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Taimur Hyat

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76
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2020-07-20
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2020-07-20
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  1. “To barbecue with potentially a shortage of beef burgers right here. And then even in the services sector as island and India went into lockdown, it became quite hard for some people to kind of have their call centers in other places operate effectively. So this is going to actually impact all sectors. And I think there will ultimately be the right balance between what is too much redundancy and what will investors ultimately value as the right level of downside protection.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Ultimately, over the long term, it'll come down a little bit to how equity and debt investors perceive the cost of additional resilience. We believe in the medium term investors will be willing to give up some of the upside of the leanest possible supply chain for a more resilient supply chain that can weather other tail risks. Most of them are knowable that might strike in the future. And while not all of them are preventable by having a multi-location more redundant supply chain, some of them certainly are. And our belief is that investors will value that more diligence that more, and therefore companies will be willing to invest because they'll be rewarded in their valuations for that. I think a key thing here is it's not just about manufacturing. This is also about food supply chains. We saw how the lack of ability for migrant workers from North Africa or Eastern Europe to come to Europe affected food supply chains there. America was trying to”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “So, I think the most compelling single theme across the report is that the cost of doing business and building resilience in business has gone.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Sometimes we get excited by other topics when range of nationalist leaders rose across the US and Europe. We did a report on the ongoing tussle between sovereignty and nationalism and who'll win in the short term, which was nationalism, but why we think there's still lots of reasons why globalization ultimately will prevail. This year with the COVID crisis and lockdown, we did a report not on all the very important tactical steps that market participants need to think about right now. And on the alphabet soup of recovery parts that they're focusing on UVW, but more around once the crisis is over, once the great lockdown is over, what will happen next? And that also was a special report because we were working and continue to work on climate change as the next big megatrend we are discovering. Obviously these megatrends are also deeply interrelated with each other. So we're now getting a quite interesting body of work that has lots of cross-”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “Many, many weekends, and I think it brings back the power of my lonely years writing my PhD thesis and trying to add structure and logic while still reflecting the diversity of views. But I think the key lens we take is what were the chief investment officer of his sovereign wealth fund, major pension plan, public or private and endowment? What would be on their mind? And we try and apply that CIO lens to how they would navigate the issue. And that's kind of the frame for writing.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “So we do it in two ways. We have a thought leadership council. It sounds grander than it is, but we bring one or two of the key researchers in each of our seven businesses together and get their best ideas of what is influencing their long-term thinking, what they think. And by long-term, I think it's important, we are not futurists. We try and avoid trends that might have a 20 to 30 year impact, but very little impact before that. Our sweet spot is three to five years. But we get that group together. We get some of our institutional coverage people together and say, what are clients asking you about? And that leads to a shortlist of five or seven ideas. And every year we take one idea and bring all these investment professionals in one-on-one in-depth interviews, and then collectively to debate them when there's a bid ask in views. There's no single house view at PGM. There's a multitude of views, which is one of the power of the models. We've had Nobel Prize winners, IMF, economists, others jump in as well.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Sell a particular position, we are capturing our best ideas across public and private markets, equity and fixed income and real assets. And what a unique chance, if nothing else is an excuse for me to spend time with some of the most thoughtful investment professionals we had to understand how they think about these longer-term trends, while obviously they also spend a lot more time on the tactical side.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “So the power of megatrends, I think, is actually quite inextricably connected with the PGIM model because we have the unique ability and I have a unique ability in my seat as CEO across PGM to tap into the collective thinking and the asset class thinking of managers that range from private debt to direct real estate to commercial mortgages to of course PGM fixed income and the public fixed income markets and then both a quant and a fundamental lens into the equity universe and asset allocation. So we wanted to take themes where we could bring all these researchers and portfolio managers together and say let's look at big secular trends that may not change the world in six months but will certainly influence what the investment landscape and opportunity set looks like over three to five years and the risks and get all their perspectives and that means we are not trying to”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “We could go on and on, and maybe we'll have to sometime talking about all the intricacies of PGIM as a whole. But what I really want to focus on is part of this series you've been involved with called Megatrends. So it's, I guess, relatively new in your seven-year tenure, but why don't you touch on what that is and then we can dive into the most recent work.