YouSaid · the spoken record

Michael Kelly

lines on the record: 81
first: 2025-11-24
most recent: 2025-11-24
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

“You looked at the people that you wanted to partner with, best of breed managers. How did you align your incentives with them and their incentives with the ultimate investors so that those expectations can get met in a way that everyone's rowing in the same direction?”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you look at the profile, the investments will often be put into a retirement account where taxes will be less the issue in factoring into the decision making. In other cases, even with a taxable account, the level of yield one can generate is oftentimes even post-tax fairly attractive if you can generate high single digit, low double digit yields in private credit and map that up against a cash alternative or where tenure yields are, it still may be considered advantageous or on a trade-off basis.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“Through their floating rate characteristics was a nice offset in balance to what was in the traditional fixed income portfolios and picking up an illiquidity premium, in some cases a complexity premium around that asset class. That to me was a lot of the main drivers of private wealth into private credit.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“Backing up, think about the post great financial crisis period of time when yields really started collapsing, disinflation, globalization, everything driving yields down towards zero and culminated up to 2021 when we had zero interest rates. At that time, the desire to have an alternative in fixed income to what was historically high liquidity, hydration, low credit risk, most fixed income portfolios, the 60-40, the 40% were mostly government bonds and agencies and mortgage-backed, which had high duration, high liquidity, little credit risk, to be able to complement that with credit exposures that were less liquid, that had higher credit risk, were shorter duration.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mentioned expectations and incentives in the first iteration with institutions. What are the expectations of that individual wealth vertical that led you to say yield was going to be the right place to get started?”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“Estate lending. A lot of these were personal relationships that we had. These were people we knew very well. We knew their teams understood their orientation towards risk, as with all forms of credit. It's not just someone who can source and originate an underwrite credit, but also someone who can deal with problems when they arise and credit. Problems always arise. And so we wanted a strong risk orientation and workout capabilities across those areas. That's how we decided on the varying combination of personal relationships and core competencies.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“When we set out for partnerships, we thought about the individual spaces that we believed had risk reward that was appropriate for the private wealth channel, varying forms of private credit stood out among them, middle market private credit, unitranche lending, real estate, commercial real estate lending. These were areas that we felt strongly about offered a very attractive entry point for individual investors through their advisors for what they were looking for, which again, going back was very income focused in terms of the objective set. We then came to who do we believe are the best of breed managers across these different areas, GSO and KKR stood out as that golden tree in the hybrid between public and private credit, EIG and energy credit, Rialto in commercial real estate.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“Love to teach through part of that capital location investment process. So as you started to go from a single relationship with GSO to what's become five asset classes, some done directly, some with managers, how do you think about in a big world of asset managers who you wanted to partner with?”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“Different verticals private credit, private equity, real estate, multi asset, and infrastructure we just announced an acquisition of postroad group in digital infrastructure. So that will be our fifth vertical and about 20 different investment strategies that we offer across those five verticals.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“About three years ago, we made the decision to expand from income strategies into growth strategies and solutions businesses. We talked with a number of investment firms about that and came across portfolio advisors. Portfolio advisors had been a private equity solutions business and been in business for 30 years helping institutional investors navigate the middle market private equity business. So primary allocations, secondaries, co-investments. That began a conversation with them, which culminated into us merging our businesses two years ago. There was no overlap in our strategy base, so we took our credit and real estate capabilities and combined it with their private equity capabilities and integrated that under the common future standard brand. Today we have close to 90 billion of assets under management across five”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“The time, Michael and GSO had launched the first ever non traded BDC. They had a BDC and a closed end fund and it was exclusively at the time with GSO as the solo partner. The first thing we set out to do was to undertake external partnerships with some other managers, Golden Tree, EIG, Rialto, and real estate, and building out the product suite in other areas of private markets, mostly around an income orientation. At the time, bringing strategies that delivered income in a world that was starving for yield into retirement accounts we set about doing that. Then we began to internalize the capabilities. I'd hire Andrew Beckman, who I knew from Goldman Sachs and Magnetar. So Andrew Beckman and his partner, Nick Halbut, and then built a team around that for internal private credit capabilities. That began a series of additional bolt-ons.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“Or on pipes might be a good idea as long as the quality content is high. I thought we can do that here. And that began my joining Franklin Square and working with Michael and the team to turn them from this packaging industry company into a world-class asset management company.