YouSaid · the spoken record

Reade Griffith

lines on the record: 72
first: 2022-10-17
most recent: 2022-10-17
sittings or episodes: 1
sources: podcast

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“People say loyalty is a big driver of them as a personality. It certainly is with me. But one of the things I've learned is if you're overly in the professional context, if you're overly loyal to an individual and give them too many chances, eventually you're just loyal to the team. And ultimately, your loyalty is to the firm and to a fund or to, and so you have to make those hard decisions sometimes and realize that that is where loyalty, your loyalty needs to be as a leader. And I know that and I've learned that sometimes giving people a few too many chances, but I think I'm better with that now. And again, if you're as long as you're a straightforward communicator with people, when it's not working out, they have a chance to change. And if they can't change, then they're probably not going to work out long term anyway. And you give them a pathway to finding something else where they'll be more successful.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“My parents were big believers in honesty, but also being very straightforward with parents. But don't be somebody who isn't straightforward as a person. You don't want that reputation. I try to be a straightforward person and I try to be honest with people.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“I like things where I think I have structural alpha in the strategy. So I want things where the odds are in my favor and my investor's favors. I don't want to be in things that are 52, 48. I'm looking for things with a higher probability, a repeatability. So I'm not a gambler. Go to Vegas and watch a show, but I'm not going to sit at the tables because I know the odds are against me. So I need to feel like there's a reason I have a strategy that's repeatable, that's investable. And that's what gets me excited. I don't like Rolling the dice, let's say, I'd rather hit lots of singles than hit doubles on home runs. It's getting on bass consistently is what I try to do”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Those are the things that really had an impact on me and what I wanted to do. So I just say I buried myself in books for a few years. And that's really what helped me get focused.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, decisions I made to get involved in investing, I didn't come from a background where people had been involved in finance. I came from middle of nowhere, Minnesota. So for me, I got it from books. It was books I read. Those were the things that really influenced me. And, you know, I asked other people what I should do. They said, go read books, learn. And so there were a series of books I read, probably the first one was The Reminiscences of a Stock Operator, Edwin Lefebvre, which sort of described the wild, wild west of emotional trading and flows before the Securities and Exchange Act came into place. It also teaches the importance of regulation. And then it were things like you got to think Alfred Jones and what he did was setting up a hedge fund, Pierre Lynch, Ben Graham, of course, everybody's read Benjamin Graham's intelligent investor, Jack Schraeger wrote these books, Market Wizards, New Market Wizards. I read all these things voraciously. They were kind of accounts of really successful people and how they made my.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm not a fan of high frequency trading, so I see it as an arbitrage on retail flows. I know people argue that they're providing liquidity. I don't believe it. It's a high short ratio strategy. I don't like things where I think people are making money on almost a structural, in this case, arbitrage. I want people to have to make their money by taking more risks than that.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Some of them are very liquid. The hedge funds can have quarterly liquidity. The stock always has some liquidity every day. And so I don't think it's something that could be done in a meaningfully replicable way.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't think you can do it perfectly. Obviously, the stock has a certain liquidity to it, depending upon the size of your investment, which might be better than the funds themselves because you can buy and sell the stock where the funds get in and out. But there are things that we don't offer at the fund level. There are things that we do with our capital on our balance sheet, which isn't replicable, whether it's investments that we just make in public markets or private markets and hold on our balance sheet. Maybe we've invested some money with a strategy we think is interesting that we want to learn more about. And we've got a little money in their fund or made some co-investments through a co-investment strategy with people as well. Those aren't replicable. We're not offering those to investors. And so there is a component of what we do that you don't get if you try to replicate and invest in all the individual funds. And the liquidity would be very different. Some of our funds like infrastructure are 25-year funds. So that more complicated to get in and get out of unless you're doing a secondary transaction.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is there an economic dominance between buying into the underlying strategies, pro rata to how TFG is allocated to them compared to owning the stock, which also has an economic interest in the businesses of those strategies?”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“At the fun level, we offer the pure play at the stock level. We offer the diversified play and people can pick and choose based on whatever their horizons are.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“As always, it's a case of a pure play versus a diverse high play. And it depends what your requirement is at the time. If you look at the stock and say, okay, it's at a discount. Well, if the discount tightens, you'll make a little extra. If the discount widens, you make a little less. But basically over any medium-term timeframe in three to five year investment, your returns are going to be very correlated to the returns of all the businesses together. So if you like our suite of businesses and you like the diversification and can own that exposure, so maybe you're a family office and you just like all the different asset classes. So you'll put an allocation into that diversified portfolio. If you're an institutional investor and you want an allocation to European events or you have an allocation to infrastructure or real estate or whatever it is, then you need a pure play investment into one of the funds because that's your mandate. That's what the risk you're looking for. That's what you're targeting. We offer both.