YouSaid · the spoken record

Steve Kuhn

lines on the record: 84
first: 2019-02-04
most recent: 2019-02-04
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

“So if you pull a thread on that a little bit further, you said earlier that it's harder to start hedge fund than ever before. And so sure, there are some infrastructure tools. There are some things that you could scale that one person can't. But there is a gap of capital that goes into that space, partially because there's a perception that who needs the next hedge fund.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“I've talked about doing it. Again, we're going to talk later about what I'm obsessed with now. And that obsession is kind of blocking, or at least stalled, an effort to do something with this. If I could only think of someone that has experience in this.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“Obviously from your history, I'm not exactly breaking 100% new ground with this idea. You have protege partners and others. Skybridge started as an incubator. My model's a little bit different in that I think I'm just kind of providing the infrastructure. Think you could have related to that entity, you could have a group of investors that would invest in the things that this incubator found. But I think it would be a separate. I also think that the need now is higher than even was when Skybridge is doing it.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“Person who wants to raise a hundred million dollar fund has a very difficult time doing that themselves. But Millennium says, I got a check for you. And they have a pretty big edge in finding that talent. I think there would be ways you could change that and make it easier for people. Some of these would be kind of the idea of like a tech incubator for hedge funds, someone that would give you advice on how to get a lawyer that can do your documents relatively cheaply because they've done it. They'll do it repeated times. Someone that could help you with staffing of your compliance, someone that could provide kind of a third party marketing for you. I think that would be a great business.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“One thing I've told people I think it's become more difficult to launch a hedge fund. Now, then probably ever, in the wake of the 2008 financial crisis, I think that means as of now kind of the big market leader is in the big brands like the millenniums of the world have a pretty big edge because the”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“Technology has a way of bifurcating things. Some people go extremely deep into something and their technology is very high. So you have the Renaissance of the world who are obviously most brilliant minds on the planet. And they're playing a game at a very different level than even most hedge funds, frankly. And then I think you have other people who are literally kind of doing the boots on the ground understanding of how the companies work, not just equities, but where technology skill is not necessarily the most important thing. They can still create a lot of value in terms of their investors, but I don't think it's because they have the fastest supercomputer. So I think there are people that are going down that path, the Renaissance of the world, the citadels of the world, and they can make money doing that. But I think there's still a need for people who just understand stories in the world and people.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“So you were at the early stages of technology, call it or quantitative analysis in the mortgage market, and that's clearly dramatically accelerated the last couple of years. What's your take on the importance of data and technology?”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“There are certainly people who do that, but relative to how big the markets are, okay, there's two pieces of evidence. One is articles like that can change market caps by that much. So in other words, no one else had done any research on Walmart's practices in Mexico that were dubious at that time. So that's evidence. And then the evidence that Millennium's track record, like obviously, if there were enough people in some abstract economic sense, then Millennium's track record wouldn't be possible.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“That day that article came out, I think Walmart's market cap changed by something like $30 billion Someone who's dedicated to doing research on this company can move the company's value that much and has a salary, that's a very small fraction of that. Doesn't that mean that there's not enough people trying to police the markets?”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“Markets aren't efficient, and we don't allocate capital efficiently. We need somebody to do that. Hopefully those people do it well. That's what we should want as a society. Whether hedge funds get paid too well for that or well enough, I'll leave that debate to others. But the idea that somebody's out there doing that is a good thing. It seems to me that the search for Alpha is in some ways, it surprises me that there isn't more resources spent on it. Sometimes you see a New York Times article about Walmart's practices in Mexico. They were doing something illegal in Mexico. I don't remember the exact details, but this was a few years ago. And this is a smart reporter, presumably well paid for that industry, which is less well paid than the financial industry, probably making $100,000 or maybe somewhere in that range.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“And not small fees. Mazzletoff, it's going to be good for them. I just don't see how that's really a debate anymore. Anyone who would take a fair look at just simply their track record alone. So markets are not efficient. There's a lot of views that are negative about hedge funds. But let's think about what hedge funds in theory are trying to do. They're trying to find mistakes and markets and correct them. And I think that's actually a pro-social idea. If we only had index funds, and I love index funds, I think for most investors, that's a great idea. That's what most folks should do. I don't disagree with the logic of the ETF and index fund industry. I don't disagree with it at all. But in the absence of somebody looking for mistakes in markets,”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“Pretty strong evidence that that works. So they've been doing this for, I don't even know how many years now. It's in decades, not in single digit years, with hundreds of different groups on board. And it would be impossible statistically to think that that's random at this point. Let's put it that way. They continue to do well.