they need. And we know what to ask. And those insurance people know that we know what to ask.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Talk to them. Are we going to come up and meet them ever? Or are you saying we're never going to see this guy? And it's just like he's the Wizard of Oz and he's behind the curtain. That's not happening. I don't care how good the track record is. And I don't care how many smart investors invest with them. That doesn't fly. But people do it. I think some managers think that doing that somehow almost makes you want to invest with them more like it's like your special.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Anywhere from monthly to quarterly, depending on a whole host of variables, how much money we have with them, how easily we can track what they're doing. If it's a large cap value equity manager managing separate accounts and we can see exactly what's going on, we probably don't need to talk to them every month unless we just have questions because we can see everything. And if it's biotechnology hedge fund and you can't see it and the markets are crazy, we might be talking to them more often. The written communication is quarterly. We send out a quarterly questionnaire that managers need to complete. Make sure they're on board. There was a manager that we interviewed last week, and they were very direct and said, you'll almost never get to talk to the portfolio manager. But if we get down the road and we're serious and we think we want to invest, are we going to get to?”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Information flow. So if we know that we are going to take a whole bunch of money away from submanager, the sooner we can tee that up for them or add, by the way, we have a biotech manager who we just gave them a healthy chunk. We call them in advance and said, hey, we want to do this. We want to give you the heads up and make sure that that's all good. Not because they're closed or not closed, but they might have something to say about that. That's great. Or you know what? This is the wrong time hold off. And we want to work with them. We're pretty demanding about information flow. So while we want to be good partners and give them all that information, we want them to give us the information we're asking for. And we're not great with managers who have proprietary this and secret sauce that and we don't share.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Being really straight with them. If we're expecting to add a big piece of capital or redeem something, we want to give them as much notice as we can. Now, sometimes you don't need to because what they do is so liquid and they're big and it doesn't matter, but it's still being a good partner. Managers appreciate.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Some clients have bigger liquid budgets because they rely more on the portfolio, they spend it more, they need access to it more than others. We have some clients who almost never take money out of their portfolio. They just add to it. They make money doing whatever it is they do. The portfolio, its liquidity is used to manage itself, not to fund operating or living. So it depends.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Even a conservative client can still have some venture in their portfolio. But they'll probably just have less. They'll probably just have a smaller bucket of that than they will of other things. Then a more aggressive client would have more. Now, does every client of ours have venture? No, of course not. Probably every single one of our clients has some long-only equity exposure. They must have some. They do. Most didn't have bonds for a long time, with the exception. They didn't have those and they did have equities. But some clients have more real estate, others have less. Generally speaking, taxable clients have more real estate than non-taxable for reasons that are probably logical. Clients who have larger illiquidity buckets, they don't need as much liquidity, will end up with more private equity, private credit, real estate, venture than clients who have smaller budgets.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“But we tend to like those more unless you're running gazillions of dollars, you've got to make those dollars count. And so you can't have multiple analysts in multiple different sectors, healthcare, consumer, technology, on and on and on. So you channel it into that specialization. It's also more rewarding because there is some satisfaction in identifying talent early. Everyone knows who Blackstone is. You don't need us to put you in the next Blackstone Fund.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“I still think the PE guys more broadly are delusional. They think their stuff is worth a lot more than the public markets are telling them. I do not get why they trust themselves more than the markets. Their assets are just not as good as the public ones, period. This is a hedge fund manager's opinion of, broadly speaking, the private equity world. And he's probably right to a certain extent, but he's not right across the board with everybody. Our private equity managers tend to be more sector focused specialists like healthcare guys or finance markets or biotechnology that gets really complex and really requires sector expertise, not a jack of all trades. We do some private equity investing where it's more broadly defined and it's not just healthcare and not just you name your thing.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“We look at where managers mark their book and want to understand how are you carrying the values for whatever the companies are in your private equity portfolio. And there's nothing we can do about it other than question them. But what we can do is feel confidence in their realistic assessment of the value of what they own or feel less than confident. If we feel really confident and they've put up good numbers, they've done a good job and now they're going to raise their next fund. Is it rational to think there's a good chance we'll re-up? Yes. Even if the results are good, if we're not comfortable with the way they mark their book, we just don't believe it. They're just basically faking it till they make it. And they do make it, so the results are good. There's a much less likely chance we're going to re-up. I was having an exchange with a different money manager today. I'll read you what this guy said.