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Plans it's going to be small. There are many competitors. Now we serve pretty much the vast majority of the top hundred pension plans in the world. And John also built this as something that has scale but also depth. So we try and do both. We have these craft asset class boutique managers, but we also try and leverage the power of being a 1.3 trillion manager. And the increasing number of areas where scale is critical and where the power of being at that scale really helps us with clients and in making investments that others really can't afford to make.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “Relationships and originating assets across the country, very different temperament. And we celebrate those multiple investment cultures as long as at the center of each one is an institutional or retail client and meeting those obligations to them. But the origin of all this was, first, the general account of prudential back, you know, 70, 80 years ago and managing their money. And in the late 1990s, John Strangfield, who later became the CEO of Prudential but was the head of PGM at that point, said to really get the best investment performance, I need a team of investment talent that is the best in the industry at generating institutional quality investments. And for that, I need to build a third-party business because to get the best talent and to have somebody who doesn't just hire you but can also fire you when you're underperform, you need third-party clients. And I was reading the first documents from the 1990s that said, you know, we might have some success with defined benefits.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “We are trying to change it, but to some extent it is one of the sort of best kept secrets in asset management among the top 10 asset managers. So you have about 1.3 trillion in assets, largely third party, 80% of our fees come from third-party clients, institutional and retail. And we are organized as seven different businesses, each with a fair degree of autonomy and each focused on a single asset class. So it's a craft business at the level of each underlying business, focused on a single asset class with investment professionals whose cultures, while they have some common themes like long-termism and risk management discipline, are quite different. We have a quantum business called QMA where you have people who I'm sure love Star Trek and sitting in their t-shirts writing code. And then you have our private debt business, one of the largest in the US and Europe, where you have people who are credit analysts and thinking about borrowing.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “I was at Credit Suisse for about five years and we transitioned from moving out some of our smaller long only businesses that we sold to Aberdeen into more of an alternative centric boutique in the US and focusing our European efforts mainly on private banking and Switzerland and Germany. And I had a great run there. I think I gained learned a lot around product development discipline. It's not just about launching new products, but what is the tail of products that haven't worked? Be proud of your failures, but also end them when you need to. And PGM was at a very compelling point when I joined roughly seven years ago. It had weathered the global financial crisis, but was still a very US-centric business in terms of mainly serving defined benefit pension plans in the US. A few of our underlying multi-manager businesses had stepped into other regions. And there was a real”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “I continue to work for the complex web of transition service agreements between Lehman and Barclays and various other bankruptcy courts, and then having transitioned most of those topics to the next generation of Barclays leaders, I moved to Credit Suisse and to the CSAM, which is the asset management business at Credit Suisse. And brand product development and strategy for them globally. Credit Suisse is very international, obviously the big hub is Zurich, and managed products around the world for Credit Suisse's asset management business.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Was sort of everything a little bit in slow motion even as it was moving so fast. It strained how the brain sort of tries to cope with all the changes and volatility and turbulence that was going on outside there. But inside the company as the next wave of leaders tried to change it, I think there was still calm, a sense of a business plan. And I think a sense that the regulatory agencies would step in in some way or a bidder would come in and preserve Lehman in its entirety, which never quite happened for a range of reasons. But I would say the best business leaders, the ones who are my mentors, remained calm. I think they were actually quite cognizant of the risks that existed at that point and really tried to find the best fiduciary path through that. That wasn't true for everyone, but certainly the ones that I work most closely with in those final months.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Think we could probably have a whole separate podcast on the lessons from Lehman, but I'd say one certainly is concentration risk. Have a diversified portfolio of ideas, of businesses, of asset classes, of securities in terms of how you lay your chips as a business so that you can weather different market environments. And second, don't get so caught up in competing with others who may have very different balance sheets or asset bases relative to yours that you end up creating leverage or equity situations where you may not be able to survive when markets turn.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “I was there through the collapse and beyond the collapse, and I think what doesn't kill you makes you stronger. I actually learned some of my most valuable lessons at Lehman Brothers, as I saw our stock price plunge to zero, as I saw management changes around us as we want the phone with Geithner talking about becoming a bank holding company. I think dealing with extreme tail risk, dealing with clients and employees in crisis gave me some of my most important lessons in resilience and calm and how to handle downside risk even as you pursue growth opportunities.