YouSaid · the spoken record

Rishi Ganti

lines on the record: 79
first: 2017-07-18
most recent: 2017-07-18
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

“She said, sure, and she did. And when you're really young, it's like Hard to think abstractly about things. You don't really know what honesty is or courage or anything. But in that moment Really knew what kindness was A little bit more about I had to be as a person”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“That was my existence. And my mom told me, well, you got to get yourself to school or whatever. And so I remember just crying because I didn't want to be one of those kids, you know, one of those delinquent kids that we had in Chicago didn't show up to school on purpose. I actually cared very much about school. It was a refuge for me and it was a great place to learn. And so I was crying among all these like townhouses or whatever. It's just in curvy streets that just led to nowhere and I didn't know what to do. And I just looked through tear-filled eyes at a house with a very nice car, by the way. It was like for a lower middle class suburb, this house had a sports car in it. And I knocked on the door and I couldn't have been intelligible. You know, I was bawling. But I asked the lady who appeared, will you please drive me to school?”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“So for me, I'm actually suspect in even guessing what the kindest thing would have been. There are so many. And I may not even realize it, which sounds sad, but actually one moment does come to mind as perhaps the kindest thing that was ever done to me because it actually taught me what kindness was. So I grew up with parents that were very unreliable. That's just a fact of my life, and my friends like to joke that pretty much explains everything in my life, in my adult life. And so when we moved from the south suburbs of Chicago into a solidly middle class suburb at Wheeling, Illinois, this is a place where all the roads are twisting and winding up cul-de-sacs because it's residential. I'd never seen that coming out of a city. And of course, I was left to defend myself whether I was going to school or not or where the bus was. And I had no idea as I walked out the door what even to do.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“To pass on, as do my friends, and I'd love to have a child who could receive that from me. And that kind of epiphany or even starting orthogonal of basically microeconomics 101 that I can think of, which is if you want to have a wedge between price and fair value, you've got to avoid competition. These kinds of awakenings just didn't occur until I really had to wrestle with a bunch of internal demons that I had. And I did that very late in life. So don't let the cart be in front of the horse. Planning comes second and some level of personal introspection, however you do it. And there are people who have said it much better than I have on how to do that has to come first.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“Demons is again, I think Buddhists have, and I'm no Buddhist, but I understand that I think they have a kind of a lock on this kind of understanding. You will, I believe, emerge from the other side with a kind of transcendence about who you are and why you're here and what your calling is and what life as short as it is a bit about. And then I think planning will become your ally. I think for me planning was my ally Only through luck and in many ways not so. I wish I perhaps had not spent so much time earning all of those credentials. I don't know if it was some deep-seated insecurity in myself that caused me to do that. I wish I had not planned myself into doing so many different things. I had three competitive sports careers and instead had taken a step back because when I did that right away I realized I have a lot of”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“Because a goal is something that you need, it's something that you want, it engenders all kinds of human desires that ultimately really, I think, lead us astray from what life might be about in its best sense. And so I think it's good to plan and to do things that you think, at least in the interim, are helpful. Those might be things like exercising or getting a good night's sleep or being an eternal student and reading. But while those things are going on, taking some journey into yourself and trying to suss out or root out where your deep-seated needs are and wants and ask yourself, why are those there? And when you're able to root those out, and I haven't done this, so I'm saying please do as I say and not as I do, once you've wrestled with those deep.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think what you just said is one of the best answers I've heard on this topic. I'm amazed that you have that at such an earlier age in your life, I wish I could have articulated what you just did 10 years ago or something like that. I think you've really hit the nail on the head. I think planning is a tool that is best used when you've achieved some kind of truce with yourself. I think Buddhists have done this best, but it's also understood in cognitive psychotherapy. I think at some point people really have to step back and take a journey into attachment.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“And that is too late in this world. And I'm overjoyed with the daughter that I have and I hope to have more. And then you have... Guys like Mark Zuckerberg, who just, yeah, he ended up at Harvard, so I guess he knew what he was doing in high school. I've taught thousands of Harvard undergraduates. They have a lot of support or a lot of Hutzpah or a lot of what it really takes to get where they need to go, even if the help comes from outside. But once there, he really went where as far as I understand it, he and I did not overlap where his mind took him and led a relatively unplanned life. And so if I could do something like that, I think people have a love-hate relationship with planning and their to-do list. It can be your ally and it can also be your nemesis. And I feel at this point now, a little later in life, I'm at my eighth level degree of mastery in planning, where what I would call beyond planning. And that's what I really talk about. as well as the well-planned one.