YouSaid · the spoken record

Steve Moseley

lines on the record: 102
first: 2021-05-03
most recent: 2021-05-03
sittings or episodes: 1
sources: podcast

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“Brings to the table and needs to be considered in the context of our portfolio. In other words, we have identified gaps in our portfolio that we're trying to fill. There are characteristics that we know even before we know the company. So, you know, for a very long time, we were working hard to generate deal flow in life sciences. I think there are a lot of different ways to win. And the distinction I'd point out here is that understanding the context, understanding fully the incentives and the different players, that turns out to be more determinative than I would have guessed. If you go back and look at these deals, turns out some of those factors matter a lot more than the factors that you would naturally consider, like purchase price multiples and growth rates and industry factors, that's situational assessment turns out to be really important. And I think that's something that develops with time, but only with time.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Over time, I've learned to attach more value to the situational dynamics. This is something that I ignored when I thought the judgment was all about the data that was available, the company data. I pay more attention to the situational analysis. Why does this sponsor need capital? Why do they need it from us? Why are we getting this call? Is this the 50th call or is it the first call? And that has to be overlaid, of course, against the skill set that that sponsor”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“That exists, that resides at each one of these sponsors. If we back them, we have that belief. And hopefully we're correct in that assumption. And we can leverage that intellectual capital too, the domain knowledge. Even when we see deals that aren't coming to us from a sponsor, there's almost always a conversation with a sponsor that informs our judgment. And maybe that's the conversation that allows us to throw the bad deal out early, or maybe it's the one that leads us to conclude that we have to stop looking at fund XY and invest our time and energy and diligencing this big opportunity. So I probably made it sound more complicated than it is, but if you consider the fact that every allocator has this giant virtual network for sourcing, the challenge is how do you capture that value and how do you deploy your internal human resources?”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Every day. And that's a mistake, that's a cost and opportunity cost, then it should be willing to stomach, but it's not a freebie. It is the reality because we're actively deploying capital in the form of regular way LP commitments. A different way to think about it would be that this isn't a free deal.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of opportunities are real constraint is our human resource constraint, how many investments can we really manage? How many can we process live and how much can we manage once they're in our balance sheet? That may not sound like a radical insight and I won't argue that it is, but I can tell you it's radically different from the way you think about it when you're running a buyout firm where deal flow is not everything but a lot. And for us I'm reluctant to admit this because it sounds like I'm asking for some sort of karmic retribution, but we have more deal flow than we can manage. We turn away outstanding opportunities.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“You've ever seen the size of the opening, the volume of the funnel does matter, but I think not as much as the shape of the funnel. In other words, the process that you use to select these, the shape that we target in our process is one that's fairly flat, which is to say you have a giant mouth to this funnel if you can picture that. Yet it's a shallow funnel, maybe a little closer to a dish than a long funnel. And the implication of that, if you think about the slope of the funnel rather than the diameter, not to get too mathematical about a simple concept, if you think about that shape and exercise a lot of energy early on to throw out the deals that don't matter, then you're recognizing the constraint that actually matters for us as allocators. And this is why some learning was required. This was a surprise for me. The results are to function just of the volume.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“We do invest a lot of time and energy, not only in deal selection, but in thinking about our process for deal selection. We have this synthetic infrastructure in place for sourcing, which comes in the form of deploying several billion dollars a year into funds. So the managers find us. And in fact, since I started out in the business working in mid-market biochops, it's taken me some time to learn that sourcing is less important than I had imagined. But for allocators, for LPs, recognizing that you have this ecosystem of which you're a part and trying to extract from that, what comes very naturally for opportunities to support the GPs seems to lead to good outcomes. Having said that, unlike in regular mid-market buyouts, bigger is not always better in the sense to use the funnel metaphor that exists in every pitch book.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd characterize it as sort of a backlog of relationships and some good relationships that were established through those old funds of funds and separate account relationships. It was easy to do that today. We need to think much more carefully, not only about where a new investment contributes to the portfolio on the margin, not only about incremental returns and diversification, but we have to budget our own time. And if there's a way to make a $10 investment with a 10% expected return and another way to make an $8 investment with the same expected return, we need to be making the $10 investment. And so aspirationally, I'm trying to make fewer, larger investments, but that has a cost and implications also for diversification and so on.