YouSaid · the spoken record

Sam Sicilia

lines on the record: 94
first: 2019-07-01
most recent: 2019-07-01
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

“I think in almost every dire situation it's possible to figure out what really matters. Sooner or later you'll figure out what really matters. Once you determine what you're able to change, then you should focus on only those things. There's no point stressing about the things you can't change. I wish I had learned that much earlier”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“My father used to always say never forget where you came from. And my parents instilled a sense of fairness and social justice in all three of their children. It nudged us to always try and do the right thing. So I grew up in an environment of social values and today I work in an environment that's tempered by social values, it's underpinned by a social contract. We call it the superannuation system. So as my role as CIO of Host Plus is to allocate capital for the retirement benefit of over a million working Australians so that they have a shot at a dignified retirement. As important as that role might be, I never forget the humble beginnings, if you like, right. Where you came from.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“For where is the power? Without your allocation, they can't generate a fee. I'm just asking for everybody to have that view. The power has to lie with the buyer. And we can go into scarce resources and skills all you like. But anyway.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you can't justify something, then why do you do it? How do you justify advalorum fees in some asset class? How do you justify the fact that if you're managing a bond portfolio or an equities portfolio and you're trading that the fee goes up in a linear way more or less if I give you 500 million or a billion or three billion? Surely it should plateau at a particular level and after that you should take any amount of money I can give you or your strategy can cope with for no additional dollars. And so that's one kind of pet peeve and the other one is if I hear one more time an LP, whether it's an institutional investor About a private equity manager or a private equity fund to fund manager commenting about their GPs saying, you know, they're the market is 2 and 20. Institutional investors are the market. You're charging yourself, right?”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“investment managers are able to extract fees above and beyond what's reasonable. Now we could sit here all day and debate reasonableness right but why should we engage in that futile exercise of debating reasonableness because there's no prospect of ever reaching agreement on it right? So I think what's probably a better idea is to think about principles.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“I need to ask you about this one because I used to always be a double spacer and somewhere between five and ten years ago I read that the conventions shifted to a single space after the end of a sentence.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think this one might surprise you. Grammar and Errors in Text And the reason for that is I spent two summer vacation jobs as a proofreader for a scientific journal. You got paid per error that you detected And let me assure you I can't read a newspaper today or see a screen on the internet without seeing all the font issues and the double spacing that's missing and the use of a semicolon instead of a full colon and the misuse of verbs and it's horrific and it's a curse and so my pet peeve is when I see these things I can't help but want to circle them on the page”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mentioned earlier that I had a childhood dream of wanting to be an astronomer. But like most serious hobbies, it's expensive to do that properly. Fortunately, I now have the time and the money to give it a good shot. And so I've started constructing an observatory at my home. It's four meters by four meters in size, 13 foot by 13 foot, and I live about 20 miles, 30 kilometers out of the city lights. So it can get quite dark out there. So coupled with the fact that technology has come a long way since my childhood and that black and white television and watching the lunar landing, I'm particularly excited by getting this up and running. So I think I've rekindled that hobby.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure they send a CV, but the CV's what got them in front of me so we spend no time talking to them about their CV, about their finance skills at that stage. I want to know about their hobbies and their kids and what they do on the weekends and why they want to work for Host Plus beyond the fact that they need a job or you're looking for some special insight that says I have the ethos to work for a not-for-profit industry fund. Because if we don't get that, longevity isn't going to happen. They will leave or we will part ways. In the front line investment people, operations has had, you'd expect to have some turnover in the operations, but we've never lost an investment. It's been cumulative, but it's never gone the other way. I'm particularly proud of that. I'd be very disappointed the day that it happens, but I hope it doesn't.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Last financial year we were the number one of the top fifty funds, but we were also the number one of the top fifty funds over a three year period, a five year period, a seven year period, a fifteen year period, and equal number one over a twenty year period. None of us were there twenty years ago. Or fifteen, I started ten years ago and I was the first employee. So let's get a health check on this, right? There's something special about the fund and it's to do with the characteristics of all of the things that I've mentioned today. Why wouldn't you want to work for that winning environment, that winning sports team, if you like? Internally, Culture is very important. When we hire people,”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Answer that in two ways, let me refer to what makes hostplus special as a fund, as an investment manager, and then what makes HostPlus special internally to the staff. Because I think they're the questions we would ask the investor, why are you here? Why don't you go somewhere else, right? So first of all, what makes host plus special is that demographic, that time horizon, that home run that you're given before the game starts. The board that gets that is a winning strategy. All you need to do is harness it. And we've learned to harness it hence the outcome. Where Australia's top performing balanced fund.