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“I actually had a chance to do something like that for kids at a university. And the topic I would talk about is planning I think that there is underplanning and I think there is overplanning and I think that there is room in a life for serendipity and I think that planning also speaks to something like goals and I think many people's goals are misplaced. They're chasing money or fortune or ultimately unsatisfying notions of love and discounting courage and truth. And all of these things come into planning. I've lived a very well-planned life. I could never have accomplished the things that I've done if I hadn't, whether it's paying my way through school or the degrees I earned. I was competitive in three different sports, the languages I've learned, etc. And I didn't become a father until I was 45.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I'm glad to be in a universe of ideas, and I think, Patrick, there are many paths to doing that. And I certainly would not recommend what I did, except that I was force-fed the appreciation of what I'll call abstraction. I think I frustrate people a great deal in marketing Orthodon or to our investors because I deal at a high level of abstraction and they want to know what we literally did yesterday. And I think abstraction is greatly underappreciated, especially in the financial disciplines. I think”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“And universities have a real problem ahead of them. I actually gave a small presentation to Emory University, which is my alma mater, about the fact that I think colleges could easily become ghost towns because information is being liberated, it's being democratized. Yes, there are some things you need to do in person. Like if you're in a particle accelerator, or if you're training to be in the opera, yeah, you need other people around you. Otherwise, I think distance learning works. One of the hottest new high schools is Stanford Online High School. And that high school gets people into all kinds of great institutions of secondary education. So I don't know where that's going, but I'm all for it. I'm against what I've done, which is a ton of formal education. Look, Jack Trainer, how much education did Jack Trainer have? Will any of us ever have the impact on the field or just plain thought that Jack Trainer had? I'm not even sure if he even graduated college.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“Up and realize wait, wait, that works for everything, right? Like how much I should eat, how much I should sleep versus study, whether I should ask that girl out to the dance or this one. That works for everything, right? I couldn't have had that if I just didn't have an open mind coming in and I don't know why I had an open mind coming in, by the way, but I just took a course. And that led to an awesome sojourn for me that's really meaningful. And so in a way, I just want to, if I can say anything on this podcast, just stop the relentless commodification and credentialization of education. Somebody can take a course in Shakespeare and maybe that doesn't translate into dollars and cents that we can measure, but that person's life is forever enriched from it. I don't know actually where formal education, by the way, is going. I think that colleges have”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“About who we should be, not just what we should do. We train culture formally here. And on this desk, Dominique is reading Barking Up the Wrong Tree by Eric Barker. We care about what it is to actualize ourselves and in some sense orthogon is an expression of that. So it's a life well-lived. I read about the fate of college and its costs and how, and I hear Bronco has a daughter that's going to school, everybody's picking their majors just before they enter. And last night was watching an episode of Kids on Chopped, which is a cooking competition show and a girl declared confidently she wanted to be a neurosurgeon. I was not going to become an economist. I fell in love with economics in a classroom when I was presented marginal cost of marginal revenue, a Marshall Allian analysis. And then I just woke up.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So, I mean, Patrick clearly, you're very intellectually curious. You're actually running this podcast, and it's clear from all the ones that I've listened to, and I'm working my way backwards through all of them that you're a pretty smart individual, you're a very deep thinker, and that you're animated by ideas. That's all there really is to it. a number of credentials, a lot of people joke that there'd be 20 letters after my name. Take it from a guy who's very well pedigreed, you just don't need that. The value from it is that I enjoy a life that's animated by ideas. I enjoy it in my professional sphere, which is that at Orthagon, we think about thinking. We do that a lot. We're not in a rush to do anything. It's a maker environment. It's very cerebral here. There are no Bloomberg terminals. We spend a lot of time thinking about it.