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Board observer seat, and we are a large investor in a lot of funds, so we've got some LPAC access and responsibility. And simply through natural growth and the number of line items and an overall value, complexity grows quickly. So the dollars have grown quickly and compounded, and that's a good thing. The complexity has also grown and compounded, and that's a fundamental risk that's made it harder to manage. Your question is really about how we get there, how this filter or funnel works. It was easier at the beginning because everything was diversifying, and I did have kind of a”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's changed over time. My job has changed over time because the portfolio has changed over time. The right way to build a 12.5 billion dollar portfolio, and my judgment does include co-investments, direct investments, and other activity. It'll be different in the future from what it is today. But that approach also requires that you build the team along the way. So if I contrast my job on my first day of work, it was really easy because there was virtually no portfolio and so the first direct investment we made, the first secondary purchase we made, and the first fund commitments we made got a lot of attention. And I could track these on my laptop without much trouble. The cumulative, I don't want to call it a burden because it's just the natural and embedded part of the overall ecosystem, but for lack of a better word, the burden connected with all those investments is cumulative. It grows over time. And if we take a board seed on an operating company,”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“As I said, of intellectual capital, and we think that if we can find tactics, if we can find market opportunities in which we can be helpful to general partners, then that leads to good outcomes for everybody. So even when we're making direct investments, I haven't made a single investment here without at least talking to a general partner with specialized skills. They're not all people that we've backed as an LP, but they are all people who have knowledge that I don't whose opinion I respect. And I think we've been able to capture a lot of value there. So a different way to answer your question would be to say there are lots of different opportunities out there and you just can't touch them all with funds. And if we can eliminate some costs on the one hand, but also add material alpha with this 25% of the portfolio, then we're doing a good job. And that's what justifies spending.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Structured investments of different kinds in funds. I think the stakes business and seeding activity fall into that category, and also direct investments in operating companies. We know that comes with a special set of risks, not only the obvious and identifiable ones, but a risk that relates directly to what I characterized earlier as a shortcoming, which is that we've got a very small team. So if you have a very small team in a semi-remote location and you're honest with yourself, and I hope that I am, and I certainly acknowledge that I can't be an expert in lots of different areas, and that they're brilliant investors out there with differentiated specialized skills. The logical thing to do is to invest in funds, but I think that's not enough. And what we found, when I had experienced and observed before I came to the permanent fund and since is that those GP relationships have great value, it's a sort of”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“The way we've invested to quantify a little bit is that roughly 75% of the capital we deploy is through funds and that regular way GPLP format. And when I talk to GPs and others, I emphasize that that's our central activity. And it is certainly centrally important, but it is not the most time intensive part of what we do or the most labor intensive.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, a lot of that tends to lend itself to someone in your position investing only in funds or even only in fund of funds. You've extended beyond that. And so despite those challenges, why have you gone out and approached co-invests and stakes and all these other ways of addressing the markets?”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Layers of managers. In other cases there are opportunities we think we can't address. We can't capture unless we approach it more directly. And all of that has to happen in the context of reality and our reality is that we are based in Juno, Alaska, which is an amazing place to live, but it's obviously not the center of the deal flow universe. And we have, I'd say maybe a mild version of the problem that a lot of U.S. public plans have public pension plans, which is that it's very hard for us to pay people properly. It's been very hard for us to open an office outside of Juno, and so hiring and retaining the best people is a challenge for us. I think it's a challenge that will ultimately derail our success. We've been able to get away with it for almost nine years now, but there's a lot of work to do in those long-term.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, if I go back to something I said before, which may seem obvious, but I think is an important observation, our board didn't direct us to invest in any particular way. They want to build private markets exposure for all the reasons that we've discussed and others. And we don't have any special financial. We as investors here at the Permanent Fund have no special incentive to invest directly in an operating company versus through an overpriced fund of funds, except to the extent that the expected returns are different or it fits into our portfolio in a different way. So here's the point that I think is both obvious and important. It's our job to find the best mechanism or combination of mechanisms for deploying capital in private markets and sometimes that involves lots of”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“A lot of times when you hear people talk about that cross-fertilization of ideas, it's often within a direct investment organization. And I'm curious, you started and came into this seat in this, you know, let's call it a hybrid between being a fund investor and doing co-invests. In addition to the fund investments, what have you done within that portfolio to try to either add incremental return or these incremental insights?”