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Quicker time frame as we need to with that structure. That's been a very useful technique. We do not have an investment committee. The board functions in investment mode as well.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“We realize that when we started doing co-investments in private equity, infrastructure and real estate, it was obvious that the timeframes for decision making didn't coincide with board meetings. And as obvious as that might sound, there was an immediate solution, which is circular resolution or ring up everybody on the board and say, can you meet next Tuesday, for example? But that's an inefficient way of doing it. And so we have a way of dealing with private equity co-investments internally. The board has formed a small subcommittee of four directors which we call the SIG, the special investment group, and they can be called on demand on a deal by deal basis. And they can get together and work with the internal team and have a delegated authority from the board to make decisions, provided it's consistent with the investment strategy of the fund. And so we can then make decisions on as”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Say, go away and never bring this opportunity back. This is not something we want to do. So it's good to know that we can read the landscape. And we have other decision-making structures such as we have strategy days so that we've formally put things on strategy. So if something is off strategy, we ensure that we don't spend time looking at it with an expectation that it goes to the board. It's not going to the board if it's off strategy. You need to get it on strategy first and then build the investment case, educate the board, and then we're off. And that fiduciary model has worked really well for the superannuation system in general and particularly well for HostPlus.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we have a fiduciary operating model. The board makes all investment decisions. Our job is to work with Jana, our asset consultant. and prepare the case, if you like. Think of the board like a jury. Think of them as nine men and women of the jury. And we need to lead them to make an investment decision on this case. And if they make a decision other than that that we wish, it's not their fault. It's my fault. We didn't do a good enough job in prosecuting the case. It's quite simple. And we learn lessons from that. We learn what to bring to the board and what not to bring to the board. And more often than not, decisions go through and the board has demonstrated that they're quite happy to say no, you need to go away and come back and fix this and fix that and we learn from that and very rarely they say.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“All of those things, so that team looks after those things, four of those. We have one legal person, head of legal, and she's hiring another person. So there'll be two soon in that team. Again, that's critically important because otherwise you have people like me playing amateur lawyer, reading external legal opinions about investments without really having a legal background. I don't want to be in that position. And the rest of the team asset class heads, one asset class head plus one analyst in each asset class. So it's a lean and mean team, if you like. And I have a deputy CIO, which is the best thing I've done in a long time.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Have 18 people in the investment team. Four of those are investment operations people. They are critically important to the investment function. You can leave money on the table by not implementing investments properly, by not implementing board decisions properly, by not structuring vehicles properly, by not taking into account tax and other obligations that we have, FX, settlements, et cetera.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“It into the equity markets, and as your 60 day money comes in, put it into the equity markets. So we view hedge funds playing that role rather than protecting the portfolio from the volatility of equity markets. Our unlisted assets have that role.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Strategies, you have some long short strategies, you have some market neutral strategies, you have a variety of hedge fund strategies, if you like, that are in there that individually may look odd and may perform in odd ways, but collectively do a particular job, and they're all gated to some degree. So they're probably 30 days liquid or 60 days liquid or 90 days liquid. And we know what proportion we could put in redemptions and get some of that back over those periods of time. If the markets recover as they did from December last year to January this year, then, hey, you know, there's been an opportunity cost, but not much more. Just move on, right? But if it's a persistent drop, then you might want a dollar cost average in. And as your 30-day money comes in,”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Such that we can tell them up front that our intention is to draw down on you if such large events took place and then to replenish you again with our huge cash flows. And so we've put together a portfolio of almost $3 billion at the moment, but it's growing of what we call liquid defensive strategies. They are lowly correlated with equity markets, but in stress times that correlation could approach one. Let's be frank about that. But if it's less than one, then we're prepared to sell that portfolio to take advantage of equity market drops. What's in that portfolio? You have insurance linked.