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“You get the return of nav along the way. And if we're compounding on a low volatility, hopefully we'll continue to do that in the future. You get the benefit of the structure.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, yeah, you're right. The Kcarer vehicle immediately went to a big discount. We traded a discount, right? So the first thing is we've never issued shares, done a placing or anything like that. We wouldn't do that. We have consistently bought backstock in the market since we've been public, you know, as long as we've had the liquidity to do it. We've consistently used that as one of the tools to return value to investors. We obviously try to pay a meaningful dividend to people and that's one component of returning value. The other is to buy back shares. So that's clearly how we think of it. But we don't exclusively do that. If we buy back shares in the market, we are basically buying”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Most of these complex asset management firms tend to trade at a discount to whatever NAV is. It's been true in the closed end fund investment trust space for years. How have you thought about capital structure of Tetragon when it trades at often a meaningful discount to N”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Complex business that we try to make more complex. So maybe the negative for public markets is we're complex and we continue to get more complex because our whole raison d'etre is to be there early building businesses to have sustainable alpha with entrepreneurs and to build it out on the TFG asset management side and even on the investing side we're always looking for things that we think have good risk awards. So we are complex. We constantly evolve. It is a difficult thing for people to get their arms around, I understand that. And so that's the complication is telling the story to people. And I'm quite proud of is that we have compounded the NAV of the firm in a very consistent way over the 15 years we've been public with very low volatility. Our goal was to do 10 to 15 percent net after our fees to investors. I think we've done about 12 and the volatility has been quite low. And so we're doing what we set out to do. And that permanent capital has enabled us to do it.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think the purpose of being a public company was to be able to generate permanent capital that would enable you to do the kind of things we wanted to do with TFG asset management. Probably the best thing that we've got from this public vehicle is the ability to have permanent capital, to be able to have a five, 10 year duration in building businesses, because you need that. And like I said before, the first five years, you're much more valuable to the business than they are to you. If you have to sell it at that point, you're never going to get the value. It's just about to take off. You need to have that. And so we recognize that. And this enabled us to build TFG asset management by going public. So that was the big thing that we got from it. What ultimately happened is this market in Amsterdam turned out not to be that liquid. Not many other people followed. People then moved their listings to London. We've done the same thing. We have a listing in London as well, specialist fund segment. What we have today is”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the market, they think that metering businesses are worth X and Y, and why are they willing to pay for this? What are really water assets worth? Well, you only understand that if you're on the other side and see these deals. So it just makes you better. And so in that way, everybody benefits from it. If you get too siloed in what you do, you start missing things. And so for me, my job is to keep my head slightly above the parapet and I be aware of what's happening in the market, both for the macro risks that are out there. Sometimes you'll see risks in the credit market before you see them in the equity market. Sometimes it's the opposite, typically the equity market is first and credit market second, but it can vary. So again, having those exposures and to know what's happening there and where there's distress, there is distress somewhere else. It may bleed into the market and that may help me with my hedging strategy. So data is good and making sure that you have alignment and making sure you don't have conflicts. When you add that all together, I think it's a good formula.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. We are big investors in our own products. And so when we're generating a return for people, we're generating a return for ourselves. The European Event Found a huge amount of my time working with great people on the team there, making sure those returns are good. And if those returns are good, Tetracon's a big investor. It benefits from it. I have personal money in there. I benefit from that as well. If we build something else on the platform that becomes very successful, the insights I learned by building that business about that strategy makes you a much better investor for event driven and other things. So it's all cumulative. Your exposure to all these different strategies and asset classes can only make me better as CIO of the firm, CIO of the fund. So I think it's additive because you never know where the next opportunity is going to be, having your eyes open to little niches, what's happening in the market, infrastructure investors, what are they interested in? Well, we have an infrastructure platform. They think that towers are worth this. Well, there are hidden tower value in various portfolios.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Curious how you balance this tension between the business and the performance. So you're on both sides of the fence. You have your capital invested. You want it to compound. Generally speaking, as you said, smaller can be better. But you also own parts of the business and you benefit from their growth. How have you thought about effectively the return on your capital as part of say TFG in how you optimize that tension?”