YouSaid · the spoken record

Sarah Williamson

lines on the record: 73
first: 2018-09-03
most recent: 2018-09-03
sittings or episodes: 1
sources: podcast

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“So long-term company So typically, what you see is that long-term companies continue to invest through cycles. So if you look at R&D as an example, and if you look at short-term company versus long-term company, a longer-term company will continue to invest through that, whereas a short-term company, knowing that they're going to miss their earnings because markets are bad, they will pull back on that. And so then, of course, they have to restart. And so you see the difference in how that pays off. And usually the long-term companies are the ones that are doing things like building earnings, not just EPS. So if you look at sort of EPS relative to change in earnings, which usually means your shares around, if you look at R&D or other sorts of CapX, if you look at accruals versus revenues. So if you look at companies that are willing to miss their guidance, so you can find these sort of tells of what a long-term company is, but typically long-term companies are more counter-cyclical and”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“Over any long term period of time, but it's challenging. And to put some metrics on it in the United States over the decade leading up to 2016, if the short-term companies in this country, and I know this is a big if, if the short-term companies in this country had been able to behave like the long-term countries, they would have created a trillion dollars of additional asset wealth and five million more jobs. And so think of all the things that would be different if we had done that. So it's a big issue. And so even if we can move this dial a little bit, it has a potential to have a big impact.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes. So we're really thinking about it in three ways. The first is can you quantify the problem? Is this a big problem? Is this just an annoyance or is this actually a real problem? Is it a quantifiable problem? And so the first question is how big is this? And so with McKinsey, we've done a lot of work and we can go into it more detail. But sort of the punchline is if you look at how long-term companies have behaved, long-term companies on a number of financial metrics versus how short-term companies have behaved, what you see is that long-term companies outperform in terms of revenue, profitability, share appreciation, job creation, all the things that you would look at over any reasonable period of time. But in the crisis you could see that they got punished much more harshly than short-term companies. So managers are not wrong when they say, I want to be long-term, but I feel this pressure. What we see is long-term companies outperform short-term companies.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“Product or create something. And usually those are also long-term ideas. Those take a while to come to fruition. So long-term needs to deploy capital, long-term needs to use capital. Makes perfect sense. You put them together. The challenge is that the way that those get put together is through our capital markets. So typically what happens is that money goes from a saver to a big asset owner like a pension plan or an endowment or a sovereign wealth fund to an asset manager through the publicly traded capital markets into a publicly listed company. In that process, that long-term goal on both ends really gets lost and it gets very, very short term. And I had seen this as a participant in the markets for many years. We all feel this if we're investing. I've also spent a lot of time in investment committees. You're always trading off the long-term short term. And I think that our system has really, the balance is important between the two and the balance has shifted towards the short term.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I loved Wellington. I had no plans to leave Wellington. I think it's a wonderful place. I was very lucky to be there and be a partner there for a long time. But I met Mark Wiseman, who at the time ran the Canada pension plan, and Larry Fink, who runs BlackRock, and Dominic Barton, who runs or ran until just recently McKinsey. They had this idea, this was their idea about what is wrong with capital markets, what's wrong with capital markets is that if we take a step back and say, why do we have capital markets in the first place? The reason we have capital markets is that we have savers who have a long-term need to generate money. They don't need the money right now, but they need to put it somewhere. Usually they're saving for a long-term goal, such as their retirement or the next generation or future students of the school or whatever it is. So they have a need to generate return over long periods of time. At the other end of the spectrum, you have management teams who have an idea. They want to enter a new market or build a new”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“That seems like a nice segue to talk about what you've been doing since you left Hoynton. So before we get there, what was the rationale after 21 years? It's a lifetime by some stretch, but you're still quite young. So what was the decision process to leave?”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“By having the economic value of those companies actually grow and generate revenues and innovation and jobs and long term shareholder value, which is then how they're actually going to pay the liabilities in the future.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“Weren't as expert, which is, of course, no longer the case. So as I think about it going forward, it's really asking investment managers, what are they going to get paid for? And there are a lot of things you can get paid for in investing. One is risk transfer. Maybe I have a different risk profile than you do. I can write an option that you want to buy. There's sort of the risk transfer. There's solving the client's problem. Usually the client's problem, or usually an asset owner's problem, is not beat a benchmark by a hundred basis points. Usually it's pay a liability in the future or provide spending, but also retain the principal. It's something that's more complicated. So how do you figure that out? Clearly, there is alpha to be gained if you can, but then there's also the beta or the underlying value of the companies. And I think that increasingly, particularly big investors recognize that the money that they're going to make is not necessarily by harvesting alpha and beating the other guy.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I like to think it's not active versus passive as much as there's really a spectrum of investing. One of the things that's interesting about investing is, you know, we've all been doing this for a long time. We've learned a lot about it and no one's agreed on the right way to do it. Like if you talk to surgeons, there's a right way to do heart surgery. Now there may be a little bit of variation around and some people may do it better, but people aren't doing it totally the other way, right? It's been proven which one is better. That's not the case in investing. So the way that I think about it is there's pure passive. There's sort of enhanced index. There's quantitative, there's active but very tight to the benchmark. There's active concentrated. There's activist. There's private equity. So it's a spectrum. And I think the way that I think about the investment business at least is that it used to all be about alpha. You could harvest alpha. There was alpha sitting out there that you could go pick up because a lot of players in the market were not as sophisticated.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“And Wellington, I think maybe people don't know this, but has always managed a lot of Vanguard's active money. So when you take that lens and say, oh, fundamental research used to have an edge, today it's more data. There's obviously a lot of money flowing into the passive side of Vanguard. Where do you come out on Active versus Passive?”