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“And Doug thought it would be a good idea to go and meet with Michael and talk to him about what I was thinking, what he had been doing already. That begun a series of conversations with Michael talking about his business. And it really resonated with me, what Michael's vision was. He was bringing income strategies to the individual investor marketplace through the independent broker dealer channel and wanted to build that out. At the time, Franklin Square, the analogy I use is Netflix. They were packaging and distributing other people's contents in this case, GSO's middle market lending practice or BDCs. It's a little bit like Red Envelopes and DVDs. They had built this incredible distribution engine and pipes into all of these individual investors through the broker-dealer market. It had been my background to build out asset management companies, and I thought, well, just like Netflix eventually came to the conclusion that building your own TV and movie studio and putting it.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of which was in asset management, was helping them do that. And I bought Robico for them in Europe, which is a several hundred billion dollar asset manager out of the Netherlands. I wanted to go back and do something more entrepreneurial again and build another business. This is now 12, 13 years ago. I had a view that the next big leg in investment management was going to be bringing alternative investments to a broader marketplace, the mass affluent marketplace individual investor marketplace. I began to talk to some people in my network about that view and what to do about it. And at Goodman and Doug Ostrover at GSO, along with a good friend of mine, Scott Fletcher had mentioned Michael Foreman and Franklin Square. GSO had had a relationship with Franklin Square. They were sub-advising the BDCs for them.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“While thinking about where the world was going and what the next big trends were going to be, that was the real opportunity. And that's where I was taking the time to think through what are the next big opportunities in asset management that arc of history of high net worth, ultra high net worth capital, institutional capital, embracing these non-traditional forms of investing, who was being left behind in that, the mass affluent and the individual investors, and how to bring those opportunities to them. If they're so good for the most sophisticated allocators in the world, why are they not made available to this group of investors? That was just a mission-based opportunity. So I was at Oryx Asset Management. I was running asset management. This is a Japanese holding company, and they wanted to build vertical businesses.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“I like to build businesses. I enjoy investment firms where there's a combination of working with investment professionals and managing people and working closely with clients. Finding an opportunity to be entrepreneurial, be able to harness those experiences and skills.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you want individuals to act in a way where they are collaborating and working towards a client outcome, you have to appropriately construct those incentives correctly. That's often where an investment management things go awry. So I'm having a problem getting these guys that are managing to do what I want them to do. I always start by asking them, well, what's the incentive framework that you've designed to get them to do that? Because if you correctly frame the incentives, they will behave appropriately. They're rational human beings.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you look at capital coming in, understanding what the motivation of the capital coming in, what drives that motivation, and our expectations appropriately matched with what can be delivered. At the time, institutions were looking to hedge funds as diversifiers. You and I both know you can construct portfolios that extract the alpha and mitigate the beta. The whole of the hedge fund industry wasn't necessarily doing that. There was still a lot of embedded beta in many of these strategies, ensuring that what you were offering and what the institutions were getting was a big factor in that. In terms of learnings, being in a position where you can manage expectations and incentives appropriately is extremely important. If you think about the Charlie Munger quote around show me the incentives and I'll show you the behavior.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“There wasn't a level of transparency and understanding of reporting and risks and positions, diligence down to the manager level and their process. That approach wasn't fully embraced. The culture was more about were great investors, give us your money, and we'll generate great returns. We may or may not be able to or want to explain to you how we go about doing that.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“More akin to what they were used to in dealing with more traditional asset management companies, which at the time were long only companies. We set out to build a firm that brought the best facets of the traditional asset management business to alternative and hedge fund strategies in that business. We saw an opportunity to be a key partner to institutional investors and help them embrace these strategies and how they could be helpful to them in their portfolios. This is back in 2000 and late 90s was differentiated.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“When we started Front Point, many of the hedge funds at the time were run similar to a family office. We saw an opportunity to build a firm that could partner with institutional investors and help them demystify these strategies, understand what the risks were, understand how they fit into their portfolios, give them much greater transparency around.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“In my career, I went into macro investing. I wanted to be Stanley Drucken-Miller or Paul Treones. It always struck me that people who went into investment management wanted to be the next Warren Buffett. They wanted to be the next Trillian Robertson or Stanley Drucken-Miller. Very few people set out to say, I want to be Larry Fink or Chip Miller and manage these businesses and grow these businesses. I thought I could spend my life trying to become the next great macro investor. And I might be good at it. There are a lot of people fishing in that pond, but actually building asset management companies and managing them, there seem to be nobody that sets out to do that. I thought, well, maybe that is my career path. If I can do that, there are few people fishing in that pond. It's a much more inefficient market. And I could be A plus at that. That's where my head was at when we were building Front Point as opposed to using that as a platform to manage money. It was my original intention.