YouSaid · the spoken record

Scott Malpass

lines on the record: 120
first: 2018-07-16
most recent: 2018-07-16
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

“And some can generate working 90% or 85%. They're still better than most of the people in their space. And so you stay with them, but some can't. And that's just a judgment you make. And we're dealing with that now with some of our hedge funds. We've had longtime partners, some of the best people ever in the business. They're clearly not putting the time in they used to. They're great people. And that's their decision, you know. At 80%, they still better than most. Yeah, but at 50, no. Or sixty, no. There just can't be. It's too competitive.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“It always felt like such a subtle thing that you've had so much conviction in a particular person manager. And, okay, they're now not operating at the 100% capacity that you wish. Is it 90, 80, 70? And is that still better than, you know, if they now have more perspective and balance in their life, can they still generate the same or better returns? Is the noise around that? It's so tough.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“And they're not paying attention. I've seen that many times. And there's nothing you can do to get them back. So you've got to move on. It's hard because, and I tell my younger staff, we work so hard to build relationships and get to know people. And then when there's a separation, it's difficult. But we have to think of our client, if you will, our students and faculty at the university. And then it makes it a little easier knowing that we're doing the right thing for them.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“But at some point size is very challenging for most strategies. There are some that it's okay. Bonds, maybe large cap equity, you know, there's some it's okay. But for most of our strategies, it's not okay. And then I'd say greed can come in. Sometimes the terms, the alignment ends up moving in different directions from what originally was. And that's also related to size. And that changes the relationship. So there's a few things like that. And then there's people stuff happens in their lives and they become less focused.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“So most of the time when people don't become successful, they end up getting away from some of their own core beliefs. They ended up raising too much money, I think, in private equity. Some of the early buyout funds that were small. They said, oh, we'll never raise that kind of money. Or even some large multi-strat hedge funds will never be that big. Well, you know what? They're like 10 times that now, and the returns show that. So at some point, we sort of get off the train, you know, and say, well, it's nothing we did. You're the ones who decide to do that. So don't be mad at us. That was a decision you made. We're moving on. And obviously, we always try to part in a very professional friendly way. And I think we've done a good job of that.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“on the asset class or the life cycle of the manager, you know, and how mature they are. There's a lot of variables. You know this. I mean, there's a lot of variables. It's not an exact science. It's probably half and half. It's hard. It's very hard to predict who's going to really excel from here and who isn't. Sometimes it's extremely difficult. And sometimes you make mistakes. But if you don't do anything, you got to do something.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a good question. You know, when I first started, it was easy for me to see the really, really good ones. They stood out. And of course, the bad ones are clear. The middle area when you're younger was harder to discern, right? That middle 80% or whatever. We've certainly gotten better at figuring that out, you know, and making faster assessments of that group and either moving on or keeping on a watch list or whatever. I like, you know, people say, oh, you have notredame grads, so you're all thinking the same way about everything. And that's just not true. Yes, we are all Notre Dame grads. But I have so many different personalities and ways of thinking about things. And they bring very different perspectives on these manager selection issues. So you have to have some common narrative and you have some common criteria that do you really have to hang your hat on. We have that. But we're also willing to weigh different factors differently at times.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of that, I think that's a mistake. We do not have that. We never had it, and our board will, I don't think that ever do that. We don't, honestly, at the end of the day, we don't really care that much what other people are doing. We've got our own risk tolerance, our own mission. We're going to do what we need to do for Notre Dame. Over time, we think that's going to generate superior returns, and we're going to be at the high end of our peer group. But I think you just get obsessed with that, and it's a distraction. Maybe they're just taking my calls more because I've been around 30 years. But I find it easier today to share it with ideas than I did 10 years ago.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sometimes I hear the opposite. I was talking to Jim Dunn last week, and he was sort of saying that because of certain organizations have CIO peer-driven compensation. And as a result of that, they're less inclined to want to share ideas”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Back, and some of those work out and some don't. But we talked the Nerdame family in general. We talked to a lot of people. My peers, you know, I'm not afraid to go call another CIO if I hear they might be looking at the same thing and we'll share due diligence and confirm. You know, I think people are doing that more today, to be honest than they used to. I don't think that there was a lot of that done. When I was early on, that wasn't as common.