YouSaid · the spoken record

Mark Baumgartner

lines on the record: 83
first: 2020-04-02
most recent: 2020-04-02
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

“And Jim said we want to keep up with our peers. We compete for talent with top universities and we want to pay our professors and attract talent here. That's sort of the key, this knowledge base. But if you can just keep up with the median peer, that'd be great. And then I kind of looked around. So you're asking me to be average. And he said, no, we want you to be median peer return, but with half the risk. So you have the risk budget. Yeah. So that was the key. I said, okay, I understand now. And so that mandate has resulted in a very different strategy for the institute than most other places. It's just when you have your risk budget torn in half, you can't have the illiquidity in the portfolio and you can't have the volatility. And you certainly don't want the drawdown given the spend rate that we have and what higher education price index.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the things I did at the institute was to update the investment policy statement with a governance hat on. And so the beliefs actually didn't change, Ted. It's just a reapplication. Risk is rewarded with return over time. Sure. Do you believe that risk means a variance in outcomes? It actually is uncertain. Yes. So we're actually seeking uncertainty and we are seeking uncertainty in different areas. So diversification, but uncertainty is risk. And so that's really we're hunting for a lot of risk. There's a lot of different risks in the institute's portfolio combined. They actually result in something that is much lower risk than I think what a lot of our peers have by design, by mandate. When I joined, I said, Jim, what's the objective for this portfolio? What are you trying to achieve?”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“You've had these varied experiences going in, and you show up and you now have a mandate at the Institute to be the chief investment officer. What did you come to believe about investing that led you to take the portfolio where you took it?”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“While the institute is an amazing place much, much smaller portfolio, so a lot of people question, well, you're moving to something that's ten or fifteen times smaller. Why would you do that? And I describe it as a small place with a very big board and a great history and mission and alignment with the way that I think about risk and portfolios. And so at the time, Jim Simons was the head of the investment committee. And Marty Libowitz was on the board.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“At Ford, I was the head of risk and asset allocation, asset allocation risk. So it was Larry Siegel's old position repurposed for a quant guy. No one wanted to say strategy. My risk team at Ford was bigger than my current team at the institute because it's larger place.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“Strategy shift before the crisis, it was much more single asset class focus. So public equities, private equity, venture, and fixed income. It almost was a 70. There was very little hedge funds. There was very little energy and natural resources, very little real estate. Yes, there are embedded equity betas in all of those strategies, but there are other ways to search for alpha and see great managers in all of those asset classes. And so that's what we did.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, Ford, to their credit, held on and still tell stories again about how tough it was in March of nine, just staring down into this abyss and no one had any idea and it was much, much worse than anyone had expected. And there was a lot of confusion as to whether things were broken or survival, right? Lehman had happened, Bear had happened, the courage to hang tough and keep risk on in that situation was very, very hard. But they did it, which is remarkable and credit to the board and credit to the investment team there at Ford. And then what we did over the next five years was to shift that portfolio more toward an endowment-like portfolio. We built out the investment team there. We shifted probably eight of the $10 billion at that point into different strategies or different managers. It was a unbelievable transition, fun transition”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“While the crisis happened, yeah. Morgan Stanley shrunk lots of businesses, so we were one of the casualties of that. And again, you think that, well, that sounds pretty unlucky. No, I choose to believe it was luck because I was fortunate enough to find the Ford Foundation at that point. There was a leadership transition at Ford and a desire to perhaps change the strategy there, which was equity centric and Ford was very early in private equity inventure and had a terrific portfolio but suffered a bit during the crisis.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and by the way, look, portable alpha is a bad word now, but that's what it was. I mean, that's what we were talking about doing. We wrote white papers on this novel idea, and that's what it is. But I think Portable Alpha in 2006, which is when I joined Morgan Stanley, that was before the crisis. And there were a lot of people that were recognizing the potential of this. And obviously, quote unquote, it's just leverage, right? So yes, it's leverage, but it's applied in a very intelligent and highly risk managed way, right? To achieve an objective. That's how you do it. A lot of people took that and just, ah, we're going to lever up. And that ended badly.