YouSaid · the spoken record

Scott Goodwin

lines on the record: 87
first: 2023-06-13
most recent: 2023-06-13
sittings or episodes: 1
sources: podcast

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“Give you a personal one and a business one. Personally, my wife, Kimberly, the most amazing person partner I've ever met. She was a star athlete, played tennis at Boston College, then it was a star at Vogue on the event side and the publishing side. And she walked away from that job to help me build this business and build our family. So that sacrifice she made as my partner is incredible and something like I wouldn't be able to do what I do without her every day, her support every day. And from a business side, Dan Allen and Tony Davis who were two of the partners I worked for at Anchorage supported us from day one when we wanted to build this business. And it wasn't necessarily in their best economic interest at the time. And that is something that we'll be forever grateful for. Selfless things, I think. And I think you mentioned my listening tour like I try to do the same when people want to build businesses and we've tried to help them.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a huge future distressed opportunity. The shorting opportunity isn't as good because a lot of it's in unshortable securities. CMBX we've had on for the past year and a half. That's been good, but a lot of the rebunds are down a lot already. So it's then what is the future long opportunity in public and private markets? And it's building a team of people who are focused on that sector in the US and Europe and building the network around prosecuting it. But to me, as we talked about 02, 0304 being a longer cycle, this real estate cycle is going to be long and drawn out. I wouldn't be piling into it now. You can be patient. And the office thing is hard because you don't really know long term where occupancy is going. I like to say there's no bad bonds, just bad prices. There might.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's finding ways to get better at it every day. We have to be a chameleon because the markets are always changing. If we sit back, then somebody else will beat us to the next trade. So we can't sit back. So we have to keep bringing in really strong people to our firm that can help us prosecute these strategies that are complementary and accretive to what we're trying to do.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“The main fund is first always like that's always unfinished business every day. I eat, sleep, and breathe what we're doing in the hedge fund of the drawdown fund every day. So that's first. In terms of the platform, Apollo bought a stake in the business last year to help us expand into Europe. I think that European expansion has gone great. We've hired amazing people over there. But there's wood to chop in terms of getting that fully built out. And then private credit, which I think is, as I said, an offensive and defensive addition. We've hired very, we're not doing it with our existing team. We've hired really strong people, really strong partners from existing firms to help us prosecute that. Three partners who are starting over the next few months. And that is kind of it. We try to always have a”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, the banks, so they're being disrupted from a capital perspective in terms of the private credit lenders, direct lenders. And we're seeing now that the regulators are more focused on them. Obviously, the yield curve doesn't help. We consider them great partners, but now they're needing to, through credit risk transfer transactions, do essentially derivative hedging trades to create more capital. And I think whether it's Basel III or Basel IV, future regulatory things that are coming, that's only going to become more acute. And for us to be a counterparty on the other side of those credit risk transfer transactions, I don't want to get too in the weeds on them because they're complicated is a great thing for us. The banks are transferring us very high quality risk. We're taking a junior slice alongside them, and we're getting paid teens to 20% returns for what we think is a high quality portfolio of underlying assets. The regulation of banks and the opportunities that”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Longer term, the more low margin paper pushy businesses will have a really hard case for not being really disrupted and disintermediated. That gets us excited from an asymmetry perspective. Can't even pretend to try to be expert in AI. I'm going to let the world teach me about it. But we can look at a credit in an industry that is a clear, obvious disruptor that trades at, say, a 50 spread or 100 spread at par and say, well, that's an obvious short and the market's not pricing the volatility option. Essentially, the put, if you think about equity and credit, the credit puts usually much further out of the money. But AI has the potential for some of these shorts to put the credit put as close to the money as the equity put if it's terminal for the business. That's exciting.