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“And these women really, really enjoyed every moment of what really was tough. I mean, going into those doors is very depressing and seeing somebody down on their luck. And I'll never forget that. I said, this is what we're creating. This is what we're investing in. And it's a heck of a lot more than just making some return. So yeah, I'm just in telling you this. I'm transported back there and really glad for everyone that we can just pull across the finish line. They don't need to borrow from that bank again. And maybe we kind of set them on a new path.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“Old ladies, little old ladies, who would then drive around in their cars to the borrowers, knock on the doors, and make sure that they were going to work. These borrowers were generally underwritten to be healthy people with good heads on their shoulders, but something had gone wrong, a divorce, their mom died, something, and they started drinking. Who knows what it was? And this team of old ladies would go around and make sure that they were living a cleaner life, that they would wake up and if they were there, she'd wake them up and get them to work. And there's a great deal of respect for women of a certain age in Poland. A lot of gravitas, a lot of command. And so they were able to get these people back on track and rehabilitate their lives, yes, to pay back the loan. But yes, because just because that's a good thing to do.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“My former employer used to basically own a bank. That's what I want to call it. It's like a financial institution that provided loans to people who were down on their luck in Poland. And the bank's way of creating value was to hire people.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“In the specific one of evaluating Orthogon. We also realize that many people are not paid to take a chance on a totally new strategy, that their upside from that is limited and their downside is career risk versus kind of giving money to Blackstone. You don't get fired for putting money with Blackstone. You could with us.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“And they take one look at the things that I've told you about and they say, yeah, that makes sense. We knew you had to be doing something pretty strange in order to get the results. And that sounds good. In fact, one gentleman that we spoke with decided to invest within about two minutes of the phone call, and he is a partner and the general partner of one of the largest private equity funds in the world. And I just rolled off the speech where I said, real estate, private equity, venture capital, highly competed spaces with very little alpha. And right then he stopped and he said, tell me about it. And he invested. So we do really at this point in time attract a very specific kind of investor that's a very sophisticated investor, one that's familiar, you could say, with, if not explicitly with modern portfolio theory, one who's heavily financially trained and not constrained by a bunch of institutional factors that might make sense in some greater context, but not.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“But in fact, I'm actually marketing to human beings. And human beings look at those. They understand the track record. But they say, we're just not sure about that. And partly that may be due to institutional reasons. We've been told point blank by endowments that, look, we have our policy portfolio in certain buckets, and you're not in one. And I say, is there a bucket for other? And they say, no, we don't have a bucket for other. So these are some objections. We have had a response, obviously, so we have raised over $100 million. And I would say that the biggest response has come from investment managers, from people who run their own money, from people who are GPs in private equity funds or hedge funds, because we get them to third base. And then we tell them, okay, well, here's how we're doing it”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“Now, if you're an artificial intelligence robot, you would be overjoyed at that because we know that for any given level of target return According to modern portfolio theory, an investors should flatten his or her risk surface that is spread the risk quanta among as many different dimensions of risk as possible. That's just another way of saying diversification. If you're trying to earn a 15% return and you have a lot of stocks, the last thing you want to do is buy even more stocks. For heaven's sake, figure out another way to make 15. So the fact that Orthogon's risk exposures are utterly different than systematic factors of risk should lead one to invest. And if you're a robot, you would like it. No wonder perhaps that I ended up at two sigma.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“And there is risk in the strategy clearly indicates that we're not heavily exposed. We can't be heavily exposed at this point. I mean, I think the empirical data is in at the historical record as spoken to systematic factors of risk. We're not heavily exposed to equity risks, market risks, rate risks, credit risks. What people would consider to be systematic factors of risk. We are, however, exposed rather exotic risks, risks like change in law. What happens if the California changes its state constitution? What happens if the law changes in Brazil? We're exposed to secrecy risks, I mean, to build a platform takes a long, long time. We can be discovered at any point, and then there's competition, and by definition, we gain alpha by not competing, right? By avoiding a price mechanism, microeconomics 101.