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Ted Seides

lines on the record: 114
first: 2023-08-11
most recent: 2023-08-11
sittings or episodes: 1
sources: podcast

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“Charlie, I don't know Charlie, but of the people that I've known, every word that comes out of Warren's mouth, no matter what subject. I talk to him about AROD signing with the Yankees. Everything that comes out of his mouth is just oozing wisdom.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“He is that extraordinary. And when I'm so fortunate to get to spend a bunch of time with him, he oozes wisdom in everything he says. David Swenson was exactly the same way. And I've only known maybe a handful of people in this in my life.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I agree with you. And you could say the same thing when we were talking about the Yale motto with David Swinston, right? Cliff Askeness wrote a piece that said all Warren did was buy these quality stocks. And if you had replicated that strategy, you could replicate the results, which was absolutely true, except 50 years ago. More you had to know to buy the quality stock. Almost 60 years ago, right? That's the crazy thing. No, I mean, I think that...”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“For him to be underestimated, you'd have to have an assessment of him that is a certain level, right? I think people see him in such high esteem.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“He's just the real deal I mean, he didn't need to have dinner with us ever. And it was just so fun. And the stories that he tells, we hear lots of them, but to hear different ones over and over, investment stories, non-investment stories. He really is so extraordinary.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“And so, all kinds of things came from that. So, for example, one of the people I brought out was a guy named Steve Galberth. He used to be the strategist, Morgan Stanley. He was best friends professionally with Jack Bowdel. I bring out Steve. Steve says to Warren, would you ever want to have Jack at your annual meeting? And Warren lit up. He's one of my idols. And that led to Jack being there when Warren announced the bet. It was the first time he'd ever been at the annual meeting. It was a year or two before he passed away. And Steve brought him there. It all came from having dinner with Warren that one night.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“So every era that you had data, which started in the early 90s, until that 10-year period had fronted outperformed the market over 10 years. I was happy to do it in that 10-year period solely because of my view of the market.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Many more than that, right? One of those five was still outperforming the SP 500 through eight years. At the end of the ninth year was the very first year that the market had been outperforming all five, but there was still one year left where that one could have caught up. My premise is that Warren caught that one period of time to deliver this whole message about see the market even outperformed every single one of these five fund.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“It was with one interesting exception. Yeah. So the name of the five funda funds we picked has never been and won't be disclosed. It doesn't matter. Did you pick fund funds?”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“The annual meetings. That's brilliant. The other thing he did that was sort of brilliant was he wrote like two or three pages nine years in. So the bet wasn't over.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Here's Warren used to, he did announce it every year. And what he would do is he would put the results up right before lunch and say, as you can see, I'm losing, let's go to lunch. Right. When to say anything else. Then the first year the market had cumulatively beaten hedge funds. There was like two pages about it in the annual.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Perhaps. Right. So, but even then, you know, it took five, I don't remember five or six years for the market to catch up.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“About the previous year. Correct. He made a statement in that letter really referring to Berkshire having underperformed for the first period of time that even in periods as long as 10 years, your results can be heavily influenced by the starting point or the ending point. And I put that in a presentation I had as he had just given his reason for losing the bet. Right.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“And if you had looked historically at hedge fund returns versus the market, there was only a difference of one or two or three percent a year. Right.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's much harder with more capital there. But you have to keep in mind that what you see in an index tends to be equal weighted. And the experience of investors is asset weighted by definition. So where institutional investors have their money in hedge funds? Is with Disha, it is with millennium, it is with Citadel, and these firms have continued to generate, call it alpha excess returns. And that's why the assets have stayed in, call it the asset class or the strategies when there's so much scrutiny about, oh, the hedge fund index did this. Every hedge fund index is equal weighted, and that is not the experience of investors.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Still had 2012 to 2017 to finish the bet. And that was just the market, what we've seen in tech stocks. It was just a very, very hard index to beat. No matter what you were doing.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm sure some of them did, and some of them didn't. So you're talking about an average of a large number, I would say, that's not really part of my belief system of what a hedge fund's trying to deliver. It's much more about security selection and a relatively static portfolio construction. So I think that argument is very valid in those couple of years, 2009, 2010 probably, maybe 2011, which was a tough year for hedge funds.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's always fair to say you believe, Barry, part of your belief system is that a hedge fund is supposed to capture these moves and markets.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“At 5% where we are today, you're probably making three and a half percent a year just for showing up. So there was a structural piece. You think about the difference between zero and three and a half percent. It's actually pretty similar to the difference in what the S&P generated during that period and what hedge funds generated.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“And when the Fed brought rates to zero, not only were you not getting a rebate, you were paying to short. You always have to.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Including the biggest crisis since 1929. So you wouldn't expect that 10 year period to have a historical average return. On the hedge fund side, a couple things happen. First is you talked about earlier You had in that decade a lot more competition. It had a lot more money coming in. And I think it's reasonable to think that the alpha pool shrunk. So that's one. The second is structural, which we haven't seen in 15 years, but we're starting to see now, which is hedge fund returns are a direct function of the level of interest rates. Because when you put out a short position, you get a short rebate.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, again, I would look at it differently. So you have the market, which got crushed, and then Fed comes in and you end up with 7% or 8% a year, which is a historical average. Right.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“After 10 years, Fed comes in, the market probably generates 17, 82% a year for the last nine years, and the SP 500 beats the hedge funds by a wide margin.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, no, you're right about the securities. The challenge is unlike the SP 500 hedge funds sit in a box that has underlying credit risk from prime broker. So the credit markets froze. And that wasn't a question of security prices going down. It's a question of like, can you transact and what does that mean?”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“And it played out that way. It took about five years for the market to catch up from that one year of pain. And it wasn't glory days for hedge funds, right? Once Lehman went under, that caused a lot of pain for hedge funds as well.