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“All of the energy and effort invested in our private equity activity and all of the intellectual capital that we can share or extract from these talented, specialized, differentiated managers all over the planet, all that value has the potential to amplify what we're doing in other parts of the overall permanent fund portfolio. To the extent that we can apply our cumulative learnings in private equity, to the extent that we can apply that to inform our judgments in public equities or in credit or in real assets, then we've kind of like adding a few basis points to our private equity returns, really. So we have access to a lot of data. We have to use that carefully. We have access to a lot of intellectual capital. We protect that, but I believe that there's room to apply that in ways that we haven't yet fully explored.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Write that it's not novel. I'm sorry to say it's almost the opposite of that. In fact, part of the challenge that all private equity investors face these days is that everybody wants to be in private equity, which can be a great thing for a short period of time, but not a great thing for a very long period of time. There are two objectives that matter most, and I would say that we deserve a pretty high grade for delivering on the first, and there's a lot of work to do on the second. The first being high risk adjusted returns. We want to deliver the best numbers. And I feel, and I think the rest of the team feels a little competitive about that. So we want the private equity portfolio to deliver the highest possible absolute returns, and we want our portfolio to be appropriately risk managed. The second objective is more elusive, though I think there's a lot of, let's call it latent or there's a lot of potential value in this, which is that all”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm curious over these last bunch of years where you've been in the seat and you've taken this portfolio from $1 billion to $12.5 in a relatively short period of time, it's not novel that investors have embraced private equity. The fund flows, the dollar sizes of funds have gone up and up and up. How have you thought about what you're trying to accomplish with those investments?”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I like to say that we're not backwards looking. No investor claims that they are, but we do observe and consume a lot of information. And I guess all the studies, including those seemingly impractical liberal arts studies and economics and statistics have value when we're looking for an opportunity where there's some sustainable growth. Like all private market investors, we should be approaching that question in a way that's different from public market investors because the duration of our investment can be expected to be almost needs to be longer. So a strategic opportunity isn't a trading opportunity. A strategic opportunity is something that will persist, hopefully for multiple decades. But that judgment's harder to make and our thought process will revolve around the typical life of a fund, which starts with a five-year investment period.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“It were a thought experiment, I would say start with a strategy and then try to build confidence that the team that's in place has the tools, differentiated tools to execute on that strategy. So the unique thing in a life sciences fund might not be their tactical approach to the market or their market focus. It might be the degree and the way in which those managers are equipped to fight that battle. So I wouldn't want to suggest that the theme's not important. In fact, there's probably nothing more important. But analytically, I think starting with a market opportunity and then trying to identify the best team to pursue, to execute on that market opportunity, that seems to have led to the best outcomes for me.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“There would be a quantitative answer, and I guess in the end, the best manager is the one that most consistently delivers the highest risk adjusted returns, but adjusting for risk is more art than science, and we care ultimately about the quality of the overall portfolio, not any specific manager. But having said that, we are looking for”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Guess I'd say to start to answer at a high level. There was a need to create a diversified portfolio from the beginning and to capture growth in different areas of the world. So we did what you would expect, what every investor does, which is with pool of capital like that, to diversify across strategies, across geographies, and so on across managers. But with that said, the mandate from the board was very broad. In fact, it couldn't really be broader. It was pursue these activities and deliver attractive returns, no tactical designation, no strategic designation. So we started close to home. My first large commitments were to managers that I backed in the past, and it wouldn't make sense for us to create an index. Instead, we tried to identify what we think are the best managers in a broad range of categories, back them in different ways, and continue from there.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we have, I don't know how private equity, today's 16 with a plan to grow to 19 over the next three years, is the fastest growing component of this, not just because of the expected returns or the actual returns, not just because it's compounding at a faster rate, but because it's a natural match with the overall duration of the fund. So private equity is in some ways the center of the action, but not enough of the action. It's certainly not the whole game for us. We've got a substantial absolute return portfolio. We've got about two and a half billion in private credit and infrastructure. And those neighboring activities, those activities that overlap on the margin with private equity, are also actively managed internally.