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Illiquid stuff. The question is if equity markets were to drop thirty percent overnight, where do I get liquidity from to take advantage of that drop? I don't want to cry about it. It's happened. I want to take advantage of it. I can't sell my equities they've just dropped thirty percent, and I can't sell any of the unlisted assets. And so we looked at hedge funds again through the lens of can they provide liquidity at that time? Remembering the lessons of the past,”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“nor on any particular day or week, but when markets drop forty percent, it's that day that I want you to be uncorrelated to markets, right? And so we found in the global financial crisis two events took place, some market neutral funds as one hedge fund manager pointed out to me seem to be neutral to not much other than due diligence. And the second factor was that they had no gates and so everybody used the hedge funds as ATMs and they had a liquidity drawdown and sadly they're no longer with us. So how do we view them today? Today we view them in the following way and remember I only need to solve for host plus capital. Because I have 53% of the fund in public equities and forty seven percent of the fund in”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“from the outset. In two thousand as an asset consultant, The local superannuation market experienced its first financial year negative return was in the two thousand two thousand one dot com period Hedge funds were put forward at the time by the hedge fund industry as a solution to negative returns. But if you did the math behind that to protect 95% of your portfolio, you would have to have a huge allocation there in order to mitigate whatever the return from the other 95% of the portfolio is. And that the 5% of the portfolio that was a hedge fund, say, would have to have huge returns. So that was never going to fly. And so it was easy to be skeptical at the time. Wind the clock forward and hedge funds evolve in their spiel and words like uncorrelated to markets started to appear. The problem there is of course that they need to be uncorrelated to markets when it matters.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“And we're happy to continually look for that in private markets, for example, in private equity, we've recently funded a middle market here in the US, a middle market private equity emerging manager program where if you are a private equity manager, typically working for a larger private equity firm that wants to spin out and start your own Your own GP, then you know what the fund manager that we have appointed to look into that space for us will be allocating host plus money to you if you are part of that program, right? That's a good thing. I'd like to think that those managers remember They do subsequent capital raisings fund five six seven eight to make sure we get our allocation, right? And as we get bigger, we get a larger allocation along the way because we supported you from day one.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Also true in private equity, not just in the public markets, boutique is better, hungry is better. Having a business risk is better? An appreciation of an investor. Like host plus who provides them with seed investment capital that effectively underpins their business when nobody else will because they don't have a track record yet. All of those factors buys you a lot of good will, and if that doesn't add more performance, then you just get a good outcome. I'm happy with that, right? But Especially in the early years this leads to good outperformance relative to other managers in that space.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is there a stereotype if you were characterizing a manager or the next manager that you're adding to your portfolio on the public side? What are the characteristics that you've seen lead to a manager outperforming and being on the tail of the distribution that you're looking for?”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Then tell me what's special about them if they can exploit that skill, then you should find that active management adds value for you in that part of the market. And if it does, then someone else is losing value. Okay, I feel sorry for them. I can't solve for that problem. And if I'm that person, then we'll shut it down. But I'm not because otherwise we wouldn't get the results that we're getting”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“We believe markets are generally inefficient. Certainly in private markets, but even in public markets, there are pockets of inefficiencies. And therefore there's a case for active management. And this is not a time in our conversation, Ted, to discuss average returns, because the average tells you nothing about the outliers in the cohort. We want to be the upper outlier. Someone else can be the lower outlier, right? So I don't want to know about average returns being no better than the index. That might be true, and that's a statistical fact, but so what? It's the distribution I'm interested in, and who's in the top decile and how can you get there? And my argument is that if you can identify the sectors of the market that are inefficient and you identify people that you believe have skill and that are aligned along the lines that I mentioned earlier,”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“So when you put together this portfolio of managers, both domestically and internationally, how do you Frame out what risks you're willing to take to beat the market. Your default is probably you could just own the market, you use index funds.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“You repeat the experiment in finance and economics. You get different outcomes. In the hard sciences, you expect the same outcome every time, right? And so we believe that we've modeled it right. We have risk factors. We have factor analysis all over the place. And it's the assumptions we make in those models that end up killing us. And one of the things that physics teaches you really well is that assumptions matter.