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“But if I'm working with an entrepreneur, he wants, I don't want to get into a new strategy. How do I get into a new vertical? Let's think about the broader strategy component, and we can sit and work with them on that. Our investors aren't talking to us about strategy component. Are we going to do a new type of thing? It's fun. They just want us to do what we're doing today well with their money and not screw it up as a partner with somebody like Brandon and contingency as he evolves his business. We're going to be there trying to help him think about new things that they can be doing and providing solutions to investors. So it's a much more holistic thing.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Some of the investors we have in venture and strategy are incredibly experienced, incredibly knowledgeable. There are some that have amazing insights into what's going on in the world. But there are people that we work with that are less experienced and have less insight or are more focused on one niche. Everybody has something that they can share with you, some more broadly, some more narrowly. But it's a very different decision. I mean, somebody who's investing with us in a product wants to know about that product and how you're going to make money for them and what's the portfolio look like today. And they have their own requirement that they're trying to tick off for sure. And we're not building anything together. They're supporting something that we're doing. But the reality is they probably would rather that business stay as small as possible. And rather than grow because a lot of people have a bias to things, make higher returns when they're small. By the way, I agree with that. We do keep things the right size and don't let them get too big. So I share that view.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“I still own risk every day for the firm, for strategies. So I'm in the market. I'm involved in risk. I'm evaluating investments every day. So like them, I feel the stress of the markets. I'm not somebody above and beyond it. I'm there at the coalface with them, understanding what they're going through. Hopefully can add some insights to them as well. I was a big investor in the fund. We might be”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Things that's interesting is you still are running this event driven fund and you're also involved in helping form and back these businesses. You've had a lot of conversations with allocators who have invested in Polygon. What do you think differentiates you when you're talking to someone that you're looking to back from those types of conversations that you've had on the other side of the table?”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Before you retire, there's all sorts of different motivations that lead to why people want to release capital in these claims. And that, because the market's matured enough, that's what the market's ready for now. And that's what we're doing at contingency. There are very few people doing this. There are some. But Brandon's been doing this throughout his career. And so it's all lined up that we knew the person, we could follow him through his career. Steve had invested with him before various firms or invested in those firms, but got to know him as a person. And so we've been able to line this up. And we feel like it's the right time to build this business. It has something that's very uncorrelated. It's not tied to the business cycle, right? It's tied to the success of these claims. And so for institutions, that kind of exposure is incredibly valuable, particularly if you're able to generate double digit returns for people as well. Super valuable. And so we believe the demand is there. We believe the product is there. We believe we've got the right partner.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that capital could be released to the corporate, to the law firm, to the class action litigants earlier if there was somebody who could provide financing. This is what contingency capital does. It is not the tip of the spear. It's the handle of the spear, right? It's saying you've got a pool of litigation of settled claims. We can value it and evaluate it for you. And we can be sort of debt against it. We can be a senior claim. We can free up cash. You can take this cash and go pursue more litigation. So if you're generating a 30 plus percent return on your litigation, you can pay us much less than that to free up cash to go off and do what you need to do because you're capital constrained. So we can do those types of investments. There are people who just want their money today and don't want to wait five or ten years for the money to come in because they want to buy a house today or I don't know if you're a senior partner in a law firm. You don't want to leave it all to the next partners. You'd like to have a little bit for yourself.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“They help put a probability of success on the claim. But it's very much they're involved in funding litigation for some institutional investor. That's a complicated place to be because there is quote-unquote reputational risk if you're funding litigation. You don't know where the spear is going to point. It might point at one of your competitors. It might point at one of your donors. It could be a bit of a sticky wicket if you're not careful in that. And so we didn't want to be on the tip of the spear. And we watched some very successful firms be built up with funding pools of capital. What that has done is it's drawn attention to the asset cloud and created bigger pools of litigation. And there's lots of big pools of litigation and claims out there, whether it's at law firms or whether it's settlements for class actions or whether it's on corporate balance sheets.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“And set upon his own. And so during that time, he himself had realized that litigation finance was becoming a bigger asset class, potentially more institutional. You could build more of a portfolio than you could before where it was a collection of individual trades. It was ready to stand on its own as a strategy rather than just be a sleeve of another. So this is part of the journey we were watching as well over the last 10 years is it's matured as an investment strategy. The people that have been earlier adopters of litigation finance have been what I would call tip of the spear kind of investors. They are people who are helping fund litigation. So if somebody has a claim against a corporation for, I don't know, toxic tort or something, and they need help funding it, these firms that have sprouted up are helping fund litigation. They look at it. They get a percentage.