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, it's more relevant to the equity market than it is the credit market today because it's driving equity valuations at NVIDIA and all these other stocks that have done really well the past few months. Credit, A, there's not the convexity and B, the credit market's not made up of those kind of businesses. They wouldn't need junk debt when their stocks are traded, those kind of valuations. What excites me about AI is it's a disruptor. And the question is, is it a disruptor that accelerates businesses and makes them better, or is it a disruptor that kills them? And I think it can be both, maybe short term, it's an accelerator for many from a cost perspective and from a process perspective. But when I look at some of the businesses that are in the investment grade world, let's say, or some of the lower touch and lower margin software businesses in the Levin world, how AI can interact with them over the next five years, not over the next one year, it excites me because I think there are some businesses that”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“This advice was given to us. The thing I see caused the failure the most early on is you don't raise enough capital to prosecute your strategy and you spend more time fundraising than focusing on investing in the first few years. That's number one. If you're funding a new business, stay in your lane. If you've invested in someone to do credit and they're doing Chinese equities, you've probably invested in the wrong guy. Is there a source of alpha adaptable based on changes in market conditions? Some strategies are trades. Distress is a trade. It's not an evergreen strategy. Whereas the consistent arb in credit because of liability structure and the backward-looking nature of many of the investors is an evergreen strategy. And you can prosecute it in different parts of the capital structure. Investment grade, high yield, stress to stress structure credit all over the place. So that, I think, is maybe something that you're seeing now where”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“End of it, but now having a relationship that's a two way dialogue where we've sought out family offices in certain sectors. You mentioned one of them where we feel like we can help them manage their capital, their precious capital, and they can help us learn and be smarter on things because we're very well aware that there are certain sectors who are much smarter than we are. So getting access to them or different pools of capital that have different mandates has been really special for us to learn about some of the philanthropic or other mandates. Frankly, burden is the wrong word, but striving for protecting their capital first and providing a good risk adjusted return when you meet the people and you spend a lot of time with them is something that I think we didn't really have the chance as minions at our prior firm to have those relationships. Now we have them. It's been one of the most rewarding parts of doing this.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“If you take it, they're like golden handcuffs, right? You're married to that person forever. And it changes the economic structure. As margins come down in this business, as margins have come down in asset management, the seed economics eat more of the economics and it makes it hard to be competitive at certain scales. So more because of that. I think from an LP perspective, we want as transparent as we are internally, we want to be that transparent externally with our partners. So if you ask the people who invested in us day one, If we followed what we said we were going to do, I think they would tell you it's pretty much what we said we were going to do. We're going to do a lot of capital markets, be active in long short, do distress when it was interesting, not as an evergreen strategy. Have a hedge fund, have drawn fund, have CLOs and CDOs. Private credit's the one new thing, as I mentioned, but it's that transparency and also having relationships that are two-way. I didn't run the firm we worked at before. We were just going to the room. This is what you should say. That was kind of the end.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“So he was done seating. So he felt like he'd give us honest advice on that one. He gave us really good advice after we left Anchorage to not take a seat and to have the right liability structure to align with doing a lot of distress because he didn't think we needed to take it.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“I credit Dan Stern for not taking this seat. He told us not to do it. He gave us great advice around liability structure and done.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's amazing. We've had a couple over the past couple weeks, so it's really fun having those moments because that's sort of like, it's all coming together and that's the process.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“For you. So I would say when John and I, when the technical and the trading element, the risk element comes together with the research and we feel like we're ready for an event. And then the event happens.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's just been there since I'm a kid. It's both. Prove them wrong more than anything else. And that's the competitive fire. But I have to harness it and channel it the right way because early in my career, I would alienate people because I would just be like a bull in a China shop, aggressive, aggressive, aggressive. Let's do this. Let's do this. Let's do this. My EQ had to catch up with my trading ability. Hopefully over time it's moved up a little bit towards it.