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a very good question. I even said, guys, I think the long-term point is that my view is that we've been in this manager for a while. They're not delivering enough results over time to make sticking around worth it. On the other hand, their portfolio is particularly depressed now. Selling it now is foolish. They have a thesis behind it. If it plays out, I say we use that as an opportunity to move on. But obviously, if it doesn't play out, then it's an easier decision. And then if it does play out, it all works out exactly what they say is going to happen. We're going to look at say all those guys are smart. They know what they're doing. That's great. Okay, but we already think that that's why we're staying. But that doesn't mean we should stay for the next full cycle of this. There's other places those dollars can go where I think we would say we believe we can get a better impact in a client portfolio. So I guess we'll see.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right and us being gone is much more than the pain of six more months of it was mediocre. So the answer to your question is we want managers to explain literally why do you own these positions and what's going to happen. And then we look to see if it's going to happen. These things that they're telling us are these things happening or not. And if they are, they know their companies and their investment thesis is solid. Timing is, you can't know. Unless you're trading on the inside information, and obviously that's not good.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm not talking about bad. Just not great. And then you leave, and three months later, boom. Capitulation's a bad word in the investment business. So he said, we should explain this. I said, absolutely. We want to hear from you. So we did the Zoom meeting last week, and they took us through everything. And we finished and we said he's making a lot of sense. They're giving us rational reasons why that healthy move up is not far off. And we believe it. They have real logical direct reasons for the companies in their portfolio. They explain it. They tell us why it makes sense. Okay, let's give this a little more time. Because if it's wrong, we've had this juicy isn't worth the squeeze return for another six months. Okay. But if they're right, it's meaningful. And the pain from our perspective of them.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“When managers are going through a rough spell, we literally just did this last week with a manager we've had for a while is going through a tough spell. And they're great. And they run liquid funds and private illiquid funds. And we invest in both. And the private illiquid funds have been really good. The liquid funds, the hedge fund structure, they've been okay, but it's not worth it. And I called the main guy and said, we're really thinking of leaving this, not that. We can't leave that anyhow. That's good, so we don't want to leave. And we don't want to sell it in the secondary market. We're happy with it. But the hedge fund is like, there's better places for us to put the dollars when you factor in everything. We're thinking we're going to leave. And I just want to hear your thoughts. And his response was, we should show you what's in the book and explain our investments. These aren't what we own. You should understand why we own these names and what we think the timing is. It's very painful to be with a manager whose performance is not great.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“There aren't a lot of them. There's managers that we think can deliver Alpha. We're more on top of managers where the bar is higher. And the bar is higher when the fees are higher. They've really got to prove that it's worth paying a management fee and carry because I could just hire a long early equity manager and pay whatever it is, 30 to 100 beeps, depending on who the manager is and what they do. There's a constant process, not like we're short-sighted, not like we make decisions based on one bad quarter. But when managers have a bad quarter, we want to understand why. But what we really want to understand is that they understand why. That they understand what went wrong, what they missed or didn't miss or what they did or didn't do. Because if they don't know, that's a problem.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Where they believe there's an opportunity to generate higher returns, either because security selection or the ability to short or whatever the reasons are that people convince themselves that somebody can do something that's better. If that's right and the bond market is going to give you four or five percent and you conclude you think the stock market is going to give you five or six or seven and you're a foundation that gives away 5% a year plus you've got some operating expenses to run your foundation, you probably have to do something about it. What are you going to do? Probably look to firms that have real chops in alternative investment work that can help you maybe reshape how your portfolio is constructed to give you a little more of that part of the solution to get your portfolio's results up to whatever you need.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Are inflated, but you instantly see it in the liquid markets because risk free rates are five, not zero. Looking forward, we believe more return is going to need to come from less traditional space. If we're right and the equity markets going forward are going to give us mid single digit compounded returns for the next five or ten years, that's probably not enough return for many market participants. And it'll probably lead to the need to take dollars away from that asset class.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“We like private markets, but we've been doing it for a long time. What makes markets attractive is the less competition there is, the more opportunity there is to eke out some excess return. And so as the private market world becomes more and more accepted, we'll probably start to see the excess returns diminish. If you look at the last several years, the illiquidity premium that's been paid has been overly generous. Should you really be able to earn as much more as you have been earning in private credit than you could in public credit? You should get a premium for the illiquidity, but should it be that much? I don't think so. We never underwrote it for it to be that juicy. It was. But right now, that spread goes away because the liquid markets...”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“In an environment where the risk free rate is no longer zero, it's not going to be as easy for the S&P 500 passive Vanguard fund. It probably won't do as well, relatively speaking, over the next five to ten years as it did over the last five to ten years relative to good active managers. We believe that. We'll see.