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Or from the decision making, and if you don't believe that there are opportunities that you can identify on your own, and if you don't think that there's intellectual capital of value there, then you would keep all of those layers of consultants in place. But argue then, and argue now, was we need to take out some of those layers and the benefit, the reward for that wouldn't be just avoiding some fees. That's actually sort of the smallest component of the incremental value that we identified, but that we would be able to pursue activity that we couldn't pursue in that format. We could make investments that we couldn't make in this indirect way through multiple layers of consultants.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“About a billion dollars in hedge funds, billion dollars in private credit and a billion dollars in private equity, which sounds like kind of a lot altogether, but these were all completely outsourced. We did use the relationships behind that billion dollars, I think, at least selectively, and tried to migrate away from what was relatively expensive, highly encumbered clumsy approach to the market. Through no fault of the advisors and funds of funds managers, it was just too many layers. And there are organizations that still run their programs that way. The permanent fund was insulated from the decision-making by about three or four layers of consultants. It was a whole giant cloud, a configuration of consultants. And if you're trying to intentionally insulate yourself from the responsibility,”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's worth saying just to frame it that we didn't have to get rid of fund of funds. If that had been the right way to do it, we could have continued to live with those and we don't have a strict rule against fund of funds. But you can imagine that that wouldn't be my orientation and it was the intent then and now to build a team internally that can eliminate some of the inefficiencies that exist with a fund to fund structure. There was a, I'd say, a valuable foundation had been constructed by third-party managers at that time. They had made a large number of small commitments to some high quality managers. Not every one of those managers was a keeper, but there were some good ones there. And then, of course, I had been in the business for a while, so I had my own sense of who was capable and what areas. And we could be fairly deliberate and thoughtful about how to build the portfolio. We wanted to leverage the existing fund of funds and separate account relationships and advisors. And we did do that.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“So let's dive into how you've approached it. You came at this seat with this hybrid of investing in funds and some direct investing. Had a clean slate. There wasn't any really some fun to funds, but you're going to clean that out. So how did you go about it?”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“So the overall fund is about $75 billion today and 16% of that today it's marked at about 12.5 billion is private equity altogether we have excluding real estate and excluding hedge funds it's about 20 billion in assets across what we think of as actively managed private markets”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Fund's history just about nine years ago when they decided to bring a lot of that alternatives activity in-house. So that was the time at which we shifted from complete reliance on a small, slightly dysfunctional fund of funds program that covered private credit, hedge funds, and private equity to a differently managed program that relies a lot more on internal investment decisions.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's true the duration is theoretically infinite and our mission, our purpose is to provide for all current and future generations of Alaskans. When the fund was formed, they invested first and only in government bonds. This is the history of a lot of public funds and other large investors in the US. They invested only in government bonds. Then they threw in a little equity. Then they threw in a little international equity. They were active even in the beginning in the mid 80s, active in direct real estate investing. But outside of a few buildings scattered around the lower 48, the capital was all deployed in liquid equities and liquid bonds. They did begin to move into other alternatives through funds of funds beginning about 15 years ago, but it was a significant moment. It may not be widely appreciated as this, but I think it was a significant time in the”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Reality that this fund would need to replace the oil, and so what's happened effectively is that that finite depletable resource has been replaced with an infinite resource, a resource that's not only sustainable but should compound and can grow as quickly as we allow it to grow.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Things those inflows were invested and that corpus, the principle of the permanent fund, which is today around 60 billion in which we operate in combination with a retained earnings account of another 15 billion or so, its protected constitutionally. They set up barriers that are high enough that are wide enough, that are substantial enough that that capital is safe, the way the politicians, the way Governor J. Hammond described it in 1976 when the permanent fund was formed, was to say that they wanted to protect the capital from the greedy politicians of the future. And that was said in a way that was not meant to be comical or cynical. It was really the view of Alaskan politicians at that time, and I'm not sure it's changed very much. Today in Alaska, the oil is running out. The fund was originally set up because they recognized that inevitably.