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Motivated by failure. In my life, there have been disappointments. I was born with a great head start on most people. But whether it's failing in baseball or getting dumped by a girl or not getting promoted when I thought I should at city or not being a partner at Anchorage, those failures have fueled me. Now that we've been knock on wood somewhat successful, now there's a target on our back. And people will take shots at us. That's just more motivating. I don't think it's so much the loss avoidance as it is the anxiety of missing things. And that probably comes from my mind who had an anxiety about maybe missing social things. She would like miss a lunch. She'd be pissed.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“And we've had a few winners because we changed that, put that breakpoint in such that forced the conversation. I like to create elements of process that forced conversations on credits.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Get out fast. And that is loss avoidance and not falling in love with positions is critical. We did that a number of times on stuff that was in the 90s or par and had it go to 10, 20 cents on the dollar. And I was like, shit, we missed the short. Analyst, great call for getting out, but like we should have been short. So we had to change the process because the analyst isn't necessarily going to go from, oh my God, I love this to maybe he's changing the season or he or she is changing his thesis a little bit. And I'm saying sell, sell, sell to saying we should be short. So we have product specific trading and sector-specific research. So we said to the traders, it's your job when we're punching out of something that's a par thing that we loved, not because the relative value has changed or because it's hit our price target or because the macro has changed, but because the thesis on this specific name has changed, you've got to say we should be thinking about shorting it. And they've done a good job of pushing that up now.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, not everything fits for everybody. Calling balls and strikes doesn't fit for everybody. It's not how we run all the business. But for the hedge fund, the drawdown fund, that's how we run it. I have an anxiety about missing things. We miss a big short. We miss a big long. More of the shorts, there's less people competing for that alpha, so it's easier to get if you can get it right. I have that anxiety and I've always been much more motivated by failure than rewarded by success. And that's something that that transparency and calling balls and strikes comes from. I don't think that that's for every platform or every investor. Certainly doesn't fit every person on our team. So we calibrated up and down depending on who they are a bit. But one thing it does do is it makes you be intellectually honest. And one thing we realized was that when we were getting out of things, I think if I would say our greatest differentiator from a portfolio management perspective is we sell things before they go down that were long. When we make a mistake.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Have a vintage issue with private credit where if you've got a legacy book with a lot of distractions, maybe your eye is not going to be as on the ball on the de novo opportunity, which is actually super interesting.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Is it an offensive or defensive move? I think in the case of private credit, it's both for us. Offensive in that, yeah, we can learn more names. We can broaden our funnel from an industry perspective. So knowing those management teams is going to help us with the hedge fund and the drawdown fund and the CLO business and having tighter relationship with the sponsors. But defensive in that the banks have been a huge partner for us and now they're being dismediated in the capital market space. So some of the flow we used to get from them, we're now seeing from private equity sponsor XYZ, and that sponsor saying to us, well, you're only showing me a public solution. I want to see a private solution too. I respect you a lot, but I need to see both. And defensive in that respect, we think we can build a really interesting private credit business that focuses on senior secured lending. A lot of the larger guys have gone really up market and chased the bigger deals. There's a big middle market opportunity. And I think that also you're going to, as Kieran was talking about with you, you're going to.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so number one is don't cannibalize. I think that's the main thing we start with when we think about doing something that we're not already doing. And the napkin we had when we were planning it out at Bubby's was hedge fund, drawdown fund, CDOs and CLOs. That was the business plan. We had that business plan six or seven years ago before we started. And we've done those methodically US and Europe, where the private credit thing comes in is does it cannibalize? No, we're not doing direct lending out of our hedge fund or our draw-down fund necessarily. No, we shouldn't be. Is it synergistic to our existing platform? Yes, we'll learn, we'll grow our relationships with sponsors and we'll learn more names. And we'll know the sector is better. We'll know the management teams better. So that helps us investing across the platform.