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“It varies a lot. I mean, sometimes you get, because they're so well known and they're so experienced and it's easy to check them out or somebody in our network knows them well, it can be fairly efficient, it can be quick. We met some family office groups in Europe, for example, that were raising some funds and they were taking outside money, and that was relatively quick because there were very well-known people with a long track record. And it was really the first time they were going outside. So there wasn't really an opportunity before. But those were easy. Sometimes it takes many, many meetings. Maybe they're younger in the life cycle, you're still getting to know them. They're still getting to know themselves and their philosophy. You know this from your work. So you're looking for them to articulate a thesis that you can kind of hang your head on and sometimes hard for them to do that in a way that gets you excited, but you think they're good, so we want to stay with them, give them a chance, you know, you keep coming.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“You guys, you got to get on the phone. Stop looking at that damn iPhone and get on the phone and call someone. That's where you're going to get ideas. I preach this so much in my class. And I think they get it. I think they start to get it, you know. And I see it in their behaviors. They start their careers. You're going to get ideas from smart experienced people who've been around, not from looking online. Online can affirm things. They can develop the thesis. It could give you research. Put the framework around it. But the best idea is I haven't gotten one on good idea from the internet in my career.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Very interesting. And you get one or two ideas a year from that. It's great. So I think you do have to be more entrepreneurial. Use the tools you have available, the public sources are now a commodity, and there's a lot of them. People forgot how to get on the phone and call people. I tell my students this”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so a lot of ways. I mean, we certainly get a lot of ideas from our current partners, no question. They're the smartest people in the markets we know or we wouldn't be with them, right? So they're really good. We're always asking them for ideas. They tend to know other smart people in their space, especially as they evolve. So a lot of ideas from our managers. There's just a lot of friends of Notre Dame that we've met over the years, alumni, non-alumni, parents of kids, just different folks that we come into contact with. And I have a discipline where I sort of have a call list. And my staff does too. My senior staff does too. We just touch base with certain people periodically and say, you know, what are you seeing? Which would be looking at? Is there anybody out there you think is of interest? And so we'll just try to follow up on that. And a lot of time there's nothing particularly new, but every now and then there's something.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Love to get those numbers as soon as they can. I don't really think about the one-year numbers very much. I've got a long-term strategy. And you have to have snapshots periodically. You have to compare. And I get all that. But a lot of that's noise in terms of earning the kind of returns long term that we want. So I really worry about short-termism. And Warren Buffett is so great about cautioning people about that. And he always talked about the stock market as being the transfer, the transfer of money from the actor to the patient. And that's so true. And so one of the things I keep preaching to my team is we got to make long-term decisions. And we got to keep our eye on the ball. It's hard, though. The world's pressures are very short-term today, culturally, in markets. It's very difficult.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, the answer is yes, but I do worry about short termism in general as an investor. I think that is one of the biggest threats to high returns over the next ten, twenty years. I think financial media, social media, I worry about a next generation of people overseeing these kinds of funds having a very different time horizon than the folks who, for example, in my committee who oversaw it the last 30 years who really thought long term. I'm not too worried about it at Notre Dame because I think we have that in our culture, but I'm seeing changes in other places, not necessarily the big endowments, but I get calls from all kinds of investors, you know, looking for advice. And some of the way they frame questions shows me that they're thinking very short term quarterly annual results, even this annual beauty contest of the big endowments that Bloomberg and some of the financial media just love.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Investors always talk about the issue of short-termism, particularly in the public markets. And I've just been stewing on this notion a little bit of That behavior is forced to be better in the private markets. You give your money to the venture capitalist. He has it for 10 years. Yes. They make whatever decisions they make about the companies, but because of the illiquidity, do you see that as you look through the venture capitals to their portfolio companies that businessmen are making better decisions at all because they're still private?”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right, right. Yes, I think there's 4,000 less public companies today than over 20 years, something like that. It's incredible. Who would have thought that, you know, 10 years ago, that that would happen? I don't see that changing. Unless there's some regulatory change or some other issue, structural change that would have caused people to think differently, there's just so much capital. Why would you want to be public? You can get financing. Uber, who's had their share of public relations challenges lately, but they could go get as much cap as they wanted. And so could a lot of other companies. So I don't see that changing anytime soon. So it's a very, again, those are one of the structural changes I was alluding to that has made our job very different than what it was before.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Do you think about the implications of all of this capital at those sort of different stages of private markets where now you're reading more about how the number of public companies has been cut in half? And a lot of that is because I remember back when the venture company wasn't often cash flow positive when it went public.