YouSaid · the spoken record

Matt Botein

lines on the record: 75
first: 2019-02-25
most recent: 2019-02-25
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

“It's the noshol rule. It's in your friends, in your business dealings. You can never be compensated enough, either through a fun trip or a great return for dealing with people who aren't good people.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“Father was a great writer and I have a lot of memories of childhood sitting on a like an Ottoman next to him and marking up pretty brutally my papers but he was a big believer in good writing and clear communication organized thought good grammar That stuck with me. And my mom was always one who still emphasizes empathy and understanding what the other person is trying to say, even if they're not saying it”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“I always read the journal every morning, pretty much cover to cover. And I still do it physically because I haven't figured out how to do it on the iPad in a way that allows you to stumble into the accidental story that you wouldn't have otherwise gone to read. I do have a thing for spy novels. So whenever Daniel Silva has a new book at him, pretty quick to get it.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“investment pet peeve arbitrary rules people who set up an arbitrary rule that says to encounter BlackRock we met a pension funge that had come to us for permission to basically hypotheticate their entire portfolio to Deutsche so that they could get an intraday liquidity facility because their board wanted them to be intraday liquid. It's a pension fund that's going to go and burn 50 basis points a year their pension's return because the board has set up some random rule which says thou shalt be intraday liquid.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“I am a terrible hobby person. I like work, and then my family is the biggest hobby. We have two pretty young kids and I like hanging out with them. I like my wife. So at one point briefly belonged to a golf club and realized that I literally never went to play golf because I wasn't going to leave Sue and the kids on a Saturday to go play golf. And I was really naturally natively, truly lousy at golf. I enjoy tennis. I'll take one of the kids and go play tennis.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, I'm no great model for that. I have it in our program. Sure. I keep the liquidity in bills and mass GOs, right? So just simple liquid stuff. And then I am a believer in real assets. I think as a person, you're ultimately trying to lock in your and your family's ability to purchase. And so if you kind of break that up into what it is you're planning on purchasing, a lot of it can be mapped to a real asset portfolio. So we have commercial and residential real estate holdings, multifamily farms that grow different things that feed in. We have some investments in wind farms and solar which are ultimately tied to the long-term power price. So to the extent that you think over time you're consuming leisure, you're consuming food, you're consuming energy, trying to own those basic factors of production feels like a good thing to be doing. And then the usual alternative investment assets.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then in some of the quant strategies, there's just a lot more competition too. If you were playing merger R or if you were playing yield curve, if you were playing carry trades, there's really cheap ways to implement that and lots of people are doing it. So I think a lot of that easy money has come out. Having said that, there's still people who really do it well. So if you're a rentech to Sigma, they still do it. They've invested massively in furthering their information advantage and there's still people like Baptist to do well. So if you're really smart, if you're really differentiated, if you either are just hiring the best qualitative people, or if you're investing, Two Sigma has, I think, over a thousand people. So I think there are still opportunities, but they're harder to find. And they have to be invested in in order to deliver.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“What if you're halfway there? If you're halfway there, there's half as many shares being sold into that news event than there used to be. Like way more cynically, there's fewer dumb decisions being made in one part of the world that can be profited on from the other. And at the same time, there's more money in the hedge fund industry, not compared to last year, but compared to when a lot of investors were making their returns. So in the fundamental value-driven part of the world, I just think it's harder to pick up those misvalued securities. As you move a little off the run into distress and credit-related investments, there's a lot more money going after those. And just because of where we are in cycle, a lot less of them. So that supply and demand thing, I think, should point to you. You're going to expect...”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm not the world expert on hedge funds. I do think it's interesting to think about what are some of the downstream consequences of the rise of index investing and the decline of active investing. And if you think about some of the opportunities that used to exist if you were a hedge fund, it would be some news event coming out of a company. The market would misunderstand it, which meant the mutual funds would sell on the news. You would have a different view. You'd buy it, and you might hedge correlated to the other members of the industry, and then you would wait for it to recover for that misunderstanding to be corrected. So in the extreme, if you had 100% indexation, there would be no sale. on that corporate news event, and nothing to buy.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think for smaller institutions and high net worth, you always have funds. I think for the biggest institutions, you'll see more separate and managed account platforms, that those will gain share because they give just so much more control, control and transparency to investors. I think the big end you'll clearly see that, but you may see it something like a cadre shows, you may see it bubble up from the smaller size two if quality can be maintained.