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Second lien or the most equity co investor, who use the most leverage. Those are probably going to be the biggest losers Structure we're going to use to raise the capital around it that Apollo seating will have a higher return based on the seed economics. But I think that there was a lot of poor lending done and mistakes made in that market over the past few years that need to be shaken out. But that's not true just for private credit. It's true for venture. It's true for private equity. It's true for a lot of other areas. It's just going to take time.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“We talked about the shift from equity to yield. I do think that liability structures have tricked people into believing that being illiquid was better than being liquid necessarily. So the voll washing Kieran talked about with you a couple weeks ago needs to be exposed. And the asset classes that have Wall Wash to have either sharps that are artificial or low dispersion within an asset class, that will be exposed from an asset management perspective. And then fees can be calibrated not based off what the product is, but based on how good the manager is. Because right now, if you talk about private credit, which is a business we're about to get into, you spend a lot of time with Kiran, you've had almost no vol in the returns, no dispersion. And the biggest winners have been the guys who had the most.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a lot about human interaction and what the downside would be if you did something differently, making you retrospectively think about something you said or did. And if you did it differently, what would have changed and trying to teach me at least, Les John, more me, helping me figure out better ways to manage my intensity is great for the market, but managing that interacting with people. So that's for me. For John, it's different stuff. It's really tailored to each person. I think that's what makes her so good.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Some element of that, how we can help them. So she's making sure that we're helping them in an appropriate fashion. Her EQ is much higher than mine. I'm calibrating up or down how I'm interacting with people based on what she thinks we should be doing.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. When we met her, she was working with hedge funds and the corporate team have won beauty company, actually. And she's first started working with me and John and really helping us with management skills, managing stress of starting a new business, managing different personality types, which of us would be better fit to manage different people on the team, helping us calibrate that. As we've grown, she's gotten more involved with the whole team, not just us. And she was consulting initially once a week with me and John. Now that became over a couple years, meeting with the team once a quarter as of Jan 1 this year, being full-time on the team. And what is she doing? She's process, hiring, culture, helping the stuff that we can't deal with minute to minute from a team perspective. This person, they're stressed because they have a sick family member. How can we help them? John and I might be missing.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Tracy Fenton recommended to us by Isaac. I think with me and John, we both struggle with different things at different times. Her background is in a maximum security prison in Canada. So she's got an interesting background.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Focus on that week and what their long term focus is. And then Monday morning we sit down with the whole team either in person or on a Zoom and we go through all those workflows. Everyone in the whole team knows what each other is working on. If you covered something five years ago and you don't cover it anymore, you can still have input to what this person's working on. We want that transparency if you have the alignment where everybody has carry, you're going to have people that want to contribute to other people's work. And that's been really, really helpful for us, I think.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Going through their models, talking to the restructuring advisors, so it gives us both a chance to step back for 36 hours from the market and then sit down fresh every Sunday morning and go through the book. And that's been a really helpful exercise to make sure that we're on the same page risk-wise. We've built it with our coach at the beginning, Tracy, to be a process that we really can't ever avoid. Even if one's traveling somewhere other side of the world, we find the time to do it. And I think it's allowed a consistency of portfolio management and consistency of message from us to our team in terms of risk, what kind of risk we want in the book, where we want the team focused. If we take notes on it that the whole team can see. So they can all see that's what they're going to be working on this week, or that's what Scott and John were talking about. And they can push back. The part of the process we have is then on Sundays at 4.30, everyone on the research team sends us what they're going to do.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“So we would talk credits to me or on the desk, and then every Sunday we would meet at Bubbies in Tribeca for breakfast with our kids. His son and my son are the same age. So we'd take them and we typically would have someone, Jason Brow from Goldman, who lived near there would join and he would pay and listen. So we would talk credits then. And that really evolved once we thought, okay, we're going to start this business to every Sunday morning meeting together going through the portfolio. I mean, whether it's on Zoom or in person, we've missed two in six years since we started. So from 7 to 9 a.m. every Sunday, we're sitting there going through the book, the hedge fund of the drawdown fund portfolios. And my week is spent more trading talking to the banks about capital markets, talking to the analysts about the credits that were involved in that week, going through the new issue calendar. John's has spent thinking thematically with the research team about what's going to happen in the future.