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“He said, no, no, this is part of the cat and mouse. No, no, no. I think we need to announce this. Right from the beginning, I was like, yeah, but this isn't a horse race. This is about investing. He said, no, no, I think we need to”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, no. Let everybody boo and his. No, no, no. That was never part of the plan. Didn't happen. What was interesting was, I had said to him, well, let's make this really educational. I'm happy to have you announce the results, but let's only announce the results after a period of time when the markets drop 10% because I think that'll show the value of a hedge fund portfolio.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“And I'll tell you a story that's fun about the communication of it too. So Warren wanted to announce this at his annual meeting every year. And originally, I wanted to make it anonymous. There's a bunch of reasons why it didn't end up being that way”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“That allows you to make charitable bets based on long term educational beliefs. And so that's what we did. And we made it for a million dollars. We split the value. We split the amount and bought a zero coupon bond of the present value up front. So back in 2010. So 10 years in a”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Actually, hard to make a legal bet. It's probably easier now, right? Some betting is illegal, but then it wasn't. And he found through his lawyer a foundation called the Long Betts Foundation. They've been around.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“It looks like Warren recognizes he's the patsy at the poker table, but he has the most chips. Because every time I'd say, okay, let's do it this way, there was something back that said, well, it has to be like this. And it got to the point where he said, okay, do we want to do this or not?”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“He said that his estate planners would be thought he was nuts anyway for doing something so small. But yeah. So I went and talked to my partners. At protege, Scott Besson, who now runs a macro hedge fund, ran Soros after for a year. My original partner passed by a couple years ago, and said, hey, by the way, I've been corresponding with Warren about the like, what? And Scott read the letters and he said, I'll never forget this. He said,”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“The original. Something like that. Yeah, I don't remember the exact amount. And I had originally said, hey, let's bet dinner at Goratz's favorite place. Maybe $100,000, your annual salary, all that kind of stuff. Oh, no.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“You could argue with him about it, right? What are the talks? Yeah, it started back and forth series of letters. It was all written out.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Letter of credit. It was unclear. Correct. It felt a little dismissive, so I sent him another one. I said, okay, fine. Whatever you.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Hard cop. I didn't have his email. I sent it snail And he sent back through his assistant a PDF with a little chicken scratch response. And I made the letter, I actually put the letter in my first book to describe how you get somebody's attention. And he said, well, it has to be this and that and it has to be collateralized with a letter of credit. And I was like, what? And so I sent him another.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Right I looked at that and said, well, you know, you wouldn't want to bet on the market over 10 years starting at that point in time. Meanwhile, hedge funds have been cranking along, generating market-like returns with a lot less volatility. And so I wrote him a one-page letter.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, we had a great run. And I read a statement, and my thought was, look, he's Warren Buffett, but he just made a really bad bet. Because for all the reasons you just said, the S&P was trading at all-time highs. And let's keep mine, interest rates were normalized then.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm not quite sure because I didn't hear what he originally said, but it came off as it was a form of a challenge. And at the time, I was managing Projay Partners as a hedge fund of funds. We were short subprime mortgages with John Paul.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. So I had seen that Warren had made a comment to a bunch of students. So a year or two before that, he had written about fees that had rocks and the got rocks. And I guess he had made some throwaway comment that hedge funds could never beat the market. A student asked him about it, and his response was, well, no one's taken me up on it, so I must be right.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“So, as an individual, it probably doesn't make sense generally speaking. As an institution, Has a very different risk return profile that when done well fits in really well with the diversified portfolio that we've talked about earlier.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I said back then the bet started in 2007, and I say today, being in the market and investing in hedge funds is completely apples and oranges. So, for a taxable investor, hedge funds generally aren't tax efficient. And when you look at the assets that are invested, the $3 trillion in hedge funds, I would guess that north of 90% of that are in institutions that don't pay taxes.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Are we talking about the like? Cos Correct These are massive pools. I promise the academics who do the research don't have access to the performance data of the funds that matter. None of them are call it asset weighted. And so those studies, while true and while they seem to have Intellectual vigor to them in thought process, they're really not based on anything in the real world of the investment market.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“And then I've never seen a study who said that the large managers were anything north of 50 million in assets. The large managers. So you look at those studies, they say the small ones are less than 5 million.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“So that was the premise of the business we started at protege. And I would tell you that while true in that academic research, it's all deeply flawed.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“And in 2002, the bucket of the largest hedge funds was those north of $1 billion. And then I started reaching out to some of the managers I knew for my time at Yale. And one of them said to me, we're closed. We have a waitlist. And I said, what is that? He said, I don't know. All of a sudden, people have said, why don't you start a waitlist? We're at a”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“No, back then, the premier job in asset management was to run Fidelity Magellan. There was no reason to think people would make billions of dollars running hedge funds. It was such a boutique industry. I used to say that the guys who ran hedge funds were the ones who woke up on the wrong side of the bed in the morning and felt like they just had to short because things were going wrong. So when we launched protege, we had a classification of hedge funds and said, we're going to not invest in the large ones.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh my goodness, and hedge funds were the same way to give you a fun story. We launched protege partners in 2002. That period of time 92 to 02, you really had a golden era of hedge funds in terms of returns.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“Then had time to go to Silicon Valley to meet with the people, to see over a decade who was good and who wasn't, to ask questions and to make mistakes. That's a huge first mover evange. By the time I got there in 92, they had a great venture portfolio, and almost nobody else even understood what venture capital was.”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source
“It was already in place. They really did. That's a huge aspect of Yale's success. No doubt about it. Success of that governance. So”
2023-08-11 · Masters in Business · Ted Seides on the World’s Elite Money Managers · IDENTIFIED FROM THE TRANSCRIPT · source