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“From you to that manager when you start to falter and you don't have a number two, there's nobody doing what you're doing. You're inventing an asset class. I said, okay, remember the speech on the dollar bill that I gave before? I said, you're guaranteeing if you only invest with number ones that have number twos, you're guaranteeing that you're only investing in assets that are heavily competed. But it's avoiding competition that generates alpha and social value. And there was just dead silence on the phone as that was being processed. I would say we have those and then we have a third objection that is very deeply disappointing to me as someone who has a PhD in asset pricing. That's the following. Orthogon in having no losses in its strategy history.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“To use a baseball analogy, that gets everybody on third base looking at home plate because any one of those things is hard to do. Typically investors cannot get one of the three. They can't get double digit returns. They can't avoid principal loss and they can't get orthogonality. But we've consistently gotten three of the three because we're not in markets. That's why. So getting that trifectas very, very hard. And what happens is that we lose everybody from third base to home plate. Partly for some of the objections I just gave you. Partly due to actually the expression of heuristics that I find hard to believe exist in the world of professional investing. We've heard people who say we don't like to invest outside the United States. I actually referred that group to a Wikipedia page on home bias. We've heard an objection where somebody said, well, we need a chase manager. I said, what's a chase manager? And that person said, well, we need a strong number two so that we switch.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“But in general, when I say the three characteristics, performance characteristics that Orthagon has had over the last really 12 years now and a billion dollars deployed, we've had consistent double-digit returns. That's number one. Number two is we've had no principal losses ever. And number three is we've had orthogonality to the markets that are breathtakingly high orthogonality low correlations.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“So the last year has essentially been my education in what it's like to be exposed to the outside world. I understood right away my ideas, even though I keep saying they're in a microeconomics 101 textbook guaranteed if you use main queues would appear to be radical to most. And some objections I will say are reasonably standard. So I'll hear things like, well, we don't invest in a first-time fund. We won't invest in a manager that's below $100 million. We're now above, but that's something I've heard. We won't invest in someone with under a three-year track record.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“But could easily deploy at this moment twice that amount to platforms that are essentially self-originating. And that's what I would say about scale. I mean, I just want people to get awake, not just on the investment side, but back to Brian. When they're coming out of school, you don't have to do sales and trading. You don't have to do investment banking. Just stop and think, just breathe. Just look around you and try to see the world with new eyes and you'll see there's a lot more out there than the things that are in the Wall Street Journal. But these paths are so well trodden, they're so magnetic, it's so hard to get off that highway. But once you have the x-ray goggles on, or rather you're able to see what we see here at Orthogon on a daily basis, you'll realize the world's so much more vast than what people give it credit for.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“There and there's a good literature, it's a debatable literature, but there's a good literature out there that generally says smaller managers are better and that as managers grow, they enter a zone where, and now we understand this from this podcast, things are more competed and the more competed something is, the less alpha there is by definition. So you need to stay small in order to maybe see things other people aren't seeing. This kind of rule of thumb, this kind of intuition does not apply to non-market scenarios. Because once you have identified something, think of like venture capital. Once you've identified that people aren't renting out their own homes and you make Airbnb, the scale question kind of disappears and an efficiency question emerges, right? It's different. And so we're in an operational business strategy. So that's what happens. So we will lay down these platforms every single place we can see them. We've raised somewhat more than $100 million.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“Wallet underneath a tree. You could come back four or five years later. I don't know what the condition your wallet will be in, but it'll probably still be there. Nobody will have found it. So the scale of this is whatever you think the scale of more traditional markets. And again, I include private equity, venture capital, litigation finance in those as well as stock bonds and derivatives and currencies. multiply by 10. Now on the scale problem, we believe at Orthogon we philosophize quite a bit if you don't like getting intellectual, you will not like us at all. We believe we have solved the scale problem at a first order of magnitude because what happens is we create the machine around a given niche and that becomes the dimension of analysis. What am I saying? For example, if you are a long, short investor and you have $100 million, you can pursue lots of potential anomalies that are out there.