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“They're very conservative. They take huge discounts twenty, thirty, forty percent, depending on the company. If anything, you could argue that we've understated the values. If you look at history, they've been understated, honestly. But that's okay. We'll get the value out of it when it's appropriate and when it happens, when there's a liquidity event, we'll get our ownership and we'll go from there. So yeah, there's been down rounds this time and many venture holdings. They were probably ahead of themselves and they probably should to be some down rounds.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, until now. Yeah. So it's a high number. It's at least 80%. And so, you know, people say, oh gosh, you know, there's so much fragmentation now in the venture community and there's so many people raising money and there's so many more players. That's true. Capital is coming from a wider array of sources, search funds, little angel networks. No question about it. But if you really look at what are the companies that really become big and sustainable every cycle, there's only two or three, the Googles, you know, the Facebooks. There's only a couple. And those tend to be funded by the same people. So, yeah, more capital, wider arrays of sources of capital, you know, but still it's a small group doing the big transformational companies. Look, we're very conservative in our valuations. We report what our managers give us on our valuations.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, because I have a thirty or tenure, I've seen some of this behavior before, and so I'm always skeptical of some of these periods, late cycle, where there's, you know, a lot of froth and overpaying and so forth. You know, I think the data shows that 80 plus percent, maybe 90% of unicorns don't make it. So I don't get too high and fired up. Is that really?”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, they were coming through, rotating through, doing their normal course of work. So I saw everybody throughout that period. I came back a couple times. I had board meetings. I had to be back. So say four months, but honestly, I was probably there like two months total, to be honest. So it was pretty short.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“And there weren't very many people worth talking to. You know, part of doing London, London became such a gateway for the world. Everybody's in London, right? And I mean, I remember when I was, I went over for four months when we started this on my own. I would live there for four months. I was surprised how many of our Chinese partners were coming through London for various things. I met them more in London four or five months than I did going to China. I mean, it's just incredible. So we'll see how that evolves with Brexit. Some people are pretty negative about what's going to happen in London because of Brexit. I have no idea. We'll see how it shakes out. But there's going to be change. But that happens sort of late in our time there. So that wasn't a big part of our thinking.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that was difficult. I think we determined over the two years that although I'm glad we did the experiment, that having them back here and being part of the day-to-day dialogue, same time zone, was more an advantage for us than having anybody over there on the ground.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“You do an Asia, Singapore, or something. You know, I always wonder about that when you have such a familial feeling culture here. The flip side of having people and getting the new network and on the ground is they're not here.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“But just being on the ground there really helped us think through that as it occurred. But, you know, we made a lot of new friends. And we're there all the time. We were going all the time before that. And we'll continue to. But being on the ground somewhere does give you a chance to deepen relationships and spend more time with people you don't when you're coming in for a week. Despite all that, we decided that unless you're really like, if you're a big pension fund doing a lot of direct private equity, you know, probably be on the ground. We don't need to be right now. We feel that we sort of got a good feel for what's there and we'll be able to keep up with it just through our normal course of travel. So we're taking a pause from that. We could always restart it, or we could do it another geography, we could do it somewhere else.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, it was fascinating. I would do it again. It was incredibly accretive to our work, our mapping out of the money management community in Europe, our understanding of the European Union and institutions. Of course, Brexit happened while we were there. That was interesting. We certainly didn't expect that.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we had two folks, two of my directors did it for a year, and then two others did it a second year, and then we had some rotation of some of the analysts and associates.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“So luckily, we have a tremendous academic program in London. We have 150 kids a semester there. We have a gateway program. We have our own building. We would just plug into one of the offices.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's not as many as we'd like because I think we'd like to put more capital in, but we have found a few. And so that's an area we've put a lot of time into. We actually did a two-year pilot with our London operation. We just completed. And we had some staff in London over the last couple years really thinking about deepening our networks, extending our brand, learning about other opportunities if we want to do more direct kinds of investing, having people on the ground would be an advantage. It was also a great development opportunity for some of our team. But it was always a pilot. Our board is great about letting us experiment with things like that. And I said, look, I'd like to do this, but I don't want to make a 100% commitment yet because I'm not sure we're going to want to do it.