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“To get the bid and to recognize that there are embedded betas in hedge funds, I would not call this easy or clean. Jack had a sign on his wall at Morgan Stanley. It said, don't try this at home because you need to pay attention to it. Obviously, everything is risky. A knife is a risky thing to hold in your hand, but you want a surgeon to use that to do good. So that's what we describe the strategy as. risky but if you manage the risk just like most of our hedge fund managers are risk takers but they're managing that risk and that is sort of the key there Was highly risk managed. Derivatives overlay with alpha. And”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“Call it a collection of alpha generating managers, a portfolio largely uncorrelated with the market. Hedge funds, macro relative value, things without a lot of embedded market beta. And derivative overlay, which was managed.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“It was just a collection of risks, but it was very, very different. So I think the origin of that portfolio, as Jack said, why would we want a 70, 30, or a 60, 40 equity fixed income mix? Because we're not going to get the type of returns that we could from having hedge funds or having other types of alternative investments in the portfolio. We don't need to take systematic risk. We're getting paid for it, but we're not getting paid as much as we could for idiosyncratic risk. So they did that for a couple years, and the board, I think, at Warehauser kind of gulped, but they said, well, you know, Jack is really smart. Let's just go ahead with it. So fast forward a couple years, and possibly through the 87 crisis, I'm not sure, but the performance of that portfolio, as you can imagine, very, very different than performance of a 60-40.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“But yet Jack was very in the background. You know, Jack was not recognized in sort of unconventional, but almost too unconventional. A cowboy taking risk and sure succeeding, but that's the problem with being different in the world. The worst thing is to be different and fail. The next worst thing is to be different and succeed because then you are a cowboy or your risk taker or you're just lucky. But that's a story of how you can be different. And that portfolio weathered the crash in 87 and it weathered the Mexican peso crisis. It weathered long-term capital management, weathered the dot-com boom and bust. But it's not widely adopted. There are a few foundations out there that have that type of portfolio. Talk a little bit about that.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“Totally different strategies though. Warehauser was a synthetic sixty forty portfolio using derivatives in a pension plan, mind you, in 1985. So a synthetic exposure plus alpha from hedge funds and all sorts of inefficiencies that exist in the financial markets back in the day. And it was highly risk controlled and risk managed, quantitative, what you might think of an aerospace engineer putting in place at a pension plan in 1985. And fast forward twenty years, that portfolio which was levered two to one and used alternative investments, which in the 80s and 90s were something inconceivably risky to most, that portfolio outperformed Yale on an absolute and a risk adjusted basis.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the next step was Morgan Stanley. I was fortunate again in the spirit of luck to find someone who actually understood my background Jack Coates, who was the CIO at Morgan Stanley's alternative investment partners group in West Control. Jack was the CIO at Warehauser and had come over with that lift out to Morgan Stanley. And he had an aerospace engineering background, believe it or not. And so I came to join him and help him build that business. It was the early stages of the OCIO expansion. And so we were looking to help institutional clients do what Jack had done at Warehauser, which was incredible. Jack started at the Warehauser Pension Fund in 1985, the same year that Dave Swenson started at Yale. Two totally totally.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“Quanal is about the same as they were. Call it about a $500 million hedge fund, not small, not large, but to grow, you need to change. And so we were already turning that portfolio over about seven times a year. It happened to be a Higher frequency trading back then was high frequency today, it's not very high frequency, but we noticed that as we grew We had more slippage in the portfolio. We're impacting markets, and so Alpha was decreasing. And so the happy medium was they had kind of maxed out their size. I think there are a lot of funds like that. And you can make that trade-off as a fund sometimes. Can I grow and still give the returns that I've had in the past?”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“And now hedge funds. And so it's always been about managing those uncertainties. And the Stat Arb shop, Quanl, gave me some more insight into how portfolios could be managed in a very risk-controlled way, right? That's what you want to do. You want to take risk. You don't want to avoid risk. Howard Marx is a risk avoidance strategy is a return avoidance strategy, but you want to manage those risks. So that's been key for me in my learning about hedge funds and then how I manage hedge fund portfolios after.