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“But I mentioned that not just to unload some cynical perspective on government, but because my understanding of the way things develop then is that the mistakes that were made then were recognized, they were identified, the 900 million disappeared, and there was a recognition that this resource was large but finite, and it informed the decision-making that followed, which I would characterize as really truly brilliant. And I think almost unique in political history, at least in the United States, in that they designed a system to protect future savings from the politicians of the future, from the structural incentives that will always exist for governments to increase taxes on the margin and to spend on the margin. Most of it oil, but also uranium gold and other”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“A little bit like what happens when people win the lottery. I think there's some good stories when people win the lottery, but the sad version is that the money gets wasted. So in Alaska, if you were lucky enough to be here in 1972 and you had an interest in pursuing education in any field of any type, you could write on physical paper one paragraph request for funding for activity. There was so much money that none of these requests were rejected. So as an example, I know a woman in town here who was here who's one of the beneficiaries of that early terrible spending policies, she proposed that she wanted to study pottery, but there wasn't a good place to study pottery in the city of Juneau, so she got a grant to live in another part of the state and study pottery for a month before coming back to Juno to resume her job. So it was essentially kind of paid vacation. So money was wasted.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Treasury, but the state was tiny in the economy stall, the whole budget, the Alaskan annual government budget for every state trooper, every public school teacher, and every snowplow was only $219 million. So this entity that was spending about $200 million a year suddenly had 900 million to spend. And I wish I could say that the politicians who are making the judgment at that time set it aside for the future. They didn't think about college savings though. What happened is what you might more cynically expect, which is that the money was sprayed out the door. There are plenty of good uses for capital in the state of Alaska at that time and now, and some of it was invested in infrastructure that I'm sure contributed to the economy and supported the population in different ways, but it was not $900 million. So it was a little bit like a 17-year-old high school rookie in the NBA, or actually.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Thanks for asking that question. It is super interesting to me. I think it's almost unique in political history. It is, of course, more interesting to Alaskans than the rest of the world, in part because one use of proceeds of this fund that I'll describe in a sec is an annual dividend that gets paid to everybody in the state, which, as you can imagine, makes us very popular and gets some attention. In fact, that was part of the construct. But stepping back in time a little bit, State of Alaska only became a state in 1959, and then it wasn't until 1969 that they discovered oil, and it was a big find. That oil had real value. And relative to the size of the economy, the population at that time, it was really gargantuan, like that Beverly pillbilly kind of concept, you know, where it starts squirting out of the ground. And to put that in perspective, the first lease sale, which I think was in 1969 or 1970 in Alaska, was $900 million. So $900 million in those 1970 dollars went to the state.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Know the structure and the pool of capital that you're overseeing for Alaska is fairly unique in how it came about. And I'd love to have you tell the story of what this pool of capital is and how it serves the people in Alaska.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“People often wonder about that, although the people that wonder about it aren't in my family or my close friends, because among that group who's known me for a long time, they thought it seemed sort of obvious that I would end up in Alaska. And that's only because it's an exciting and interesting place. There are a lot of outdoor sports I like that are everywhere here because we have in Alaska, not everything, but lots of outdoor sports. But it was actually a connection like a lot of these things, I guess a human connection. One of my colleagues at Pacific Corporate Group was Marcus Frampton and he and I managed these direct investment vehicles for Cowper's and for others, had the experience of working together, liked it, apparently we both liked it because Marcus joined Alaska before I did and he called me up after he had been hired to focus on infrastructure to see if I had an interest in helping Alaska bring in house their private equity activity.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the GP side of the ledger than in the LP side, it was not an intersection of activity that a lot of people were interested in. So there was a chance for me to, I guess, play a more significant role in the co-investment market as it grew. So co-investments have been around as long as investing has been around, but it hadn't really been institutionalized here in 2004, 2005, 2006. And still today, and I can give you a little more color on what's happened in between, but still today, I think that area of intersection between kind of conventional GP strategies and customary LP strategies, I think there's a lot of room to continue to develop. Activity and thought process there.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Leveraged his consulting relationship with Calpers, with New York State Common, with several other well-known institutional investors, got committed capital for direct investment strategies, but there was nobody there to do the investing. So he built up a team slowly. I was part of that team. I joined to focus on this co-investment and minority equity investing. We call the strategy corporate partnering. It was at Pacific Corporate Group that I first started looking at and committing capital to private equity funds. At the same time that I was working on these direct investment strategies, and that I will call it sort of the space between those activities, but really it's the integration of the fund commitments and co-investments and direct investments that I didn't invent, but I recognized was interesting. You probably know that there's this common sense out there that there's a lot more sexophy.