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. Well, here's one thing I say to people about the industry in general is. We've had almost the perfect academically designed test, whether there's elf in the market or not. So there's ongoing debate of whether there's markets are efficient or not. That perfect test has a name. It's called Millennium. So Millennium is a hedge fund that hires lots of smaller groups of people to come in and manage some part of their capital. They have a large pool of capital. I think it's $35 billion more or less. And they'll give a new manager a chance if they believe that they have potential to be someone who can make money can add Alpha and maybe start them with $100 million and see how they do if they do well. It grows. If they do poorly, it shrinks or maybe it's taken away. It's basically kind of a genetic algorithm to see if there's alpha or not. That would be the perfect experiment to see if markets are efficient or not. If that doesn't work, that's evidence that markets are pretty darn efficient. If it does,”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“Had a bit of a spiritual awakening. It wasn't new that I cared about the world. I was a contributor to while at Pine River, both me and the firm were great supporters of Robin Hood. We were supporters of a group called Charity Water, which your listeners may know about. It's an unbelievable charity that provides clean water to people all over the world. That wasn't new, but I think it was a rising sense of it's time to think about this more clearly. And that's what I've spent the last five years doing and the last four months I've got a new mission related to that, which maybe we'll talk about a little bit later.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mentioned a couple of different triggering events. One of them is probably some number that you felt like you were comfortable financially. Was it that crystallized that moment or that time? Why not two years before or two years later?”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“There were a lot of forces that led me to that decision, but I kind of had a rising force of wanting to do good in the world. Some of this was spiritually based, and I made that clear at the time. But I think I'd always been a humanitarian in thinking about how can I take the skills I have and think about how can I help the most people or maximize good with that. I think that's a different game. The game I played out of college was how could I make money or find something I enjoyed while doing that? And then I decided that at some point I wanted to play a different game. I wanted to play the what can I do to make the world better game, if you will.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“Getting into those schools, that's the prestige level for a parent. And when we talk about the future of tech supremacy or the future of economic supremacy, when you see that, you're going to see that we're going to be challenged. We're going to have to think what advantages our society have. And we have tremendous advantages that China doesn't have. But we have to maximize those advantages if we want to compete economically or strategically in the world against China. They have some advantages and we have other ones, but we have to think carefully about how to maximize ours.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“They're all brilliant. This test is a two day long test. It makes the SAT test look very, very small compared to what they do. Students often faint going into it because it's that important. This one test in many ways determines your fate. If you get a very, very high score, you get a Chinghua or Beda. If you get a next level score, you get to go to that quite as prestigious university, but it's still a great university. You get a low enough score, you don't get to go to college. It is crunch time. Everything's on the line for that test. If you go to a high school in China, and I don't care whether that's in Beijing, Or if it's in the smallest rural village, the textbooks have pictures of the gates of Chingua and Beda on them. It's the equivalent of getting your son or daughter into a pro sports league.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's absolutely right. I think that's true. There are students from all over the country at the two schools, but yeah, that's true. There's no doubt about that.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, in some ways, there is things to be admired in the Chinese educational system. It is pretty pure. The scores are your scores. And not a lot of behind the scenes manipulation that allow you to get a student in. You're not going to have, it's not going to be based on your great athlete. It's not going to be based on whether your parents can write a big check. It's pretty pure.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, one of them was a partner with me at Pine River, one of the most talented thinkers and traders I've ever met. Brilliant. It's got to be in the billions because my students have worked with all the name brand hedge funds, students that I taught during that time have worked at all.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't remember off the top of my head, but. It was like reading poetry when they would write something, that is a really interesting, it makes sense, but that's no one else would say it that way. These students were amazing. And I was teaching students from both of them. I had at one point about 60 students, and I was teaching them about financial markets, about what hedge funds were, about how markets work, how you can find edge, how you can find alpha. And a lot of those students went on to work at Wall Street firms or hedge funds. I sometimes wonder what's the total amount of ELF generated by the people that I talk. Are you still in touch with them?”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“And if you got a high enough score in the competitive environment of the China education system to get in, your score in the English test has to be high. There's no way. So basically every student on these campus speaks at least passable English. It's funny though. They use the most interesting words because it's really a vocabulary test. It's not a verbal test, the Gao Cao. So they have the most interesting and unique English vocabularies. So you hear words that are perfect, they're appropriate, but something nobody would actually say”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“Either Chinghua or Beda, it's clear. Very rarely would a student have the score sufficient to get into those schools and not go there. They're one in 1A in terms of who is the top school. I think I should remember this. I think there's 38 provinces in China. And the top score from each province on this test, the Scalcot test, is almost like a mini celebrity. And every year Chinghua and Beta kind of fight over who got more of the 38. An ongoing kind of prestige battle for them. And these students are unbelievable. By the way, the Gao Cao test has, I remember, six components. There's Chinese language, Chinese history, chemistry, physics, math, and English.