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“PM and help them grow that business. Very, very different strategy than strategy capital was fundamental equity and Quanal was Stat Arb. I really got my risk degree there. Quanel was first and foremost a risk management firm, so it was sort of a better bar. I was headed by the former head of finance at Stanford, Paul Fletter, and Terry Marsh, who was the former head of finance at Berkeley. Great DNA there, great finance knowledge there. And so that was the risk model. And then the hedge fund was built around that, which was really interesting. That was, for me, that fit, right? This idea of uncertainty management, which I had through my studies of turbulence in my PhD program, and then business uncertainty and management through management consulting experience.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“That was a year. And the story there is we had a market neutral fund that had equity-like volatility. And so no one was really ready for the downs that came along with some of the ups. So we shut that down and I went to work at another hedge fund called Quantal, a quantitative market neutral fund, which one of the other partners at Strategy Capital was also the chairman of that and brought me over to.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“Very, very different. It didn't feel institutionalized at that point. It felt like there wasn't even a hedge fund. It was just an investment firm. And we were doing what we did as strategy consultants, which was to look at industries and look at companies and pick winners and pick losers. It was pretty clear to us that at some point Netflix was going to, if not kill Blockbuster, seriously hurt Blockbuster. So right there, you see a nice pear trade. And it wasn't clear at that point. It was Amazon had not even entered the business yet, was sort of threatening to enter. I don't know if you remember. They actually had a DVD delivery system before they were streaming. And it was Reed Hastings, who had the vision to stream content, which you could see things converging and it's reality today. But back in 2003, it was pretty tough to see where broadband had to go. And obviously mobile.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“We had a long short equity hedge fund. The memory for me is being in the boardroom at Netflix before Netflix was Netflix. It was really so early. They had a red envelope company. And having that experience and seeing that company being built from the inside and being able to interact with management was eye-opening for me.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“How to create companies and all of the value creation potential that exists in that area and how it's done, right? I was a kid 20 years ago now. But I enjoyed consulting a lot. And I said, this has been so great here. Why don't I take a look at one of the branded shops? And I ended up going to BCG three years later and spent four years there being a generalist and just looking at all sorts of different industries, airlines, healthcare, energy, just a lot of fun, consulting was wonderful. And along the way, I started to learn a little bit more about investing and seeing how value creation was rewarded by the markets. And I ended up after four years going back to join Hamilton at his firm strategy capital. This was in the early two thousand.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was there for three years, and we had fantastic casework. This was Silicon Valley in the late 90s, so just amazing, right? If I knew then what I know now, I probably should have stayed there and should have been involved somehow in the venture industry there. It was so much fun.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“And me and hired a kid. I always joke. I said, when Hamilton hired me, I didn't know the difference between revenue and profits, just money. But Hamilton saw some raw potential there and brought me out to join his strategy firm. And I learned about business and strategy with bane level partner working closely with them. Incredibly, again, luck, incredibly fortunate. And how long did you stay?”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“More sociology, psychology oriented. And folks in qualitative disciplines are faced with no less uncertainty than folks in engineering disciplines, perhaps more uncertainty. And so that's where I found my home. It was a departure from engineering, but I enjoy that blend of addressing uncertainty quantitatively and qualitatively. And so what was the first step after you left academia? It was into management consulting. Yeah, I was fortunate to find someone who's actually been a mentor to me my whole career, Hamilton Helmer. Hamilton was a Bain consultant. He actually worked with Bill Bain in the early days and I had moved out to the West Coast to start his practice there in Silicon Valley doing strategy work for firms on the West Coast. And he saw some kind of potential.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“I went to Princeton for graduate school, and at Princeton it was a very, very different experience than undergrad. I did undergrad at University of Florida. And I always liked and I said when I was at Florida, I had a calculator in my hand and I was always solving problems. At Princeton, I threw the calculator out and exchanged it for a piece of chalk. And we did a lot of theory there. And the other thing that Princeton had was it had a school of political science, and I had a great advisor there who encouraged me to branch out. And so I took classes in the Polyside department there, got a minor in public policy, and that shifted me off of engineering and aerospace to public policy and application of quantitative methods to areas that were more qualitative.