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“Elbows with anyone else truffle hunting either. It's very big. We'd welcome people in. Again, there's a lot that can go wrong. If you're buying a piece of real estate or a stock or a bond, investors, traditional investors, and to me everybody's a traditional investor, things that there are lots of things that can go wrong, but actually the number of things that can go wrong are fairly limited actually in refined assets. In unrefined assets, which is what we deal in, a lot more can go wrong. The problems that we're working on, the puzzles that we're trying to solve have been around for years and years. The Italians, for example, 2009, Mexico we knew about since 2012, Spain 2009, Portugal, I'm sorry, Portugal again 2012, the US Charcoal Capital 2008, Brazil since 2009. I liken it to, let's say you have a forest that you like to take a walk in and you bury your”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, answering your questions a little in reverse, we know at Orthodon we don't have competition per se in what we do. If we did, we would know it by now. We don't know of any other manager doing what we're doing. There are certainly other managers that focus on unconventional assets or niche assets, but they're all competed in the sense of being pretty strict on looking at non-competed assets, esoterics, one-off, non-bid non-flow, non-market, non-auction, we're alone. And we've developed dozens of years of human capital in order to do it to build these machines to attack them. Now, even if there were competition, that would be fine. Because as I said before, remember the light matter, dark matter. Again, for the trillions of dollars in lit market, there must be tens of trillions out there in unlit spaces. So there's plenty to do. We extend the invitation, but as we go through the jungle or go through the forest truffle hunting, we're not bumping up.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“And it's not, but that's a really good question, a really good intuition. It shows that you're on the right track. All of the platforms are operational businesses. So we are definitely not a fund to fund that invest in managers. They are we and we are they. There's no separation. So we are more than joined at the hip. We are organically attached. All of these teams have orthogonetics in them. We are inside of them working their processes, managing the cache so they are our businesses. You could think of Orthagon a bit as a holding company, but even that is not really accurate as well. So you could just say that Orthogon is a sister.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“Mechanizing them can be a source of value, and that's what our platforms do. We're not saying that the hospitals don't have the wherewithal to do it, but I'm telling you, if you don't know your way around the court, this is particularly true in our Brazil example, which maybe we'll go into also. It's far more cost effective for you to do it with us, I would say. And I think the real issue is we can't find all of the state agencies that are in this kind of predicament. It's really a discovery or a search problem where if they just knew we were out there, we would.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“This activity is extraordinarily difficult, actually. If you are a hospital and the government is basically telling you sideways that it's not going to pay, the enforcement action that you would need to undertake on this one-off basis is so gargantuan and requires such a great deal of expertise you basically need our team. And every time you hire Patrick a lawyer or an accountant or you go in for a surgical procedure, you are engaging in the same sort of activity. You could perhaps perform the surgery on yourself. I don't know. I can tell you you are absolutely capable of filing your own tax returns, but at some level of complexity, it's just not prudent to do so, especially if these things happen on a one-off basis. Collecting all of these one-offs together.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“Now expanded into 12 states or more than 12 really. So once these machines are created, they can take on a life of their own, and they're programmed with genetics that cause them to seek alpha pretty relentlessly starting from where they're at. And that also builds in safety as well, again, because they can react to threats. So we create these platforms and we have six right now in our first fund. And that's pretty healthy because, again, they self-originate. One of the things that we've sort of, I've sort of talked around it a little bit is I keep talking in analogies as if they find the assets like you find the gold nugget on the ground. But really, we're in an asset creation business. The asset was submerged and we pull it out, we refine it, we create it in a manufacturing process, and then we proceed to own it. And that's why there aren't other students in the room bidding on the asset, because we're the one creating the factory for the asset.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right That's what we call a platform. And even more than that opportunity, remember platforms can learn. They're really alive. Our investment strategy is biological. These platforms can think and grow, and I'm a new father, and it's amazing to see my daughter, Kahana, learn new things every week. She's at the age where every week it's like we have a different baby as the wife of a friend of mine likes to say. The platforms initially will struggle with the asset. You really need high human capital to be applied to something, again, that's never been done before, that's absolutely novel. But after a while, they get it. And not only do they get the asset, they'll get adjacencies. That mine, for example, we don't do mining. It's an analogy, but it may say, well, it's not just gold, there's silver here too. So there can be what I'll call a product adjacency, or there could be a geographic adjacency. Again, charter school capital started in California.