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“So he leaves and he still wanted to talk credits because he went to a place that wasn't sector based. It was more generalist. He's always calling back trying to get the credits. We wouldn't call his John. So I went to Duke, huge ACC basketball fan. He's Jewish, also a big basketball fan. And Tamir Goodman was the Jewish Jordan and like faces in the crowd and SI. Yeah, yeah. In the late 90s So he would call back as Tamir Goodman. Nobody knew the joke except for me and John. They were like, who is this Tamir guy calling for?”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“So I don't think diameter works without both of us. And I don't think I'm successful without John, probably the other way around to the degree we are in terms of investing. It's a very symbiotic relationship. We thought about doing a fund as early as 2012 together. We met in 2010. We became very close friends. We realized we had really synergistic skill sets similar to Kevin and Tony above us. They were a great example of putting research and training together and how synergistic that can be. And John, at the end of 2012, was ready to do it. I wasn't. He left to go to Centerbridge to learn the liability side of investing. Anchorage is much more focused on the asset side, how many widgets can you make. Sandridge is what unholy acts can I do in the docs? He went to learn that. I stayed at Anchorage, learn more from Kevin and Tony. But John, and he left, I would say not on amazing terms. If you left Anchorage, you were dense.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Thinking about how companies evolve through a bankruptcy process and through their life cycle and how the capital structure interacts with changes in the macro and changes in the micro is a lot of how you have to think creatively about credit. It's less about there's this huge TAM and delivery. How can I address it? What we're trying to solve for is knowing names and then touching them at different points in their life cycles, be it long, short, different parts of the capital structure, that we think management and the micro and macroeconomy are going to favor or disfavor.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, what does that mean? They're going to drive. Well, there are no cars that are being produced. What does that mean then? They're going to buy used cars. Okay, why do Hertz go bankrupt? Well, A, no one was traveling, but B, most of the Hertz debt is just a margin loan on the ABS and the used car securitizations. So used car prices crash. If used car prices are going to go up a lot, that's going to benefit Hurts. So we were an investor in the first lien. And we're sitting here looking at this. And we bought the first lien at like 75 or 80 cents. We ended up being us and Apollo with their two largest investors in the first lien. If this is what's happening in China, and that happens in the US, used car prices are going to skyrocket. And maybe the narrative is going to change in this bankruptcy that the first lane isn't the fulcrum or the controller of the equity through the bankruptcy. It could be the junior debt, which is trading at 15 cents. So we bought the junior debt on that option. You have this convex option that used car prices are going to skyrocket. That's a simplistic example, but.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“In the middle of 2020, and we're saying, well, what's this business going to be? You have to think about the narrative of a company as it goes through the process. In equities, you have one stock. In credit, in the case of Hertz, let's say you have the common equity, then you had the senior unsecured debt. Then you had the second lien debt, the first lien debt. You had the ABS on the cars. So you have all these layers you can invest in the capital structure. And you have to think about Hertz is doing no business right now. But I'm looking at the data from China. And China's reopening already in May, June of 2020. And it seems like nobody's taking the public transportation.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Lot on the structuring side. So if you think about what's happening right now with a lot of the companies that are in need of money in both, let's call it generally the private credit and levered loan space where the bubbles have been built up, they are moving assets away from creditors to raise capital. And they're doing it in very clever ways. One has just done it by creating a double dip, which is essentially an extra claim through an inner company without actually moving any assets. There's a lot of imagination and structure around that. And then I think about when you're in a distress situation, when we're sitting there looking at Hertz.