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“People that had known him earlier than his investing career even to build up a picture of the person. My partner, Steve Prince, had also been an allocator before he had joined us and had invested with some of the firms that he was working at before he set off on his own to build a business. And so Brandon Baer, who is a runner of contingency capital, which is the business that we're building on the platform to support Brandon, he had been at DE Shaw. early in his career and was doing litigation investing at its early stages of development, he put in a sleeve of a strategy involving various credit things. And then he left and was brought over to Fortress and he worked with Pete Brigger's group. And again, was a sleeve of investments within a broader credit strategy that Pete Brigger was running when he added and built a team at Fortress. And then he was now looking to lead Fortress.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“We've been looking at litigation, finance for a decade. And we've only partnered with somebody in the last two years. So it's been a long process to get where we are today. And so that's, I think, one thing about the example that's interesting is this process of identifying something that's interesting, but trying to figure out when is the right time or when can we find the right partner. These things don't happen in the first two years necessarily of your analysis and work. It might take five years, might take 10 years. You may never get there. In this case, we've gotten there, which makes it a more interesting story than if we hadn't gotten there for sure. But I've had a lot of exposure to litigation driven investments by being an event-driven investor. We have a lot of Harvard law DNA throughout the TechCon organization. And the person that we found to partner with had also been there. And so we had a lot of connectivity to him. So we could cross-reference him very well through.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“The people analysis side, you mentioned litigation finance as an area that sounds like it's a newer area in your suite of strategies. How did you go about finding that opportunity set process and then finding the people and what was it about them? Maybe use that as an example to describe the common things you'd say about the types of entrepreneurs you want to be backing.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“If we were still finding it's interesting, we start interviewing people from firms we admire to learn about who's available, what are they doing, is our insight correct? And if that all continues to work, then we tend to hire people and build a team, often investing our own capital in the beginning, helping get them going. And then when we think that the team is there and the infrastructure is there and it's up and ready, we then take it to investors with our own capital already there backing them and go forward to help them raise money and to build a brand and go to market with the goal being that we're a force multiplier for them. We're increasing their probability of success.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Small amounts of money we'll put with them to follow them, follow their letters, learn from them, try to figure out what do we think of their approach. We don't do much investing with other managers. It tends to be very small amounts.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, first and foremost, we'll start with my partners on the strategy level, my fellow founding partner Patty Deere, Steve Prince, who has joined us to head TFG asset management and is a senior partner in New York. The three of us spend time thinking about what should we be doing that we're not doing currently? Where do we see in the market that there's alpha? Where do we think alpha will come and a sustainable way? Where will there be appetite for institutional investors to get involved in these products? And then once we find something or two things or three things we think are interesting, we go out and start doing work. And that work can be working with consultants. Tell us, what do you know about this industry? Who do you think is good? What information can you share with us? Obviously, we pay people for data. We run data ourselves, look at people's returns.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe a lot of it's going to be our own capital. But there are other businesses that clearly we can scale to 10 billion and beyond. And we've had success doing that with at least three businesses on the platform currently and more to come. And that scale has not hurt returns. And I think that's another thing that's important in this alternative investment business. Sometimes the right size is small and you have to be happy with that. You can't grow beyond where that alpha component is going to be reduced. There are plenty of people who are great at running a billion, but then they end up running 5 billion and they still do well, but they don't do nearly as well and the alpha component becomes mostly beta because they're just sort of MFI, highly competitive part of the market where if they'd controlled their size, they would have done much better. So we try to be thoughtful about size as well when we bring a manager on the platform. Where can we take this business? How do we think about it? What resources should we put behind it?”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's the other advantage we have. That $2.5 and $3 billion of capital is money that has no time horizon on it. It doesn't have to be recycled back to third-party investors. Lots of people who do this, a recycling pools of capital to third-party investors. It's not their own capital. So we have long duration. We try to find businesses that we think have that repeatable alpha. We let people run their businesses. If they're ready to run their own business, we'll be on their investment committee, but they control it. They control their brand. We try to partner with people who are number ones in what they do. We don't need a bunch of number twos reporting to us. We need number ones who can go out and build their business and we can help support and make them better. So where we are today has been a journey to find those partners, to build those businesses, to get involved in things that we believe in. And sometimes we're involved in a business that it's never going to be bigger than 300 million, 400 million.