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the interesting thing about it coming to that high net worth channel is how it gets there. If it gets there through aggregating vehicles, there are shops that are in the business of making private equity and other alternatives accessible to a universe of clients that are smaller than ours. A good chunk of the returns that our clients will get from that, they won't get because the shop that's putting it together is taking it in fees, in expenses to do it, and then the fees they charge to do it. So while it'll add some diversification to those clients' portfolios, I think they're probably going to be disappointed with the level of returns. But we'll see. But that aside, there's plenty of opportunity in the alternative world to make money. And I think”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“When rates rise, that portfolio is going to go down. And people don't invest in bonds for that. Somebody who invests in the stock market, they don't like it when their portfolio is down 20%, but they know it can be. And that's the price of admission. Nobody invests in the bond market thinking they can be down 20%. They just don't do that. We're just now starting to really consider beginning to add some of that asset class back into portfolios and are pretty close to done with the work we're doing to identify the managers we'll use to put that in place for some of our clients where it's inappropriate allocation.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we haven't had long only investment-grade fixed income in client portfolios for probably more than the last 10 years, maybe the last 10 or 15 years. And if we had it, it was really short duration, almost extended duration cash type stuff. But no traditional investment grade bond portfolios. When I say no, I don't mean zero, very, very little. But I didn't understand why do you buy bonds? You want liquidity. Bonds give you liquidity. You want return. They weren't giving you return. And you want safety. They're not actually safe when they yield 2%. They run the risk of price compression when rates rise. And of course, the investment highway is littered with people who think they know what interest rates are going to do. And you don't know. What you do know is if I own a bond portfolio with duration and it's got a 2% average yield,”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“You have to make the assumption that whatever cash flows you had for the last 20-5 years that you had them in this make-believe model, whenever you gave us money, we have to add it to that whenever we took it away. We have to take it away. We ran that number. It's huge. The differential was in the hundreds of millions of dollars. I knew it was going to be big. I didn't know how big. It was very eye-opening to them. And I did it because I said I really want you to understand why volatility matters as much as it does. It doesn't matter a lot if you're talking about reducing volume from 20% to 18%. It'll help, but when you reduce it by half or two-thirds, it makes a big difference. And how do you do that by diversifying? But real diversification, not five long-only equity managers whose correlation to one another is 90. Real diversifying strategies that this zigzag.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you get to the end of the measuring period, we'll have the same amount of money because we both compounded at 10% a year. But if we both earn 10% a year and you do it with 20% ball and I do it with 10 and there's cash flows, I'm pulling money out because I have to pay taxes or I have to support the kids or I'm adding money because I sold the business and putting money. If there's cash flows along the way, I'm going to have more dollars than you will if I compounded with half the ball. This client that I was referring to asked us about that recently and the client basically wanted to understand the returns that they've gotten over time which were maybe one or one and a half percent per year better than that benchmark, but with a lot less volatility, less than half the volume. They wanted to understand what would have happened if we had instead just done the benchmark passively and rebalanced it every year. So I said, well, you have to make some assumptions.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have a family that's been a client for many years approaching 30. I think we actually worked at Oppenheimer on the day they hired us, but that was maybe a month before we left Oppenheimer. So then they went all through bear with us. And now they've been with us at ICG. And it's a healthy size family trust. They were talking about their long-term returns, and we're very focused on portfolio volatility. If you and I each have a million dollars and we go invest it for the next 10 years or 15 years, and we both earn the same 10% per year, average return. And you do it with 20% ball, and I do it with 10. But during that 10 or 15 years, neither one of us puts any more money in and we never take any money out. We just leave it alone.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“That makes sense for them, both in terms of their own comfort level, but also. That will deliver for them the returns that either they want because they just have a goal or that they need gets an endowment and they're giving away 5% a year. If you're giving away 5% a year and you want to have a perpetual endowment, you can't just earn 5% a year. Because first of all, you're not going to earn 5% every single year. You're going to have some years where you're up and some down. You're going to average 5%. But if you average just five and you're giving away five, you're going to slowly lose purchasing power. So you really have to earn more than that. And then you have to factor in there's fees. Now, there aren't taxes for a foundation. But the point is, we want to make sure that clients have objectives that they sign off on as comfortable for them. And we sign off on as achievable for them. And we'll actually give them what they really do need. That's a fair amount of the work we do.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“We want to protect our clients. So we spend a lot of time with our clients. Understanding what it is they want and making sure that they understand that what they are saying they want, they really know what that means because the worst thing for clients is they get a portfolio that they're not comfortable with because it's too volatile. The strategies are too complex and they don't understand them. Some of our clients don't understand the strategies they're in, but they don't care. But if they care, they need to understand it. And if they can't understand it, they're uncomfortable. And when you get uncomfortable, you start making decisions based on emotion rather than based on finance and economics. We're trying to make sure that when we build a portfolio for our clients, that it's really inside a framework.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“80 ish clients. Most of them are taxpayers, a dozen are small and midsized institutions, a museum, a hospital, a school, things like that, but mostly families or people. I don't know what our AUM is, but it's probably between $7 and $8 billion, or approximately 27 employees?”