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“Back then, information was not as ubiquitous. There was extra legwork you could do that would give you a real comparative advantage. Looking at these companies, looking at trends, identifying sources of information on macroeconomics and data, working within the company's understanding the supply chains. That was a time when there was far more inefficiencies that created significant amount of opportunity as time went on, as we saw through the 2000s, the passive indexation and ETFs and the capital markets changes in the public market rendered some of those advantages obsolete.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“You think about my career in the arc of asset management, when you think about the 60s and 70s, the old AW Jones model, which then you talked about the early days of barbarians the gate and private markets, went from the Bass brothers and Richard Rainwaters that family office Memphis Mafia type capital through that 70s and 80s and of course you're very familiar with David Swenson then in the mid 80s adopted the endowment model and began to say, I want to invest the way these sophisticated pools of capital are investing that begun the trend of institutions embracing that and you're in the 90s you're still at a point where it was mostly family office capital invested in these types of strategies in the early days of endowments embracing and then ultimately pension plans insurance companies”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“What I appreciated the most was being around Really intelligent people doing intense focused work. It always struck me that one of the most important lessons was to be intellectually flexible. And what I mean by that is come to a view based on your work, but be open to change your mind. If you see disconfirming evidence, don't just find evidence that supports your view and block out anything that disconfirms your view. The other important lesson that I learned, which really came more from Michael Steinhardt than anyone else, which is this idea of a variant perception. Think about what's already in the price. You might be bullish on something, but if everyone else is just as bullish, then where's the opportunity? Somebody who says, well, I like to be long, high quality companies and short, poor quality companies, well, I wouldn't mind being long a poor quality company if it's going to get better, if I have a variant view on that and vice versa. This idea of finding your thought process and how it differs from what's already baked into the price was a big important lesson early in the investment.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“That was the beginning of my entry into the hedge fund industry in the mid 90s. From there, I went on to work at Tiger Management, incredible firm with incredible people, super talented from Julian across all of the analysts and PMs. After that, we started Front Point Partners with the view to bring specialized alternatives, hedge funds, to an institutional investor class. If you think back in the late 90s, early 2000s, that was actually a thing. We called it the institutionalization of hedge funds. Was 12 years of my life wound up being the chief investment officer and co-CEO of that firm with Dan Waters. We ultimately sold it to Morgan Stanley and ran it from Morgan Stanley for a few years.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably 20, 25 pages. I went down the list and I cold called all of them. The only one I got through to was Lee Cooperman. Lee, who notoriously was known for doing more with less, answered his own phone. Lee, one word, and I made my pitch. I was a kid from the boroughs. He was a kid from the boroughs of New York. I told him that I wanted to come work for him. I would work for free and sleep on my parents' couch and do whatever it takes to break into the hedge fund industry. He told me that he only hired PhDs. I was getting my MBA at the time, so I thought I was ruled out. Then he said that PhDs for poor, hungry, and driven. And I thought, well, I check all three of those boxes. He said, well, I'm a value investor. I like the price. You start Monday.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“And this is now, we're going to talk about the mid 90s. So it always struck me as odd that who I viewed as the most talented investment professionals of the time were stuck in this arcane part of the investment business, hedge funds, venture capital, what we now call alternatives. So many of them that despite their young age had made tremendous impact, a part of financial services that was a pure meritocracy. And I thought to myself, I want to be part of that club. The hard part was how do I break into that club? I had an old hedge fund directory. I still have it, paper directory of the names and contact information for all of the hedge funds of the day that Julian's and the Bruce Coveners and the Paul Tudor Jones's.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“I started my career at Solomon Brothers. I spent a couple of years in the fig banking group and then one year up on the fixed income trading floor. When I went back to business school, I wanted to make the switch.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“Studio and putting it through your own pipes might be a good idea as long as the quality content is high. I thought we can do that here.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source
“The days of financial engineering, your way to higher returns, in my view, are over, where you're really going to see the outperformance in private equity are going to be faster revenue growing companies, lower multiple entry points, more fragmented ecosystem private companies, and where you can add operational value. That just simply tends to be more in the middle market than in the large and mega cap private company market. Franklin Square, the analogy I use is Netflix. They were packaging and distributing other people's contents in this case, GSO's middle market lending practice for BDCs. It's a little bit like red envelopes and DVDs. They had built this incredible distribution engine and pipes into all of these individual investors through the broker-dealer market. It had been my background to build out asset management companies, and I thought, well, just like Netflix, eventually came to the conclusion that building your own TV and moving.”
2025-11-24 · Capital Allocators · Michael Kelly – Democratizing Access to the Middle Market at Future Standard (EP.473) · IDENTIFIED FROM THE TRANSCRIPT · source