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the depth case is bring us something, anything you know that you know the best. Don't do any new work, you can just bring it to us. We'll go through it. The networking cases, we're going to give you something you don't know. You can talk to anybody you want. You've got a week. How well can you figure this thing out? It's not in a sector you know, probably. So how well can you not only do your deep work, but talk to the network to figure out the narrative. And then speed is just, we give you something, you have a short amount of time, that's obvious. Because I think that those are, especially in credit where there are restructuring advisors and there are capital markets bankers, there's all these different people around the nexus of credit. Having a strong network is critical. It's critical to understanding the narrative of a situation.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“And we found that they didn't like a lot of process, a few of them. We need process. We want to, and we built this at Anchorage, we want process around the research so that the sectors are covered, the topical things that we know there's a new issue coming, or there's an event that might happen in that name so that we're ready. It's all about being ready. And that wasn't for everyone. So we worked with our coach and other members of the team to figure out how are we going to change our process so that we can hire people who can do this depth and breath. So we changed the cases. Went from like one or two deep cases to three different cases. One to test depth, one to test networking, and one to test speed.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Never been a mock portfolio that's done down. Could guarantee you that no trading We were testing for depth. We would give these guys case after case. How deep can you go? How well do you know this? And we ended up with some people that fit our model really well, which was depth and breadth. We want you to be able to go really deep, but we really wide. Know your whole sector. Some people on the team were just more like the depth guy or the depth girl. And what we realized after six months was that didn't work for us. I think we had five or six analysts in the beginning and we needed people that could really cover a wide swath. But when something special came up, they could go deep. And when you're hiring for a startup with an indeterminate amount of capital, you're not necessarily getting the rocks. We couldn't hire people who worked for us before. We had non-competes. You're not necessarily getting the rock star analyst to walk out the door of his fund. So it was people who either were really good, but for some reason or another were willing to take a shot on us or had something else in their career that was going on. And some of them wanted to put the furniture in one day, talk to an LP the next day, and then work on a credit for six months.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“We tried to build for them early on so that we wouldn't make those same mistakes. But we did make some mistakes in hiring, actually. And it wasn't that we hired bad people. We hired people who didn't fit our model because we were testing for depth. When you're hiring analysts and you're not investing at that time, we had a model portfolio and like everybody's model portfolio, it was killing it.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“You get told no COPMs. That sucks. That's terrible. And that's fine if one's the telecom analyst and one's the financials analyst. There might not be a lot of synergies, but John's background is research restructuring legal. He went to Yale Law School. He worked at the Chicago Court of Appeals under Richard Posner. His investment banking background or investment banking trading. I went straight on the trading desk. It is trading risk portfolio management. So melding that together, that research and trading for us really worked. But in terms of managing the relationship we have, one person who's given us amazing advice early on was Isaac Kor suggested we work with a coach that he had worked with. And so we've met with her every week since we started, since before we started. She's helped manage our relationship, manage the team, and now she works full time for us as our chief people officer. So having some of those things, those fail safes where other people had made mistakes or we had seen mistakes made at our prior firms and our lives.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Through that if people want to get out. I think another thing that was really important for us was raise enough money so you don't have to be fundraising once you start investing. And that was a really, really important point for us because we want to raise enough money to be relevant to the banks. We like to give the banks our research and trade with them a lot. But if we can only do one or two million of something, we're not that relevant to them. To the liquidity provision point you made earlier, if I can't speak for a $25 or $50 million block that someone has to sell, I can't be that call. So we had to raise a billion dollars. And then in terms of managing the relationship between me and John, we had come from a place with 2 p.m. And when we were doing a lot of the early meetings, all the LPs were like, oh, I hate the COPM thing. It was like in the LP training course.