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“And you use it, and you manage down your costs and you manage up your flexibility. There's a more radical things out there I'm involved with a company called Cadre on the real estate side, which is a very innovative fintech-y, but with real real estate people like Fasatelli involved. And it lets you make individual investment and sale decisions on institutional quality real estate investments. So I think we'll see more innovation. I think from a starting point of I just build a PE fund portfolio through, you know, I mix direct and indirect to technology enabled platforms that let you make more kind of real-time course adjustments based on what is happening in the markets and what is happening at home. And I think we'll continue to see that.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think it's kind of unrealistic to think, no matter how good those two people are, that they're going to be able to manage a portfolio, source, finance, oversee a portfolio in the manner that a Blackstone can. So I think one poll is inefficient, this let's silo and lock up capital with no transparency or liquidity for who knows how long. But I don't think the other one's right either of I'm just going to do it myself when I'm sick. I go see a doctor at a hospital. I don't try to. So the question I think is going to be what's the middle position? How do you get the benefits of a good illiquid investment program without some of the drawbacks? The Canadians were really big developers of this. One answer is you just commit and you have a co-investment program.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“Not that the people who are doing it aren't great, but if you look at Blackstone, I don't know how many people they have in the private equity department today was 40 when I started. I bet it's 150 today. You see some family offices for”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“And you've got to make that commitment today. You should be sitting on the funding to meet those capital calls or have some way that you're going to meet those capital costs. And so there's a frictional loss on that excess liquidity relative to if you invested in some other way. And if the opportunity set shifts that the financial services opportunistic fund that you just committed to sees less opportunity and energy gets cheap, it's too late because you've made that commitment. And then you hold it less and until it matures or you hit a secondary bid, which sometimes is frothy and usually is not. So it's a really inefficient way to deploy in a liquidity budget if you had another alternative. Having said that, I'd be pretty critical of some of the efforts to try to internalize and do it directly.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“The spreads will vary, right? By vintage and to the extent that you're paying bigger multiples that are more dependent on financing being there for the next buyer, I think you're likely to see a contract. My guess is some of that's already come out of the market as the financing assumptions have started to change. But clearly the magnitude will vary. I think though that so some is better than none. One of the questions I think that the industry will have to sort of work through over the next decade is, is this the right form? So having, we see this on the hospital investment committees, you have to make a decision today about whether to allocate to these funds that will draw your capital over the next, could be one year, could be five years, hold the investments for what could be a year, could be another seven years.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think it's the attention with which companies are managed, whether it's capital structure, optimization, or just writing management, the performance is different, and I think those are the reasons. So the answer is, in my view, it's better than not having done it.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a funny thing. First of all, empirically, the private equity industry has delivered premium. We did these studies at BlackRock, and even when you controlled for cap selection, industry focus, leverage adjustments, fees, it still delivered three to 400 basis points of extra return.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so, the flip side of that is the way that most investors, particularly the last five or ten years, have access to liquidity, has been in kind of traditional private equity. So look at BlackRock today, Blackstone, where you started today compared to where they were five or ten years ago in terms of assets. There's huge amounts of capital sort of sitting there maybe chasing the same deals, bidding a price as traditional private equity multiples are probably the highest they've been in a long time. So how do you balance the two when you look at investment opportunities?”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then Bermuda and its insurers. So just an incredible array. And I would say, in general, I think many of them are overly siloed and overly valuing of liquidity. If you just said, like, what are the things that stand out as problems? And the ones that managed to reduce or mitigate the silos and allocate think about illiquidity and allocate it thoughtfully are just, I think, heavily advantaged.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's really hard to generalize, right? The differences that exist between I hadn't appreciated how profound the differences are that exist between these different types of institutional capital pools that have nothing in common other than their institutional because they're not individual. So in my travels at BlackRock, I would go to China and see safe and CIC. I would go to the Middle East and see Adia, KIA, all the acronyms and see the pensions and the Endowments and Foundations, which tend to be smaller as a presence there, and the private banks travel around North America and see insurance companies, and life is different than PNC, and pensions, and state pensions are different from corporate pensions, and Canada is totally different than the U.S.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“Ended up closing with bringing along relatively little of its capital. So our full facility ended up being drawn. But we're delighted about that because I do think it's a great company with great management and we have great security. So we're very pleased about it.