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“But was at that time a peer to Hamilton Lane and to Stepstone today. And I signed up to help them invest two direct investment vehicles that they had raised. The nature of that business of the private equity consulting business is that the economics aren't very interesting. It's sort of the maybe the least economically interesting part of the whole private markets ecosystem, but a potentially valuable platform for doing other things.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Interesting than investment banking. So I ended up going back to what I'd been doing before. And it was interesting and worthwhile for a lot of the same reasons. It was interesting and worthwhile as a new analyst fresh out of school. I was working in healthcare investment banking at CS First Boston in the late 90s when they launched the latest iteration for First Boston of a private equity business. It was a mid-market buyout fund called Windward Capital. I went to work at Windward. I ended up working in what now we would probably call small cap or mid cap buyouts for about five years until that company essentially dissolved, the partner split up and us, the young folks have to figure out something different or better to do. So I ended up going to work in California, in La Jolla at a place called Pacific Corporate Group, which sadly doesn't exist anymore.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Offer from Merrill Lynch. So I went to work as a financial analyst on Wall Street, which was a great thing to do for lots of people for lots of reasons, but I think it was especially good for me because of this wonderful but impractical liberal arts background. You do learn some practical skills when you get into an investment bank and you work hard for a long period of time. And the working hard part had some value, I think, for me too. And then I also had the opportunity to go work for Merrill Lynch in Tokyo for about a year and a half, and then London. So I'm still grateful to Merrill for allowing me to do that. This is just after the bubble burst in Japan. I was convinced at that time that I wanted to do something really interesting, but it wasn't investment banking. I'd figure out what the options are. Graduate school seemed like the right place to reflect on that. So I did go back to school, looked around the landscape as I was graduating from business school and concluded that I couldn't find anything more.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“And better, I just stumbled into those interviews. My first interview, which I remember was with Morgan Stanley, was a complete disaster, which is what you would expect if you knew how little I knew then. It had to be a disaster, but I didn't know what to expect. And I remember the interviewer asking me why I was interested in investment banking. And I had actually prepared a short response to that, which was kind of the answer to a different question, which is why are you interested in commercial banking? Because as we've since learned, commercial banking is different from investment banking, and you can't guess what investment banking is from the title of the category. So I told her that I was interested in supporting the growth of these companies by lending them money, and I babbled for a little bit before she said, you know, that's a different business. That's commercial banking. And the interview didn't end there, but it didn't get better by the time I stumbled through four or five of those. I had kind of learned some things to say and apparently learned enough to get an”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Steve, great to see you. Thanks. Good to be here, Ten. Well, why don't we start with your background? It's always fun to hear how someone got into a seat like this. I'll give you some highlights and some lowlights. I was born in Boston. I grew up in Princeton, New Jersey, College Town, very academic family, learned a lot, but probably very little of direct professional relevance. And then I went to Westling University. It is sort of quintessentially liberal arts oriented, academically focused, not vocationally focused school. So when I was a senior at age 21, ready to graduate, I had no idea what I wanted to do, what I wanted to be when I grew up. I had no idea, and I had no identifiable, verifiable sort of marketable skills. So the good news for me is that the investment banks all came to campus to recruit, so I didn't need to have a carefully honed plan or a thoughtful path to something bigger.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Co investments, stakes, and seating. We touch on perspectives on managing through an expensive pricing environment, secondary transactions, future innovation in the portfolio, and the challenges of talent acquisition and retention. Please enjoy my conversation with Steve Mosley in this, the first of three episodes of Innovation in Private Markets.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guest on today's show is Steve Mosley, the head of Alternative Investments at Alaska Permanent Fund, a $70 billion sovereign endowment that supports the citizens of Alaska. Steve leads a small team based in Juneau, Alaska that is one of the most active participants in what he calls the space in between general partners and limited partners. Across private equity, venture capital, infrastructure and private credit, Steve and the fund are considered one of the most innovative investors in private markets. Our conversation covers Steve's path to Alaska, the permanent fund's unique pool of capital, the history of its investment strategy, and the development of the private asset portfolio. We then turn to the attributes of fund investments and his focus on adding value beyond fund investments, including”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hello, I'm Ted Sides, and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation through conversations with leaders in the money game, we learn how these holders of the keys to the kingdom allocate their time and their capital. You can keep up to date by visiting capitalallocators.com.”
2021-05-03 · Capital Allocators · Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192) · IDENTIFIED FROM THE TRANSCRIPT · source