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Interest where we think there's really something there and we start beginning the process of doing some of the operational diligence. And operational diligence can kill investment diligence. They can say there are these problems that they have to get fixed or they won't fix these problems. And so that's the end of that.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“They tend to be smaller than larger. They're not managing hundreds of billions of dollars generally. So we spend way more of our time looking at smaller firms than we do at larger firms. Then, of course, small and large is all relative to the asset class in which they're investing. If you're a small cap equity manager, a large small cap equity manager might be a couple billion dollars, but that's a small large cap equity manager. It's adjusted for the marketplace in which they participate and what it is they're doing and the inefficiency of the market in which they're participating. But generally, they tend to be smaller. They tend to be independent. They always have real identifiable risk control processes in place. At some point along the spectrum of doing the investment diligence, there's enough”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Then you should just buy the market. You're guaranteeing yourself no alpha, but over time you'll get the market's return with the market's volatility. And so we're trying to find managers that we believe have something about them that gives them an advantage. Generate alpha for the foreseeable future. And then our job is to stay on top of them and make sure that that continues to be true. And when we think it's not time to say thanks, but we're going to move on now because there's too much competition in whatever you do or you're head of research left and this was a research driven process and your new people don't have the chops that the old people, whatever the reasons are.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's before you've got the last decade of zero interest rates that made it even harder to beat the market because in a zero rate environment, there's more competition from the market itself and security selection is less important because the rising tide lifts all boats. So it's not about are they smart. It's about what differentiates them, how easily can it be replicated, how quickly will it be replicated, how good is it when you adjust it for the kind of risk they take to get whatever the results are. Maybe the returns are 20% lower than the market and the risk is 80% less than the market. There can still be alpha there. And so what we're trying to assess is do they have a process that we believe looking forward can generate alpha for our clients? Because the truth is if you think the answer is no.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Being smart is a good thing, but the problem with that is a screening criteria is that most people in the investment business are smart. They are. They may not be geniuses, and some are smarter than others, but there's not a lot of people that you would look at and say, that guy's an idiot. They're smart and they're ambitious, but that doesn't mean they can make money or raise money or control risk or even know how to control risk. It doesn't mean lots of things. It means they think they can and they probably have good PowerPoint skills and they can make a good pitch deck and they probably pretty good at speaking and gift of Gab and they can convince people. But there's a reason they say that most money managers don't beat the market because most money managers don't beat the market, even though they're smart.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“So when you started to go through this process all the way back to Oppenheimer and through Baer of looking for external managers, what did you learn along the way about what worked other than the premise, hey, if they're smart, that's probably a good thing.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Much time as we needed to set up ICG advisors. So the end of January were JP Morgan, Bear Stearns, and February 1 were ICG advisors. That was 15 years ago.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Seeing if we could stay at JP Morgan. JP Morgan wanted us to stay. They were great too, but we figured out that because they have this massive funds placement business, that business had conflicts with ICG. And when we figured it out, I went to the compliance people and I called our lawyers and said, isn't this a conflict? Isn't it a problem? And they go, yeah, it is. So I called the people I was dealing with at J.P. Morgan and said, look, guys, I keep trying to figure out if there's a way for us to stay here, but there's actually not. And I've checked with legal and compliance and here are the problems. We couldn't stay and do what we were doing if they wanted to keep the funds placement business intact. We got to go. They were awesome. They said, take your time. There's no rush. Find your real estate. Get your new firm set. Do everything you need to do, all good. Then, of course, the fourth quarter turns in the fourth quarter. You get to the end of the year, and it's a train wreck. And we're spending more time dealing with portfolios and clients and stuff.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“Provided legal, they provided compliance. They let me go around to the different branches and do road shows with their broker so that the brokers would know that this service was available so that we could grow the business. They were great. The deal we had made was very fair. And people were saying, well, you should go, you'll make more money somewhere else. I said, of course I would because obviously bears making money from us being here. I've got to deal with them. And they've never broken a word of it. They've always kept their word. I'm not going to just say to a partner, you know what? Thanks for the memories, but I'm going to leave you now after you've helped me get to here. So that's just not the right thing to do. Plus, there's no reason to do it. If it ain't broke, don't fix it. It eventually did break. Because in 2008, Bear went away, effectively. JP Morgan bought us. And then there was probably a four or five month period of...”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source
“I meet this guy. I love this guy. He was just the greatest, and he completely believed in us, and he started bringing us lots of business. And the business grew. I would say five years into being a bear, we were there for 13 years. Some of our clients started saying you really should leave and go start your own shop. And you know that whole thing about if it ain't broke, don't fix it. It's like the bear guys were great. Everything they said they were going to do, they did. Every promise they made, they kept. They didn't meddle. They didn't bother me.”
2024-07-29 · Capital Allocators · Jeff Assaf - Protecting Clients and Assets at ICG (EP.398) · IDENTIFIED FROM THE TRANSCRIPT · source