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, going back to 2004, we knew the management, we knew the spec, we knew the market, and we were able on a pretty short time frame to come up with a way to effectively backstop there being a certain quantum of capital available at the time of close. We ended up writing a variable-sized convertible preferred with wire coverage. And so we were willing to put in up and we brought in partners up to $210 million, but the company could reduce that amount to the extent that the SPAC money arrived so they'd have more common and less of this convertible preferred. And we would get compensated for that with a good security and the warrant coverage, none of which would be good if we didn't actually like the company and the management team. But given that we did, it was a nice way for our investors.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“And retain the management team who were largely the former White Mountains management team, Alan Waters, Kib Oberting, old friends. And for a variety of reasons, they elected that it was in the interest of the group to go public and to do so on an accelerated timeframe. So they elected to do that by merging with a spec, which also happened to be run by an old friend Avi Kolakstein, who was a former Flowers partner. And so they had this merger set and became apparent that the merger would be better if there was certainty of a certain amount of capital being in the company at close. And with this generation of spacs, it's not clear until the very end how much capital was going to arrive with the spec, not only can the shareholders vote, but they can redeem until fairly close to the last minute. And so we knew the company.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“Indeed, indeed. I think the opportunity zone thing, the challenge is going to be finding good deals, not finding capital. And we felt like, and they felt like having tentacles into local developers of lowercase Affordable Housing nationally is an interesting way to access that. And then we did back to White Mountains. It all comes back to White Mountains. White Mountains had bought a Scandinavian reinsurance company in, I want to say 2004 from ABB, which preceded GE in blowing up as a conglomerate. And they bought this business. They put it together with other”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“And we had a great strategic conversation about what they were trying to do. The CEO is Chris Hunt, what he was trying to do and what we were trying to do with people like him. And we ended up forging a partnership where we invested in the business and are helping them, we hope, to vision and execute, move into asset management, bringing third-party capital alongside the family's capital. property development management, mortgage residential mortgage financing, tax credit syndication and infrastructure, all these real asset debt and equity businesses.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“In this strategy, if all you want is the more equitized exposure. And we were very, very fortunate to have day one investors come to us who bought into that approach. We made an investment with a family, into a family business called the Hunt family, not the oil hunts, not the ketchup hunts, not the trucking hunts, but the real estate hunts in El Paso, who are like a longstanding, outstanding family. They made their fortune in the military housing business and went on to expand their presence in real estate into affordable and market-rate multifamily and then on to infrastructure. And we were fortunate to be introduced to them through a member of the family who was on the Penny Mac board.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“It is to invest across the capital structure predominantly but not exclusively in the financial services business with a flexible mandate in partnership with people to bring the right people, the right structures and the right capital to bear to make outsized returns relative to risk. So in this case we brought the people of College Avenue together with a structure which was a warehouse to a securitization on a flow purchase agreement and the right capital, which is capital that understood that this shouldn't be expected to be a 20% return. We had that open dialogue and said we're going to do some deals like this. We do think this is a mid-teen return deal. We could be wrong, but it seems to be tracking that way. So we're going to sometimes do things that look like 15s and sometimes we're going to do things that look like higher that have more risk. And you shouldn't invest”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“So first clarify we don't consider ourselves a private equity firm. We would consider ourselves a private investment firm. To us an important distinction because a private equity firm wouldn't make this investment. It doesn't reach, at least their targeted investment return. It's not a company. It doesn't have people who work at it. You couldn't check the VCOC box. So that's an important distinction. For a second, It comes down, I think, to transparency with the investors. So we had very clear conversations about our intended investment strategy with our investors.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“Relative to going out and trying to buy those same resids, there was a lot of added value to our investors from going through the sausage-making process of accumulating and taking capital markets execution risk, but managing that the best we could. And so we thought we clearly created value and achieved or target to achieve rates of return that are more than what the market would ordinarily pay you and more than what you would absolutely require for taking that kind of credit risk. And so in that case, that's what we did.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we looked at the business and we think it's a really interesting business, but at that point it was a more venture stage company, the equity of which kind of belonged in the hands of venture capitalists. But we thought the assets, which they were producing were really interesting. The average FICO of their loans were kind of 760, 770, and have some interesting characteristics about nondischargeability and bankruptcy. default rates through the crisis for this subset of student loans, and yet they price at call it Liabor plus 700. And so we created a structure where we just bought the loans as they made them, and we accumulated them in a warehouse facility and aggregated them to a certain scale, and then securitized the loans and took back the Rasids. And if you looked at that execution,”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“We've made four investments, and I think we're about to make a fifth. The first one we made was an investment in the student loan pool. And so we looked at a company which we think is a really innovative. It's a fintech, but it's run by real finance people, credit people, people who come from Sally May. And so they know what they're doing. They created a very slick online app, phone app for students who are still in school to take out loans. But the niche they focus on is loans where there are high credit quality parents or grandparents who are willing to co-sign. And that financial support from the co-signer allows them to access credit at a much better rate than if they as a junior in college went out and tried to get the loan themselves.