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“The biggest change I've had in my life has been the conversion from believing quantis more important than qual to today believing qual is more important than quant, right? It's just one of these things that evolves over time. You can do the numerical analysis on a portfolio. and come up with conclusions. You can make decisions based on that portfolio. In fact, you could make higher decisions based on that analysis without even meeting the manager. Good luck with that, that's my view. Luck with that strategy. It's not that sophisticated and there isn't that level of precision, and we fool ourselves in finance In economics, in believing that these systems are like physics, they're not deterministic.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“So if you take a step back, the public markets have evolved a lot in understanding what risk factors you're taking when you invest in any particular manager in the portfolio they put together. So on the one hand, what you're describing is a very qualitative assessment or one person's assessment of their self and their advantage. On the other hand, you come from a maths background. How do you put those two things together when you're thinking about your public equity portfolio as a whole and what really is value at it?”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a question we ask the manager. What special about you? Do you have that special? Or is this just a Me Too competing for attention type product that you have? You know, there's any number of these products that you're offering out there. The best answers are there's only one me and here's why I have this skill set and here's my insights into things and here's why I'm committed to this business and here's what keeps me here.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Huge focus on the person. Not at the expense of the other stuff. You need to do the other stuff, right? But the other stuff doesn't drive the outcome. The person drives the outcome, and it could be one or two people. And of course, if it's a quant team, let's be real here, right? Whatever, right? I get it, right? But that's not the group we're discussing here. We're discussing what really matters. And for us, I can pinpoint a particular individual or one or two individuals that drove the decision to make that investment. It's a relationship game”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Referencing and cross referencing and examining and cross examining the individual. Their personal circumstances Trying to look into get insights as to what keeps that individual there because irrespective of that individual's skill, or the characteristics of the organization or the systems that they might have in place, if that individual leaves in a month's time you don't have that skill set in the manager that you have just contracted with, right? And so that personal element is hugely important. How much money do you earn? How many kids do you have? What schools do they go to? What are the school fees like? At what stage are you at? What car do you drive? Is it mortgaged? There's a whole set of you have a right not to answer those questions, but you're not getting our money. It's pretty simple.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Let's start with my former profession. So consultants look for the proverbial set of peas, people performance, whatever, right? There's a set of characteristics that they try and extract. And some of them sit there and interview the manager about the securities they hold and the reasons why they hold those securities and the time that they would dispose them, the cell discipline, and you can go on and on and on about all of that. And all of that is important but somewhat important. To us the key driver is the single question of Who is going to manage our money? And what keeps them at that firm has nothing to do with the brain of the organization? It has a lot to do with the personal circumstances of the individual concerned. And so the asset consultant in this case, Jana, spends a huge amount of time”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“And we're getting flows that way, and it's evidenced by US investors putting money into Australian venture capital managers. And that signals a difference this time round. And so that is the winds of change, if you like, that I think means that the industry, provided it doesn't suffer any adverse events that the industry is here to stay now, so it's a pleasing outcome.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“The pension fund industry is big, and so it can start to put money there as we have and a number of other pension funds are starting to put money in that direction, the future fund that you interviewed Raf Aunt, who I know reasonably well, he mentioned venture capital in his session with you. So that industry there is starting to pick up. The second reason why it's starting to pick up is that if you are a venture capitalist in Silicon Valley or in other select number of other parts of the world, real estate is expensive and talent is expensive and Melbourne and Sydney and Adelaide and Brisbane aren't the worst places in the world to live and so you could think about wanting to relocate your family there and it's not such a bad life.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“The venture capital industry in our country but disappeared in the dot com bust of two thousand and so mistakes were made at the time and capital went away And today it is a growing industry and it's growing for a number of reasons.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“To venture in the US, there's this belief that there's a subset of great venture capitalists. You hear about Benchmark and these incredible funds. But the capacity and access to those is effectively non-existent, except for a very small number of investors. What does that look like in Australia?”