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's true. So you have to be ready. And we're talking with managers now that we won't use until the next collapse. But when that happens, we'll be ready, they'll be ready, and we'll be able to put a lot of capital to work. So we're anticipating things maybe more than in the past even. We've always had good liquidity because we have fundraising, we have good inflow. We're fortunate as right as an investor. You sort of get great cash flow. We're in the middle of a campaign now. And so, of course, everybody's in a campaign, right? All the time. But it's a great structural advantage for the big endowments in terms of rebalancing and all of that. So we're always looking, you know, I think about emerging markets. I think about what a weaker dollar could mean. Europe, there'spects of Europe that look very interesting. We do a lot of, in private equity, we've always done more that middle mark and lower middle market.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I will tell you that we've been spending a lot of the last couple years thinking about some of these longer-term portfolio construction ideas. I think just obviously the market's been good the last couple years. Volatility has been low. And it's been a time where you could sit back and think more about sort of longer-term construction. And we've been doing a lot of that. And especially given our size now, look, we were opportunistic with the energy collapsed. There were some things we did there. Those are relatively easy, right? Because it's clear that there's an opportunity and just had to be positioned to take advantage of it and have liquidity. And I think all the big endowments and foundations are pretty well set up for that. I've been through, what, four distress cycles the next time there's a distress cycle, I'm sure we'll hit that really well again.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“We might have a theme we want to put in place that's opportunistic for a shorter period. We've done some of that, and we'll continue that. And I actually think as the fun grows, we'll probably do more of it. And I'm not against that at all. I embrace that. I'm looking long term on how I can get the right exposures and make sure that I'm not missing out on something because I'm being obstinate about I can't find an active manager that does that. I'm going to use all those tools.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“If I don't believe that because there's been a lot of flows in the past that all these stocks are overvalued, they're structurally overvalued and people are going to lose money because they're buying at a high. I don't believe in that general narrative, to be honest. I think you've got broad indices with a lot of companies. And sure, when there's market corrections, they're going to go down with the market. But because you haven't had as much friction in trading and fees, you've already way ahead. The rebound is going to be correlated directly with your allocation. So, I mean, the data is very clear. Most people should do passive and they should be low cost because it's the trading and turnover and fees that really undermine most retail portfolios. And I'm glad institutions are doing more of this. Like I said, we do some passive ETFs temporarily. We're looking at exposures. We're transitioning some managers.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, yeah. Do you have a view in your head of the US market, SP 500 is something like 30, maybe a third, 33, 34% is indexed today? Do you have, there's this debate, Charlie Ellis says, yeah, we can get to 90%. Do you have any view from the seat of what's a healthy amount? Well,”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Looking for the best talent, I would index most of it. If I were running a state fund at $150 billion, I would index most of it. But I've got as much smaller fund than that, and I've got a full team here, and we can do this. But most people can't, and I would argue there might only be fifty or sixty investors in the world who really can do this model well. I don't think there's a lot. I think most people should be using more of these other techniques.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“30 million families investing with us in their various investment accounts and retirement accounts. I think it's a very good thing for the public because most people have no idea how to allocate their money. I think these target date funds, whether you have the slide path, I think it's fantastic. I think about our own faculty and our programs here. And they can invest in those funds that match their retirement age. They don't have to worry about it. They have to spend a lot of time on it. They don't want to. They're doing research. They're teaching. I think some of these innovations have been incredibly helpful for the broad retail public and retirement funding. I think Vanguard's played a great role with that. I get asked a lot, well, you don't do a lot of passive. You're in all these esoteric active strategies, high active risk. You're not benchmark oriented. How does that square with your belief in passive? I said it's completely consistent. I said, if I didn't have a team like I have here scouring the world during 800 meetings a year,”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“There is a lot of structural change going on in markets, and I think you just have to understand it and embrace it. Computers, computer-driven models, quant firms, passive, millennials, for example, they want to go online. They want to do index low-cost products, ESG focused generally. And they're not going to spend the time doing the research that we used to do on company. They want a quick, efficient, and they want to move on to other projects. So, for example, at Vanguard where we pioneered passive investing, we're well over $4 trillion now. We're bringing in $300 billion a year. I don't see that subsiding anytime soon.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Active management had a really tough slog over the last seven or eight years. Indexing, we know where the trend is going in terms of fund flows. You have quant and big data coming in. Do you ever sit back and say the fundamental managers that we love and understand that comprise the core of our portfolio married with whatever factor balances we have might not cut it?”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“We do we tend to stay fairly simplistic though. I don't think getting too cute there is helpful. You really can't time most of them anyways, but I think having the right balance is important, knowing what you have, having some balance, making sure the big factors you're very aware of. Growth value, large, small. You could throw in other things. But I think those are the big ones. Kind of back to where we were a bit, you know, 20, 30 years ago.