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“What we wanted to have was the ability to invest anywhere in the capital structure. And so rather than being wedded to, I am the hammer of control private equity nails, we should be able to do control private equity, minority equity, structured preferreds, debt, and assets. And look at a situation and say, given where we are in the cycle and valuations, given the nature of the underlying, in this case I want to be nowhere or I want to be ring-fenced on these assets or I want to make this loan or I want to have this structured piece of equity.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“General markets perspective things seem expensive, right? So the risk you're creating across a lot of assets buying at least a couple weeks ago's price is, I think, skewed negatively. And I've had that view for longer than it's been evidenced. I don't know if it's earlier or wrong. But to me, the implication of that is to how you want to structure your investing activities is to be sort of maximally flexible. particularly given that sectorally by experience were relatively focused in financial services, big universe, but it's not the full world. And so our perspective was that if you're going to be relatively focused in a sector, and if you believe your investment period is likely to be”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“Took probably a year to work through internally. And it's been almost exactly two years since. And we talk a lot. I still sit on an investment committees. We have very open pipeline calls with them on our business. We've made investments where they've been advisors. We did a student loan purchase trade where we buy a flow of loans. And we used their analytics group, their financial markets advisory group, to do a lot of the credit and prepay analytics and to help us with our first securitization. So I'd like to think what we've done is keep some of the better elements of what could be accomplished being one firm and still enjoy, from my perspective, the autonomy advantages of being independent.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“Companies and deals. And being willing to leave money on the table, take time in doing it and doing it correctly, and lend long-term assistance. I think those are all proof points of a decision which is rooted in a different objective function rather than dissatisfaction or disagreement.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“One important thing is I wasn't leaving to go to a competitor. Most people who've left are in some way setting up shop or going to work for something that will be a competitor to what the firm does. What I was doing was so different than what most of the bread and butter of BlackRock that I think it was just naturally a little bit less offensive. Second thing was it was very clear in words and in willingness to leave things on the table that this was not about money, it wasn't about people, it was about truly a different objective function than what people in the firm wanted for themselves. As you said, if we had created the mega fund at BlackRock made more money, but this was about wanting to be entrepreneurial, wanting to be structuring, creating”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think a lot of patience and wisdom on Larry's part helped. It is hard to make that work, but you can't do it unless both sides have respect for each other and patience and a willingness to see past the moment of separating towards the end state of having a good partnership. And certainly from my part, I didn't do anything to hold them up or embarrass them, none of which would have been deserved. And they couldn't have been more supportive and wonderful. Not only did they make the investment, but they did nice things like talk to potential investors and say, we think it's a good idea to invest. So things they certainly didn't have to do, but I think over the span of time, as we work together, we'll be very mutually beneficial.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I fell in love with the idea of hanging a shingle and having the small partnership and just controlling our lives. And I think with Larry's backing, we would have had as close to that as would be humanly possible in a firm the scale and prominence of BlackRock. But there ultimately are constraints on how independent you can be in any big regulated firm. I think where we ended up is for us the best place, which is we kept really good ties with BlackRock. They bought a little piece of our firm. The journal reported that they can put $400 million with us to invest. And we share ideas and work closely together. But at the beginning of the day, when I wake up, it's Galatin Point Capital. It's me and Lee and a dozen other people.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“I did think about it, and Larry suggested it. And he may have been right. That may have been the ultimately more lucrative, larger scale. But for me, it wasn't just about how mega could you make something. It was about the day-to-day of life and control and balance. And along the way in thinking about this, I had started talking to a friend of mine about initially his advice on what to do, and then ultimately we started talking about forming a partnership. This is Lisak”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd have to think that BlackRock is a pretty unique platform to see, oh, you could do a telecom deal with Charlie Oregon. You can Lumineeri's coming and bringing in a mortgage-related business. Did you think about trying to just say, like, I just want to invest? Let's create a mega BlackRock opportunities fund and I'll just run that.