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “The first step outside of McKinsey was Lehman Brothers, an interesting choice in two thousand six when I joined them, but a company that had both asset management there and Newberger Berman in those days that had the capital markets business, that had investment banking, and had a team strategist that were doing quite a lot of interesting work going into emerging markets. If you recall back in the day, Lehman had for the first instance nearly had a liquidity crisis when Russia happened and long-term capital management. And therefore, there's a wariness around emerging markets, which of course have come a long way by 2006. And we spent a lot of time thinking about what do we do in China, what do we do in emerging markets, how do we structure joint ventures around the world. And that seemed like an interesting growth journey at the time.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Think at some point you get tired of being on the outside looking in at a company, you recognize that some of the real challenges around talent and organization and how to convince people to do things rather than what the five page PowerPoint answer is. And you can really only do that as an insider, I believe, rather than as an outsider. So I just wanted to change the lens. I didn't want to be the photographer taking the photograph. I wanted to be in the picture deciding how to influence things.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “I think my lens on asset management is a combination of management consulting and academics. So I think what academics brings is particularly if you're doing it in a cold, dark, isolated room in England without a team around you, it brings the need for a lot of structure to what you're doing, to be extremely disciplined and organized and think three steps ahead. Because if you lose your way in British academics, there's no one who sets you right for a very long time. So I think that sort of discipline was one piece that I bring to asset management. And I think in management consulting, it brings the lens of not just looking at your own company, but looking at peers, looking at benchmarks, looking at other industries, and therefore kind of widening the lens from a sort of narrow telescope to a much more of a sort of spectrum of views. For example, in technology, institutional pharmaceutical sales is far more ahead of our institutional asset management.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “Ever since I was ten or eleven I wanted to be an economist. It was the one thing that summer markets and how they're worked, whether it was just the price of apples being set by the supply and demand curves, was something that really resonated with me as a way of thinking about the world and as a toolkit to understand it. And I think with that came this idea of a very structured way of looking at the world and the percentages.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “That was one of the reasons I left academics, the piece on land ownership, and it's a very complex topic linked to land reform and politics and wealth distribution. But academics in general is backward looking. You're looking at data that's five years old. So it's like looking out of the rear view mirror rather than looking forward. It's very isolatory. Everybody wants to be a big fish in a small pond and a team coming together might make more progress than you can otherwise. And modern economics, this is a whole separate discussion we can have, is increasingly caught up in econometric complexity rather than trying to find policy.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “So I found a few interesting things. Perhaps the most interesting thing was how owning any asset, particularly land, completely transforms the journeys people can make out of deep poverty. If you own a land the size of a tablecloth, it gives you access to credit markets in rural economies around the world, in poor countries, and that access to credit markets lets you weather storms in a way that if you have to pay for a big wedding, if you have to pay for the fact that you are unwell, small things that can tip people into destitution, you can protect your assets, your goats, your cows, your small sharecropping piece of land. And that allows you to do much better. Even a tiny piece of land creates a binary outcome between people who end up surviving and thriving versus those who get sucked deeper into poverty. That was one of the few policy findings from what we did.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “I've been in a bunch of places. I spent about 40% of my life growing up in Pakistan, then spent the next twenty percent in the UK, in England, and then I've been in New York since about two thousand one, so the last forty percent. So straddled all continents. And I had a whole different career before I came to asset management and Wall Street. I was a lecturer in economics at Oxford. I was doing a PhD in development economics. I was studying extreme destitution, how the poorest of the poor rise up and is it the marriages and the demographics of where they're growing up? Is it the decisions they make? The entire other end of the spectrum between poverty and wealth. And major transition or a transformation almost at some point from that world of academics and Oxford and tutorials to”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “Weightless firms, commercial, and residential real estate, remote work, and purposeful firms. We close with the discussion of investment opportunities coming out of the pandemic. If yours intrigued as I was, you can see all the previous megatrends reports at pgim.com. Please enjoy my conversation with Timer Hyatt. Timer, thanks so much for joining me.”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “My guest on today's show is Timer Hyatt, the chief operating officer at PGIM, a 1.3 trillion dollar asset manager across public equity and fixed income, private credit, real estate, and alternative strategies. Alongside PGM's president and CEO, David Hunt, Timer distills insights from across PGIM's portfolio teams and shares long-term views on the investment implications of global megatrends annually. Their most recent megatrends piece, after the Great Lockdown, is the subject of our conversation. We cover timers' lessons from academic research and economics, management consulting, and working at Lehman Brothers through the financial crisis, PGM's Business, and the Mega Trends series. We then turn to the latest Megatrends piece and discuss the impact of the pandemic on supply chains, inventory management,”

    2020-07-20 · Capital Allocators · Taimur Hyat – After the Great Lockdown (Capital Allocators, EP.149) · IDENTIFIED FROM THE TRANSCRIPT · source