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“Is that the physics are different? They are smart bullets. They can think, they can grow, they can react to threats. They can expand it to adjacencies. They can take a peek into the future. So we build these machines to do what we need to do. And I think that's really necessary when you're venturing into territory that people have never seen before.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“Bill on the ground, or more importantly, But at Orthagon, what we don't do that we've eventually realized we should operate on a meta level, on a meta-investment level. So instead what we do is, yeah, we pick up the gold nugget, but then we look around, we say, who owns this land? We buy all the mineral rights to the land, and we put an expert mining operation on the land, and we will mine that seam until it gives up. So at Orthogon, we're not actually making investments in the sense directly into assets. We're not trying to be those comparison shoppers. We're not trying to be paid for what I call static kinetics, which are just buying low and hoping you sell high or selling high and hoping you buy back low. We are actually building machines. We're building alpha factories that can mine an opportunity when we see it. And what I like about these factories, whether they're in the U.S., charges capital or in Italy or in any of the other countries that we have, we currently have operations in six countries.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“Refugee camps to fraternal orders, to Catholic fraternal orders, to women's shelters, all keeping them operating. Again, there's a big difference between the total amount that needs to be paid and just to have working capital on time, just like in the charter school example. Look, the schools might not need, for example, the whole hundred dollars, 98 or 99 is fine. But if they don't get it, they'll go bankrupt to the glee of the local traditional public school. And so we sort of keep it operating in that way. And that's something that happens in Italy. And I want to go into one more thing. You talked about how to make it into something that we can invest in. Okay, so there are kind of two modes to go about this. And it took me a while to figure out the right mode. So one mode is we all know proverbially that there shouldn't be $20 bills on the ground. So I want to say if you find a 20...”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“But what we can do for you is if you agree to something like, I don't know, 60% of the payment that you were billing us for, I have a hunch that that audit won't happen and that you'll get the payment in the mail in the next two months. But you know, up to you. That sort of thing happens in Italy all the time. I'm not going to say whether it's good or bad simply because there are so many dimensions to the moral quandary that Italy is in fiscally, that it's really hard to draw a conclusion. Let me just say it's tough. And so in that zone, we have a team that will go in and will pay the hospital much more than it ever would have gotten for that payment. And we'll secure that payment against the state of Italy when in court. Okay, it's got to work in court to do this and will make Italy pay on that payment and essentially force Italy to behave. We have factored state payments in Italy to the Vatican, to hospitals, to”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“And then the hospital won't hear back. No payment will arrive. And this is just my story. I'm not saying it happens this way, but it's something like the hospital billing department calls up the local disbursement authority and says, hey, where's our payment? And the disbursement authority says, what payment? And the hospital says, here's the invoice number, here's the control number, here are all the reference data, and the disbursement authority says, oh, that payment, yeah. Hmm. Well, we're getting to it. By the way, I heard through the grapevine that you might get audited. And that's going to be really painful if you don't have sufficient evidence behind every single patient you've treated. Well, we're going to have to claw back some payments, delay other things. It could lead to other sorts of investigations. It's really painful.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“And what I'll call black transactions that are never seen. It's not a high transparency culture. And it really falls on the bankers to figure out how to make something out of that mess. The Italian government at all levels from the national level down to the local level basically arbs its own agencies and citizens. And let me describe how that is. A classic example would be a hospital. A hospital may treat a bunch of patients and then the hospital will build the state of Italy. Healthcare is nationalized there as it is in Canada.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, there's something like a hundred times more alpha in the trade than total risk, right? Because if 10 basis points is risk and we know that analytically, we're not really guessing because the market has priced it for us in an IRAN. Well, it's hard to explain the other 9.9 points, right? That's clearly abnormal return that can't be ascribed to any systematic factor of risk. And I would argue to you, I would posit to you as a puzzle that it may be alpha, a payment for a service for surfacing this asset into a market. What about Italy? So in Italy, the government is very, very behind on a bunch of payments. Italy is in a very precarious state. And I was actually overjoyed when Mario Draghi became the head of the European Central Bank because Italian bankers are actually very, very smart because they have to do a lot with very little. That country is crippled by a pervasive culture of tax avoidance.