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“For everybody is less. It was a Lurinieri idea. And so we did that deal. So we had all this interesting deals that were coming in. I was able to do them. But it reminded me that that's actually what I enjoyed more than managing what was increasingly a stabilizing business. And so the management responsibilities were larger than the strategic or investing responsibilities. So I started a series of conversations with Larry about where my longer-term interests and ambitions lie. And Larry was just great about it, very understanding, and suggested that, listen, sort this through with me in a responsible way where we can make transition plans for the businesses and we'll back you in doing this when you leave.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“There were reporters who picked up on that same kind of. It's actually in litigation still with the FCC because the FCC had a different view of the eligibility as well. So these were investments that we made where relationships were funneling opportunities in. We could evaluate them, structure them, and do the wireless auction deal, the music rights. We recapitalized a company called Home Partners of America, which is the leading provider of the rent-to-own financing. You want to go buy a house. You're not going to qualify for a mortgage. No one should really lend to someone who might default because the foreclosure process has been proven to be too expensive. And so the right answer really is a rent to own, as with furniture. Rent the house, establish your credit history, you have an option as your credit history improves to purchase the house, the house that you've been living in. And if it doesn't work, it doesn't work with the break.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, it was very fun. We did everything from music royalties and rites to, we did a wireless spectrum deal with Charlie Juergen, Dish Networks, where he was entering the spectrum auctions for the AWS 3 band back to media and communications routes. And we backed a small business which entered the auction as a small business eligible for bin discounts. And so there might have been a lot of...”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“investing. The first part of the adventure was kind of like investing because you were choosing which investment capabilities to invest in. As it matured, stabilized, it was more management and less investing. And I was fortunate that one of our major LPs developed a nice relationship with me and actually trusted us with some money. At this point, I was the CIO of the Alternatives Business with effectively a CIO's fund to invest in various ideas that we came across.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“By comparison, like infrastructure seemed really interesting. I didn't know what that meant when I first started investigating it, but parts of infrastructure were really interesting. We focused initially on renewable power. We brought in a great guy named Jim Barry to run the business. And that was something you could look at and say, these are assets that require broad reach, government relations and connections, long-term financing relationships, and really should be conducted on a large, stable platform and can be sustainably. And so we built out the infrastructure business, which we could then offer to the firm's clients as a substitute for bonds. You trust BlackRock for bonds. These are bonds, but better. So that was a great thing to build. So I enjoyed that. I did miss, you know, with the passage of time.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's an interesting place to have money, but we probably shouldn't do it here as a major focus. And in fact, we're better off procuring that exposure for investors through legacy Queelos, now BlackRock alternative advisors, the hedge fund defunds business, rather than trying to manufacture it internally”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“Are doing that we should be doing and what are the things that we're doing that maybe we shouldn't. And then what are the things that we're not doing that we should be doing and what are things that we're not doing that we shouldn't be doing? Sounds so simple. But that was really fun because it was very intellectual. It was think about where are the areas if you had capital to invest as an investor you would want it to be but then map against that which of those areas do we think lend themselves to being operated in an increasingly large scale organization? So you might say small fundamental value driven hedge fund might be a good thing to do, but does it need to be or can it sustainably be done inside the four walls of a really large asset manager where you're constrained by filing requirements that come from the index business and you might say you know”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“Unclear at the time, but BlackRock had been more recently acquisitive and had gone from being relatively pure fixed income asset manager. And then with the acquisitions of State Street Research and Management, Maryland Investment Managers, and ultimately BGI, along with Quellos, had accumulated unintentionally a number of alternative capabilities. With those acquisitions had come a couple of real estate businesses, a hedge fund of funds business, a private equity fund to funds business, and a number of hedge funds. And so the initial job was pull that together because most of those continue to live in some other historically associated part of the firm. So pull it together and think about what are the things that we”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's now six and a half trillion and 15,000 people. I just settled in there when Larry said, you know, we should actually have a real alternatives effort. Do you want to run that? And so I said, great.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, no, no. But, you know, it actually ended up engineering a little deal where we bought a majority interest on behalf of a group of investors in a bank. And I met an actually qualified bank management team, particularly a great CEO. And so engineered a deal for that great CEO and management team to go into the bank and investors to take an interest. But it was becoming clear as this was proceeding that I was not going to be the CEO of the bank and actually the system was right. I shouldn't have been. And along the way Larry Fink called. So BlackRock had been my partner at High Fields in the creation of this mortgage business called PennyMac.”
2019-02-25 · Capital Allocators · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · IDENTIFIED FROM THE TRANSCRIPT · source