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that was true. So you could really know some things that people, others didn't know. I think that's really not true anymore. It's just much, much harder to have an information edge. You can have an analytical edge, but not an information edge. And I think that the way that investing has evolved obviously is much more quantitatively driven, much more data-driven, at least in those early days, it was really fundamental research in the classic sense of the word.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I think that the first thing I've learned is that investing has changed a lot over that time. So from the time I started, which was the early 90s until now, obviously the investment world has changed. Back then, we could know information that other people didn't know. We could talk to companies, and they would really tell us what they were thinking. That was before Rule FD. There were plenty parts of the market just to pick on energy. One of Ernst's saying was, you know, if you show up in Houston in August and Calgary in January, it's amazing what you learn.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I started in Boston, I was there for a couple of years, and then I ended up going to San Francisco, and that was one of those sort of serendipitous things where my husband was offered a job in San Francisco. He's a private equity investor. And so I went to Wellington and said, we really need a West Coast office, don't we? Because we did not have one at the time. And after a number of conversations, it was agreed that we did. And so I went to San Francisco and I stayed there for seven years. That role was leading the growth of the business on the West Coast, trying to understand a very different investment community, connecting Wellington, which particularly at that time, it was global, but it was very Boston-based, connecting that more to the West Coast. And obviously there were very strong firms on the West Coast like Capitol and others out there already.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“Ertz von Metz. Yes, exactly. In the public markets. And there were a number of endowments, particularly then, that were trying to figure out inflation hedges. And so energy is a logical inflation hedge in a lot of ways. And that made sense. But then that also then transformed into broader inflation hedge products. And that was something that, particularly at that time, the endowment community was particularly interested in most of the other parts of the investing world were not. So that was an example of trying to take the pieces of the puzzle and put them together in a different way.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, yeah. So, I mean, for example, at that time Wellington had a very strong energy team for years, managed a lot of energy money for years.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“What I found is that as you know they're very different investors than pension plans. They're not pension plans. They tend to be much longer term. They tend to be more interested in total return than other issues like fitting things in boxes and some things that some other investors have to worry more about. And they tended to be some of the most sophisticated and interesting and challenging clients. So they were often on the leading edge, which was always fun.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I started in Boston working with endowments and foundations. Again, I don't think I was qualified for that job either, but I had known some people who had moved from McKinsey to Wellington. And so my first job was trying to figure out how Wellington could do a better job managing money for endowments. Wellington had managed money for MIT for years, but the rest of the business with endowments was quite small. And so the job was understanding that community, making sure we had products that made sense for that community.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“In Dallas, and then in Boston for five years. And then I went to Wellington. So I went to Wellington Management in Boston. And I was there for 21 and a half years, mostly in Boston, also opened the San Francisco office, came back. So spent a lot of time on the buy side.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“That was one where I remember they were asking me the classic what's your weakness? And I actually said, well, I've never taken an accounting course. And they were quite surprised that, first of all, that was true and that I admitted it. But I went to Goldman Sachs. I worked in the mergers department. And that was the early 80s. So it was an interesting place at that time. It was a bit of a locker room. But I did that for a year in New York and then a year in London. I was young when I graduated from college, so I had gotten into business school and I was planning to go, but I thought about doing what today we might call a gap year, and so I went to John Whitehead, who at the time was co chairman of Goldman Sachs to ask him for some career advice, which seemed like a logical thing to do for a 21 year old. And he said he was going to Washington to be the deputy secretary of state and ask if I would like to come. So I said, sure. I tagged along with John Whitehead to Washington, and I did that for a year. And then I went to business school at Harvard and went to McKinsey, first in London.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“They teach international relations and political philosophy and small children to read and all of those sorts of things. So I went to Williams, but when I was graduating, I was an econ major. I needed a job. And I didn't know much about the world of finance, but I interviewed through Williams and surprisingly enough, got a call back to go to Goldman Sachs in the merger department. And I think I have a history of being off-free jobs. I wasn't really qualified for.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“All right, I'll give you a little bit of history. I've been in the investment business for a long time, but I grew up in a very academic family. Nobody in my family is in business for several generations.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“Begins with Sarah's career and turns to FCLT Global. We talk about the potential for improvements at public companies, including quarterly guidance, executive compensation, capital allocation, and board dynamics, and then discuss the potential for improvement at money management organizations, including fee structures, setting expectations, reporting returns, and governance. Lastly, we hear about FCLT Global's new research initiatives. I'm pulling for Sarah and FCLT. If their work bears fruit, we will all be better off, and most importantly, so will our clients. Please enjoy my conversation with Sarah Williamson. Sarah, thanks so much for joining me.”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guest on today's show is Sarah Williamson, the CEO of FCLT Global, a nonprofit consortium of large asset managers, allocators, and corporations dedicated to encouraging long term behavior in business and investment decision making. FCLT Global conducts research, convenes business leaders, develops actionable tools, and generates broad awareness of ways in which a longer term focus can increase innovation, economic growth, and future savings. Prior to joining FCLT Global in 2016, Sarah spent twenty one years at Wellington Management Company, where she was most recently a partner and director of alternative investments. She started her career at Goldman Sachs and had since at the US Department of State and McKinsey before joining Wellington. Our conversation”
2018-09-03 · Capital Allocators · Sarah Williamson – Focusing Capital on the Long-Term (Capital Allocators, EP.67) · IDENTIFIED FROM THE TRANSCRIPT · source