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“Please enjoy my conversation with Mark Baumgartner. Mark, thanks for joining me. Pleasure to be here. We always start talking about people's backgrounds. Why don't you just walk through kind of how you got to the CIO seat? It's a strange path, that's for sure. I grew up in Florida and watched a lot of rocket launches and always felt close to Cape Canaveral and the space shuttle. I remember drawing pictures of the space shuttle when I was 13, 14 years old. I actually saw the first launch. Really neat experience. So I always had that desire. And so I pursued that in school. I studied aerospace engineering in undergrad. And then when I got out of undergraduate in 1991, the country was in recession. And I said, well, you know, why don't I just go for some more schooling and pursued graduate studies? The theme in my life has been luck. I think it was lucky that there was a recession in 1991 to push me to go get some more schooling.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guest on today's show is Mark Baumgartner, the chief investment officer of the Institute for Advanced Study, where he oversees a billion-dollar portfolio that seeks to achieve just median returns, but with significantly less risk. Prior to joining IAS, Mark Ed Stints at the Forge Foundation Overseeing Risk at Morgan Sanley's Alternative Investment Partners at both quantitative and qualitative hedge funds, and as a management consultant. Oh, and he studied to be a rocket scientist before that. Our conversation covers Mark's path to IAS and the principles of luck, risk, and uncertainty on that path. We discussed the IAS portfolio, one that's catered to achieve a low-risk profile, and how he's stayed the course when that structure hasn't been rewarded by markets. We talk about identifying managers that fit into his approach and different metrics of defining risk at both the manager and portfolio level.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hello, I'm Ted Sides, and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation through conversations with leaders in the money game, we learn how these holders of the keys to the kingdom allocate their time and their capital. You can keep up to date by visiting capital allocators podcast.com.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“Capital out hitters is also brought to you by admired leadership. Back in April on episode 497, I sat down with Randall Studman, the executive coach behind admired leadership, who advised more than 500 CEOs, including some of the most respected names in asset management. Randall introduced me to Alex, an AI leadership coach's team built on 40 years of proprietary research into what the best leaders actually do. For investment professionals, that means your entire team gets on-demand coaching grounded in the behaviors that drive results, and build the kind of followership that retains your top talent. We use Alex and our team at Capital Allocators swears by it. Try Alex for yourself at the link in our show notes. Try Alex. Leadership.com.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“Capital allocators is also brought to you by Ridgeline. Ridgeline makes your day unrecognizable. That's how refreshingly different it is from legacy investment management technology. With Ridgeline's front-to-back AI native platform, your typical tech pains disappear. No integration headaches, no data discrepancies, and no upgrade cycles. Instead, you get real-time data flowing through everything from portfolio accounting to reporting to reconciliation, trading, compliance, and more. In the AI era, asset and wealth management firms moving to Ridgeline gain a decided advantage. That's why customers call it miraculous game-changing and an awakening. If that's not how you would describe your investment management tech, request a demo at RidgeLine.ai.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“To an exact verifiable source because the answer is only as good as what's underneath it, and without the sense you know exactly what that is. See it for yourself. Try a free trial at alpha-sense.com slash capital. That's alphacense.com with a hyphen in the middle slash capital.”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source
“Capital allocators is brought to you by AlphaCents. Here's something for you. Most AI tools today are very good at sounding right. But can you actually trace it back to a filing, transcript, or specific passage that drove the answer? Or are you just trusting the confidence of the output? For allocators, that's not a minor concern. A missed filing, incorrect source, or context that gets lost somewhere in a retrieval chain aren't edge cases. They're how decisions go wrong. AlphaSense is the AI platform built specifically for this. They own the content over 500 million curated documents from broker research and expert transcripts to filings and earnings calls. And they own the retrieval layer on top of it. That means every answer can link back”
2020-04-02 · Capital Allocators · [REPLAY] Mark Baumgartner – Luck, Risk and Uncertainty as CIO for the Institute for Advanced Study (Capital Allocators, EP.77) · IDENTIFIED FROM THE TRANSCRIPT · source