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“fair amount of it is the predominant amount of it is domestic there is some in the US and there is a couple of portfolios in China mainly biotech in China and in the US there's some tech and some autonomous vehicle and advanced manufacturing and in Australia it's mainly biotech and tech.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Today it's in a much much better shape than it has ever been, including host plus putting one point two billion dollars into venture capital, which makes Host Plus the biggest Australian institutional investor super fund in venture capital by a long shot, and there are reasons for that again. The demographics, the time horizon, our expectation is that we get a return from venture capital that must be our primary goal, but there are a whole set of side benefits for the ecosystem in our country to develop that and for the economic benefit to the country, which of course will feed back into the economy and therefore into the super system and therefore benefit our members.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“But I think the single biggest move we made was to hire an individual, Neil Stanford, who is head of private equity at Host Plus, and he bought a discipline to the analysis of the private equity portfolio. Again, back to relationships when I was working at Russell Investments. He then went to work for Jana, our current Asset Consultant, and I hired him again from Jana. So that working relationship, that familiarity with the individual meant he hits the ground running and bought in a discipline, an expertise, if you like, that allowed us to reexamine that private equity portfolio through a different lens.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“we inherited obviously upon arrival there's an existing portfolio, some of which I was the adviser to back then so I'm not distancing myself from it it's there and it needs to be dealt with wherever it was possible to work with other investors to get out of opportunities. We tried to do that wasn't always successful other investors have a right to keep those managers if they wish that's fine we will live with that right”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“That private portfolio after eleven years, you probably have a core of managers that you like, and those are the ones that you lean on to find the new relationships. How did it evolve from when you first arrived and were building out the portfolio and no doubt made some great investments and some mistakes along the way?”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“that has experienced the benefits of those relationships and can benchmark events that take place and the subsequent benefits to host plus and host plus members. Again, a 10 basis point fee reduction is a riskless return to host plus members. Every year per annum forever, right? Why wouldn't you chase it?”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“The internal team at Host Plus understands that we are a relationship to the Organization, and we have relationship sourced managers, managers that we have been introduced to because of other relationships, that the alignment is huge and the incentive for them to misbehave which is always low for the reasons that I outlined earlier is even lower right from the outset because of those introductions and those other hooks and attachments. We like doing business with those types of entities preferential fees, preferential terms, preferential deal flow. There's any number of benefits that come that way. Remember, these are private markets, right? And then incredibly grateful to in having a board that understands all of those dynamics.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“Let's start with the investment manager. Again you can lead by example. We have quite a number of relationships that are fifteen and twenty years old. And we say to each of our fund managers if we invest with you Then expect us to be there for the long haul. Look at our cash flows, look at our time horizon If you want us to be An investor in your fund, then let's talk about having a relationship, not a transaction right from the start. And in some asset classes like private equity in general or private markets, but private equity in particular without a relationship, we won't do the investment. Relationships are ninety five percent of the driving force. People underestimate how important relationships are in private markets. I'm convinced of that, completely underestimate the importance of good relationships.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“At the GP level where there is exposure at funder fund levels in more recent times, the terms and conditions and fee structures and the vehicle designs are much more modern relative to the way they were in the past. And you don't see brand names there intentionally. In fact, if you look at HostPlus's website, you won't see too many brand names across any asset class because we don't invest in brands. We invest in individuals. Wherever there is a fund manager name, chances are there is an individual or one or two or three individuals that we can point to that are the root cause of why we made that investment. If you know why you make an investment you have a ready made reason to get out of it if that reason changes performance is never one of them.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source
“The more recent portfolio construction, if you like, in private equity, I'd like to think has been a well thought out strategy. It's one of looking at different segments of the private equity marketplace, working out where we want to play with an eye again to our time horizon and our demographics and our cash flow, realizing what the issues have been in the past in terms of follow-on funding for venture capital not being there, etc., and the mistakes that were made in the past, ensuring that we don't repeat them, and seeing where the gaps are in our portfolio and trying to find managers with the skills to close those gaps for us. So today there's more exposure.”
2019-07-01 · Capital Allocators · Sam Sicilia – Seizing on a Long Time Horizon at HostPlus (EP.103) · IDENTIFIED FROM THE TRANSCRIPT · source