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure, I'll tell you that again, I didn't speak these growing up. I did not grow up in Switzerland or anything like that. I grew up on the south side and the south suburbs of Chicago where an entirely inappropriate language for this podcast is spoken. But I do speak at a professional level, English, German, Portuguese, Italian, Spanish, and French. And I do work in all of those languages. I'll be in Italy in just a few days. And I'm happy to tell you, for example, about what we do in Italy. So in Italy, somewhat similar to the charter school example where we're based on earning something against a sovereign, we're doing that in Italy as well. And just to close off the charter school example, remember if we make on an IRR basis something like 10% off a school, the actual risk of the payment, the municipal bond risk is something like 10 basis points.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“But it's back levered. Okay, so for example, financers typically provide us 100% financing, right? It's a quadruple A asset. So if $100 has to go out to the school, well, it's not our money. We'll get $100 from the bank to do it now. Char school capital has done more than $1.5 billion of these assets with essentially zero loss. The banks are not worried. There's been no loss to any investor. The states are still around. So your return on capital is almost arbitrarily high.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“The charter school suddenly has a lot of students, and there's a public school that basically has to increase its performance to compete. This is charter school capital today. That market is in the And institutions such as East West Bank, America Bank, and BlackRock have funded it. And it just started out as three men and a dog in a room just like this. That's what I mean by surfacing an asset into a market. And once an asset is in the visibility of a market, I'm not saying that markets treat assets perfectly. There are well-known failures of markets in pricing assets efficiently. But when an asset is not priced at all, the social value pickup by introducing it into a market where at least it can be seen by traditional more traditional sources of capital is immense. And that's what we did for charter schools.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“The laws of states are a little bit discriminatory and they work really hard to make sure that a charter school cannot lift those students off the waitlists. For example, a very typical provision that states will have is that a school, if it takes a student off the waitlist, the school must prove that it has been teaching the student for six to nine months before they even get one payment to teach the student. That's a huge working capital outlay initially that a school must make in order to take on a student. And that basically means that the bleed from public schools to charter schools is very slow. Enter charter school capital, charter school capital can walk in and pre-fund all 50 students and boom.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“A market and basically cause massive charter school growth. In fact, the big CMOs in this context means charter management organization. Those are the multi-campus charter schools that really know what they're doing. They're the biggest client. We thought that the unsophisticated schools be the ones that would use this service the most. Absolutely not. They are the schools that are run by former investment bankers at Goldman embarking on their second careers as tycoons. Those schools are using charter school capital as a form of acquisition finance. If they have 50 or 100 students waitlisted at their schools,”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“It today. And boom, just like that, the financing problems of charter schools were solved. Charter school capitalism is absolutely not out there to gouge schools, so the rates of the effective rates of interest are very, very favorable to schools. These factored payments last only as long as the payments are, so these are very brief payments. So the financial effect on the school on the downside is minimal. But the fact that the school avoids bankruptcy is incredible. And every time charter school capital enters a new state, they're in 12 now and they've expanded from attendance receivables, which is the receivable I just described to you, to all sorts of myriad things, school lunches, ESL payments, federal science grants, so-called MCRs, mandatory cost reimbursements, which are things like handicapped access ramps that schools have to build today, but they don't get reimbursed for for a year. These are all very mysterious assets that we were able to unlock for the schools and create”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source
“The bank will say, we'll ask, what are your assets? And here's the thing. You don't have any. You don't even own the building that you teach in. You probably rent that building if you're a charter school. You might have a few desks. You don't have any credit history. The bank can't cross-sell you things like auto loans or mortgages. You don't meet any traditional underwriting criteria. And so frankly, you go bankrupt. Why? Because that check is a lumpy payment. It's a big payment, perhaps. You needed to pay salaries, the rent, utilities, et cetera. And there's no bake sale or whatever charter schools do to raise money in two weeks that can save it. And as a political aside, I will say that probably traditional public schools sort of like that because it's a check on charter school growth. So charter school capital came in and said, well, look, you're getting a payment of, let's call it $100 in a couple months. We'll pay you $99 for it.”
2017-07-18 · Invest Like the Best · Rishi Ganti - Esoteric Assets - [Invest Like the Best, EP.46] · IDENTIFIED FROM THE TRANSCRIPT · source