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, if you look at the top five market cap companies in the SP today versus 20 years ago, I mean, it's completely different, right? It's all technology. So that's the big difference. But I do think it's important to pay attention to the kinds of exposures you have in a portfolio and make sure that your structure reflects some boundaries. We're not willing to have 10 years where value's out of favor and we've got 90% value managers. We have too much to do here. Sure, you say it's perpetual, but it's perpetual in many ways, but it's also we got to spend every year. And we're ambitious. And I can't take a 10-year period where I have all these managers underperform because their styles out of favor. That's not a satisfactory. So I think having some boundaries there and understanding that's really important.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“There is a fundamental change in that these very large cap companies are still growing like crazy and gaining market share, and that's at the expense of increasingly valuable. Yeah, I mean, if you look at”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so when I first started, we spent a lot of time looking for skill, but we were very conscious of styles. You might remember it was sort of large and small and mid-cap growth in value and blends. And then it was micro cabin. And you had mini camp. And I think some of these firms kind of went crazy with this stuff. It got silly. But there was merit to factor now. I mean, it's undisputed that factors are really important in determining stock price performance, stock market performance of individual companies. So paying attention to that, I think, is important. I mean, you can have long periods where certain styles are out of favor, no matter how skilled the manager is. That's just a fact. We've seen that. Value's been really under pressure. We've seen that before, by the way. We saw that in the 90s. But it's really severe right now for a lot of different reasons, including just that some of the real growth areas like technology are just really much bigger than they used to be in the banks or smaller. So, I mean, there's been a lot of shifts in this.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“I will say we've come back a little bit when you think about some of the market changes in market structure, the movement to passive. I think portfolio construction techniques, at least in the public side, have sort of come back and I think you need to think about those a little more.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so when we was first evolving in our program, we really needed to set some ass allocation targets. I needed to get the board comfortable with, okay, we're going to do this much in private equity. We're going to do this much in venture. So I thought it was important at the time to have a pretty good structure in place that was a clear asset allocation plan. And then within that, we were just looking for the best people. And so I think that evolved. Then it did become, honestly, very bottoms up as we matured and grew in size. You know, we've had dramatic growth. Like I said, it was $400 million when I started. Now our pool's over $12 billion.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Issues. And that from those meetings came the endowment model. Now, the bigger endowments were able to execute it faster because they just had the resources. So the Harvard, Yale, Princeton. But then you think about Notre Dame and Northwestern and others, as they started growing, they were doing the same things. But it was really the philosophy that Jim and his colleagues sort of put out really did help move this along, this thinking. So generally we follow that basic approach, and we're just looking for skill wherever we can find it. It's so much more competitive. We're trying to get into with groups even earlier and help shape some of the terms and the alignment and capacity rights and just various things like that. We do more co-investing in real estate and private equity than we've ever done. Just more things that have control that allow us to really amplify and expand with our”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we never called it the endowment model back when I started. That came from the press later. I'm sure my peers have been around would say the same thing. We felt that being a spending institution and needing high real returns, we had to be in equities. But we wanted to diversify because we didn't want the risk of a single category. Pretty basic portfolio theory, to be honest. The twist was that the big endowments were really savvy at developing long-term relationships with the top people, getting them early, getting good alignment with them, and then staying with them. And growing with them. I think that large endowment funds have done a really good job of that, unlike a lot of other kinds of investors. Some have now caught up. It's a lot more competitive today, right? But I'll give a lot of credit to Jim Bailey at Cambridge because Jim assembled a group of endowments in the 70s to talk about these.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm sure you did the same thing. And it was just what I learned. I tell my younger staff, you know, you should do some of that. And I went to a lot of conferences and seminars and things that, again, I wouldn't do as much today because I don't think I get this much value today. But I did a lot of that then. Not speaking, just sitting and listening. And I think you have to be open-minded as you're still forming your philosophy and getting a sense of what quality looks like and skill and the patterns of success. I think meeting a lot of people, and the bad patterns stand out too.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source
“You get to meet this person, see what they have to say. I was at a point, you know, when you're younger like that, I was meeting, I would meet almost anybody. I took meetings I would never take today.”
2018-07-16 · Capital Allocators · REPLAY - Scott Malpass – The Fighting Irish's Twelfth Man (Capital Allocators, EP.25) · IDENTIFIED FROM THE TRANSCRIPT · source