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Obvious, but when you have a culture where the compensation is a zero-sum game and people feel like they're fighting for that pie, you're not necessarily rooting for the person next to you to succeed. That was number one for us. Everyone on the team have points that's at a senior level so that even if I'm not having a good day or a good year, if I can help my neighbor who's got the most interesting sector succeed because of my network or I've seen something in a doc that can help them or something before that was critical. Some of the other great advice we got was around liability structure. Like I mentioned to you, I think it's alpha, which was focused on aligning it to sort of the least common denominator of your portfolio. And the case of our hedge fund, that was going to be whatever we were doing in distress. And if you wanted to have a third to half of the hedge fund in distress at different points in time, I think it got close to half during COVID or just after COVID. You need to have a liability structure in terms of investor level gates that allow you to kind of manage.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, number one was alignment on your team. You want to create a culture of alignment where people are rooting for the person next them to succeed. And that may sound funny.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, they all taught different things, but I would say from certain people, it was about learning from your mistakes and integrity. From others, it was about trading and pain trades. Some of them were more on the banking side. It was really just getting exposure to these people every few months and picking their brains. Now, John McFarlane, who I probably kept in touch with the best of that group, is on our board now, has really been a leading mentor for us in diameter in terms of building the culture, the compensation structure, the alignment structure of the place, worked at Solomon and helped save Solomon with Buffett, and then went to BCO of Tutor. And it's just an incredible human being.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Shares for CS or Goldman or some big bank, their floor brokers couldn't take all their flow. They would give it to a $2 broker. And this guy was a legend of the floor. So working for him, getting his lunch from Il Molino every day, taking the train in from Connecticut, and then following that into, and really John McFarlane deserves a lot of credit for this, but him helping me follow that passion into college, mentoring me a lot, working with him and then learning from Paul at Tutor one summer got me very excited about markets investing. I went to Duke knowing that I wanted to investing in trading. There was no doubt in my mind. Duke was a great thing to go through and an amazing experience, but I wasn't exploring what I wanted to do after then. That was kind of my story.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Talking to my dad on the train home, and he says, Well, I ride the train with people who are in the investing side of finance. If you want to talk to them, they can teach you about it. So lucky enough, I'm living in this town. And my dad's riding the train every day with Tony James, who ends up running Blackstone later, John McFarland, who at the time was at Solomon, but ends up being the CEO of Tutor, Richard Shilton, upcoming equity long short guy at the time, and Mike Clark, who was running convertible bonds at CS. So the four of them really combined to help me think through as a young teenager how I would get interested in that business. I opened a knee trade account and I would look in the journal and make horrible stock picks and then compact was the first stock I bought because I had a compact computer. Hopefully my processes have evolved since then a little bit. But that evolved to working on the floor of the stock exchange as a runner. I would take the train in 15 for a guy named Donato Catone who was what's called a $2 broker and $2 brokers are basically over.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Eight, nine, ten, right around there. So I beat these guys and they invite me up to Boston. I would talk to them after school before sports practice about trades once every couple weeks. So they think I'm in college or something. They invite me up to Boston and they say, come up, go to Yankees Red Sox. You should see Fenway. You're a huge Yankees fan. You know, Maddingly sucks. I said, okay, but can I bring my dad? They said, why? Well, now I'm 10 or 11, 12 at the time. So I bring my dad up there. And I think one of my brothers came with us too. And we go to Fenway with these guys. We'd go to one of their houses in Newton for a barbecue, go to Fenway, super nice guys. And they're saying to my dad, your kid's researching these players. He's killing us. We're supposed to be the investing guys. He really needs to be getting a new investing.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source
“Guy, Bill James was kind of the original statistician saber metrics guy. And he had created a business with a company called Stats Incorporated, the data source for all the sports leaks. And I'm at the time, I think, eight or nine years old. So I signed up for Bill James Fantasy Baseball. I have to put in a bunch of spreadsheets on who I want to draft at the beginning of the year. They run a snake draft, which means the first pick in one round, the last pick in the next round. And I get put in a league randomly with 15 other people from around the country. Just so happens four of those guys were in Boston, worked at Standish, worked at the same firm. I win the first couple years. I'm in this league.”
2023-06-13 · Invest Like the Best · Scott Goodwin - Know The Names - [Invest Like the Best, EP.332] · IDENTIFIED FROM THE TRANSCRIPT · source