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I was a little bit downed by that. It wasn't as exciting. And here was a rising China, which I was just incredibly fascinated by. And I just wanted to go. So I ended up telling Goldman, I'm going to go and do this. They ended up giving me a job in China because they didn't want me to leave. They liked me and I did some work working for the China subsidiary of Goldman at that time. But that was not that many hours. It was a few hours a week. And I had the rest of my time. I was teaching students there. And I was teaching students at Qinghuai University and Peking University or Beida as they say. The rough equivalent is Baida's the Harvard and Qinghua is the MIT of China. And it's a very hierarchical college system in China. Basically everyone in the country takes a test in their senior year. It's called the Gao Cao. And the highest scores go.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“There are times in the markets where things are incredibly interesting. There's a lot of volatility and your ability to add value, to add alpha is very, very high. And there are other times when markets are kind of dull. Spreads aren't moving very much. Markets are not very volatile. 2005 was the latter. I didn't feel like I could come to work and A ton of alpha for our investors, that was challenging because the years before that had been very active and very interesting and one was able to add a lot of value.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“I had a piper for a few years, then I went to Cargill, then I went to Citadel. And after that, went to Goldman Sachs for a little while. And I took what was the first strange turn in my career. I took three years off from Goldman and went and lived in Beijing.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“A certain number of calculation units to every user. And literally like three times a week, I was begging for more. I needed more calc units. So I would call the help desk. After about a month, everybody at the help desk knew my voice. I would say hello. And they would calc units. You need more calc units. Yeah, I could use some calc units. So I loved it. It was all engrossing for me. And I think that was, it was like playing a game for real money. I got to meet some really interesting characters during that time Mike Vainos. I don't know if you know Mike, but at Ellington, I met him when he was still a kider and saw the desk there and they would play these games of like taking out math Olympiad problems and solving them on the desk when they were bored. Yeah, it was a unique culture, unique time, and I loved every minute of it.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“I love it. I love the business. I guess it feels like playing a game. And Piper Jeffrey, it wasn't Goldman Sachs. It was a regional firm, a smaller firm. But that meant that I got to do a lot of things very quickly and got to see a lot of different opportunities. And it was a great place for me. And I was working in mortgage-backed securities there as an analyst, just the kind of the dawn of the beginning of the MBS, the mortgage-backed security analytics market, the yield book. If you're a mortgage person from that era, this was like the first machine that could actually calculate an option adjusted spread. This was like magic. I thought this was the coolest thing in, I think it was 1994. I was the number one user of the yield book that didn't work at Solomon Brothers. I was the number one user. And this was back when we had a limited amount of computing power, again, revealing our age here. That was something they had to think about. So the only allocate.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“A unique situation came to me early in my career. You think that that's going to open Graduate in 1991. Biggest recession probably since 2008 Really tough time to get I had been In my hometown I was happy. Then the recession hit, and they said, We have a hiring freeze.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, so let's go back before we'll go forward to the other things in life, which would be fun to talk about. What was it like at the very beginning of your career when you were learning the mortgage market? It was great.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“And they were kind enough. Nurture that Parents would take me to chess tournaments and I always love playing games. Decided that I wanted to kind of figure out a way to do that for a living Went to Harvard, studied actually game theory. Economics at Harvard studied under Professor Shelling who end up winning Nobel for his work on And then I thought, what can I do in life that's most like playing a game? Happens to pay To do it. And I thought that was Wall”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“Grew up in Minnesota, had two amazing parents who loved me and were kind enough to follow my obsessions, which was board games. I was obsessed with board games as a kid.”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guest on today's show is Steve Kuhn, a retired hedge fund manager. He spent two decades in the industry specializing in mortgage-backed securities at Cargo, Citadel, Goldman Sachs, and Pine River. In his last stint in the business until his retirement in two sixteen, Steve was a partner and portfolio manager at then $14 billion Pine River Capital Management and was one of the hedge fund industry's most widely known fixed income traders. Our conversation covers parlaying a passion for playing games into a two decade Wall Street career, spending time productively when you're investing specialty is out of favor, stepping away from the money game, presenting the evidence-based case for active manager alpha, talking the state of the hedge fund industry, managing his own money, engaging in philanthropy and”
2019-02-04 · Capital Allocators · Steve Kuhn – Life After Hedge Funds (Capital Allocators, EP.85) · IDENTIFIED FROM THE TRANSCRIPT · source