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Allocators who say, we're going to help support you to build a business, but we've never really been an investor ourselves or have been an investor, we've never been an entrepreneur and built a business. We don't know what you're going through, but we'll support you because a lot of times those allocators will also have three or four if they like, I don't know, structure credit. We have a large structured credit business on the platform as well, LCM, $12 billion of CLO. So people might say, well, I'll invest with three or four businesses like this in credit or structure, credit or CLOs and help back them all get up and running. We make ABET. So when we bring somebody on the platform, we're saying you're our bet, we're going to partner with you. We're entrepreneurs like you. We know what you're going through. In the first five years of you building out your business, we're going to be way more valuable to you than you are to us. But if we're successful, you're going to be way more valuable to us than we are to you in the second five years and beyond. So we have to have the duration of capital.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“We don't have on the platform that we want exposure to, et cetera. But that evolution to get to where TFG asset management is today was sort of always the plan. We always wanted to get there. And so we've got infrastructure today. We have real estate. We've got commodities. We have litigation finance we're building. We have events and convertibles and distressed and co-investments that we're doing with technology firms and partnering with private equity and venture capital firms to get exposures we like. We're looking at building new businesses. This is where we are today and it's exciting. And it's across a lot of different asset classes. And what they all have in common is they all have sustainable alpha. They're run by people that we believe are top decile in what they do. We are entrepreneurs and investors and we try to attract other entrepreneurs and investors.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“So the names will tell you what our ambition always was, which is we were always trying to be multi-sided. So a polygon, tetragon, they're all multi-sided shapes. And we always aspire to be a firm that was very multi-sided and had lots of different businesses under one umbrella. And that is where we've evolved to. And so as we sit here today, what Tetragon has under its asset management business, TFG asset management is what we call it, is we run about $35 billion of capital for our partner investors. We have two and a half three billion of our own capital at the core, which a lot of that is invested with our managers and TFG asset management. And it's also invested with other investments and with other people that we like that have strategies that we”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Events make events take longer. It reduces the probability of certain events happening. And so you certainly want to do as much as possible if you can afford to, if the instrument volatilities aren't so expensive that they're prohibitive to own them, you try to own options and volatility around your portfolio to help reduce those extension risks and other risks that come through. That's a very important component of it. The other is just to make sure But if something bad happens, typically there's an ownership risk. Who owns the things I'm in? Are they the same types of investors? If it's too much hedge funds and hedge funds,”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Involved in lots of different strategies across the firm. But if I just look at that European event strategy for a moment, that strategy has elements to it that are very hard to hedge because it's not like a long short portfolio where your factor risks are easy to quantify. By their nature, they're involved in some kind of an event. It might be a merger, might be some kind of a regulatory event litigation, something that's driving their valuation, which makes the recent history not a good predictor of the near term and future. Should the event not happen? Should the thing fall apart? Yes, the stock may fall back to its historical patterns and correlations and factor risks, et cetera. So they're notoriously difficult portfolios to hedge. One thing is for sure, when you're an inventor of an investor, your sure volatility.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“For very little cost and adding those layers in your portfolio. If the bad thing didn't happen, great. It didn't cost you much. If the bad thing did happen, it saved you money and gave you a chance to be in a better position than your competitors when you're trying to reshape your portfolio should that thing happen. And so there's been a lot of things in Europe like that. Not always, but often been things that have been too cheap for the ultimate headline risks that were coming.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, first and foremost, you need to think about whether the next events you perceive are priced in appropriately by the market. So if the market perceives as you perceive, so there's a risk that you perceive differently and you think it's more risky or less risky, you can be long and short risk, it could be through options, it could be through long and shorting could be sovereign instruments, currencies, various other things as part of your portfolio hedging. But if the market is already anticipating what you're anticipating, it's priced in and there's probably nothing you can use. But what I've often seen is that there has been mispricing in Europe in what I perceive to be short duration risk, things that might happen in the next two or three months that could be very volatile and you've been able to buy equity market or currency or shorting sovereigns and certain peripheral countries at various times.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“than even the corporate strategy, I'd say the macro element has been more than 50% of what's driven Europe over the last 15 years. So you had to learn to do both. And I think that is interesting. And that's something I very much have learned since we've set up Tetragon and Polygon and all the other businesses that we've done is to be much better at the macro than maybe the toolkit I had learned at Baker and I and Citadel just because macro events weren't the big drivers over the period of time I was there. That being said 1998 was a very interesting year, the Asia crisis and I was just joining Citadel at the time and I saw how they navigated through that and they were very successful in getting through that and being able to hold on to the risk when others had to sell and so I did learn some things about structure and making sure that your capital is there when you need it, what your relationship with your prime brokers, all these things I learned which were very valuable. So there were macro events, but just it was”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think that's a great question. Europe, you have not been able to strip the macro from the micro because the macro has been driving the micro for much of the last two decades. In the US, it's been much less so. 2008 obviously was a very macro driven event. But post that in the US macro strategies, just focusing on the US, there was less to play for. You've seen that macro volatility in the last 12 months has led to macro funds doing extremely well. And there was a period of time where it was extremely hard for macro funds to make any money because it was just sort of trending one way. And so in the US, you've been very much, I think, much more able to just focus on the micro and the investing in corporates, et cetera. And only in the last 12 months have people really had to take a step back and go, what's my overlay? Where are we in the cycle? In Europe, you've been unable to strip the micro investing away from the macro. And this led to changes in investor appetite, flows of funds. It's been driving the market much more.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Employing it. So I think that is a valuable experience for anybody who has been getting through the last couple of decades of Europe.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Potentially be leaving the euro, and what did that mean? And peripheral would have been sovereign defaults in Europe. A whole series of things that people got very concerned about over the last 10, 15 years that led to a lot of this volatility. And so being someone who's been focused on Europe, we have had to manage volatility. You've had to get to the other side. You've had to be able to craft your portfolio in a way that allowed you to hold on to risk at the right time and benefit from when things normalize, not to have to sell at the bottom and to be forced to buy at the top, which has happened to many of our peers in Europe. And so for those who've survived and maybe even thrived, you've learned so much over the last 20 years in Europe, where if you're in the we're just focused on the US, you've missed. Now, the next five years in Europe may be much more volatile. If you don't have the toolkit, you're going to build the toolkit, but you're building it rather than...”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“By being in Europe, what I've seen and learned has been to live through much more volatile events on a macro side. Markets have not gone up and to the right like they have in the US. Since 2008, other than the last 12 months, the U.S. market was just up and to the right. There are a lot of people who are in middle of their careers who've only seen getting long risk benefit. And those who took the most risk made the most. And it's a self-reinforcing thing. In Europe, it has been a massive roller coaster. In fact, what we're seeing this year is nothing. I mean, the fact the markets were down 20 since 2008. We've had periods of down 40 in Europe over periods of time, let alone down 20, plenty of down 20s, from a European perspective, the volatility this year is not very much. You've got obviously a war we're dealing with in Europe right now at our doorstep. It's a big deal. We dealt with Brexit. People thought that Greece would.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Stay around for a long time. Now, obviously, if you've made a mistake in hiring or what doesn't work, you have to make those decisions. But you try to do as much of that upfront through a rigorous screening process. I feel very strongly that loyalty needs to be a two-way street. You want people to be loyal to you, but you need to try to be loyal to them as well and make sure that you're thinking about their careers and making sure the hiring was well thought through so that there's as few mistakes as possible. So that's kind of when we were looking to get going, you had to think that through as kind of first principles. And then from there, it's like, okay, what strategies and who's available and how do you want to move forward? But I think we led with culture.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“Investing with bits of information. People are telling you what they want to tell you, not necessarily what the truth is. And you have to glean for yourself. You're going to be wrong a lot. And you have to get used to that. And so if you haven't yet made mistakes, you're going to. And those mistakes that you learn the most from. So I like the idea of hiring mid-career. I also like the mixed DNA. I didn't want to be a uniculture firm where everybody starts at the bottom and works their way to the topic and there are firms that have been very successful doing that on Wall Street, but I wanted a firm where we were constantly refreshing the DNA and where we always had people coming from successful models that might add new things and new ideas to what we were doing and make us better. So mid-career, mixing DNA, people who've made mistakes. And the goal was longevity, getting people that would be sticky and want.”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think, first and foremost, for me, I wanted a firm that was collegial. I wanted a firm where people were respectful to each other. And there's lots of examples of very, very successful firms where it's much more of a aggressive people against each other kind of culture, which is great. That can work really well. It just wasn't what I wanted and what I wanted to be presiding over. But I also wanted people who were really, really smart, really, really hardworking and were kind of mid-career. I didn't want to spend a lot of time with people who hadn't yet made mistakes. As a private market investor, you get, at least in your starting gun, you have near perfect information. All the data about the business, you get inside, you can do your surveys of what other competitors are doing and really make a very educated decision at the time you make the investment. Public market investing, it's always”
2022-10-17 · Capital Allocators · Reade Griffith – Managing Assets and Partnerships at Tetragon (Capital Allocators, EP.276) · IDENTIFIED FROM THE TRANSCRIPT · source