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Todd Boehly

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64
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2022-12-29
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2022-12-29
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1
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  1. “So then now we're in 2002. We're growing our CLO business and VLAN launched our first private credit business. So we launched a fund that was 100% dedicated to originating debt directly. And we got in that business. And then I got to know Mike Milken. And Mike Milken ended up becoming an early investor in a separately managed account that then we morphed into a much larger hedge fund. So now we had CLOs, we had private credit, we had hedge funds. So we were starting to fill out our product suite. From there, we were just able to continue to really grow the team. And ultimately come 2008 now of 2009. I remember seeing Freescale get bought out. And that was a big acquisition that was done with a lot of debt. And that was the first time Covenant Light debt started really creeping in.”

    2022-12-29 · Capital Allocators · 2022 Top Episode #2: Todd Boehly – The Next Berkshire Hathaway at Eldridge, EP. 223 · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “So we started with CLOs and we launched a CLO called 1888. And we started really figuring out how we could get multiple asset classes inside of a single CLO. That gave us a much broader funnel to select assets from, which I've always thought that is the key, is to have a really broad funnel”

    2022-12-29 · Capital Allocators · 2022 Top Episode #2: Todd Boehly – The Next Berkshire Hathaway at Eldridge, EP. 223 · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Sold off all their hard assets. They had sold off their pipelines. They were going into fiber and fiber trading. And a lot of businesses that weren't really investment grade type businesses. So we said, okay, obviously there's your bonds, not our bonds. So you can decide whatever you like to do with them. And then, of course, within a couple weeks, the whole thing fell apart. So the bonds went into the 20s and 30s and were trading without accrued interest. So all of a sudden, the 68 million dollar position had a market value of 25 cents of the 68 million. And Bob, to his credit, called us up and said, all right, well, I guess I'm going to listen to you going forward. So that then gave us the credibility to then really build the credit business at Guggenheim and Salmond's and Midlands. Where early investors in all of our funds.”

    2022-12-29 · Capital Allocators · 2022 Top Episode #2: Todd Boehly – The Next Berkshire Hathaway at Eldridge, EP. 223 · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “The capital markets to fund themselves. And salmons at the time owned $68 million or so worth of Enron bonds. So I remember Thanksgiving of 2001 was going deep on Enron. And when we were spreading Enron to figure out what Enron was really all about, we basically called up the CEO of Salmons and at the time the Enron bonds were trading right around 88, 90 cents on the dollar, depending on the bond. And we basically made the recommendation to sell the Enron debt. And the CEO of Salmon's at the time said, you guys are wrong. We shouldn't sell Enron and we don't want to take a 10-point loss on 68 million bonds. And we said, okay, well, we don't see how the business is not 100% reliant on the capital markets. They had also”

    2022-12-29 · Capital Allocators · 2022 Top Episode #2: Todd Boehly – The Next Berkshire Hathaway at Eldridge, EP. 223 · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “Yeah, so October 24, 2001, right after 9-11, we ended up moving to Guggenheim. So it was six of us that left Whitney and formed the credit business at Guggenheim. And the first large client was a large shareholder of Guggenheim, was Midland. And Midland was an insurance business that was owned by Salmons in Dallas. Our first job was to go deep on 10 names that salmons had invested in. And if you recall, that was right when Enron, WorldCom, Taiko, there was these large investment-grade businesses that were basically, if you boil it all down, they were showing earnings, but their CapEx was so large that their CapEx was greater than their earnings. So they're actually relying on”

    2022-12-29 · Capital Allocators · 2022 Top Episode #2: Todd Boehly – The Next Berkshire Hathaway at Eldridge, EP. 223 · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “With some cash for the business, then I think they'd look very fondly on that as it created a solution for something that needed a solution just because of what the limited partners were saying.”

    2022-12-29 · Capital Allocators · 2022 Top Episode #2: Todd Boehly – The Next Berkshire Hathaway at Eldridge, EP. 223 · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “I had started taking these CBOs over for Mark and Guggenheim and it was really a company called Liberty Hampshire, which was one of the original vehicles that formed Guggenheim. And you felt the world moving at Whitney because Whitney 4 had not performed to the limited partner's expectations. And basically the message that came back was, all right, Whitney, you need to get back to your basics. And having now started to manage these distress CBOs for Mark, I called him up and said, there's something going to go on here. Either the team's going to go in a lot of directions and we're all going to go off into our own thing. Or maybe we can buy the business from Whitney because they're going to be looking to exit the business just based on how I'm reading the tea leaves. And if we showed up.”

    2022-12-29 · Capital Allocators · 2022 Top Episode #2: Todd Boehly – The Next Berkshire Hathaway at Eldridge, EP. 223 · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Started really learning how finance companies worked. To me, a CLO or a CBO or a CDO is really a bank with a limited life. I think you really learn quickly that credit is the most important thing. And I think credit is kind of a fundamental tenet in all things capital markets and finance. So by being able to really go deep on credit and learn about what really drove performance, that gave me a real insight. And it was also great because when you're lending money, it's almost like dating. You can break up easily when you get paid off, but you also have a front row seat to understanding businesses, industries, management teams in a lower risk way than if you're at the bottom of the capital structure.”

    2022-12-29 · Capital Allocators · 2022 Top Episode #2: Todd Boehly – The Next Berkshire Hathaway at Eldridge, EP. 223 · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “So twenty years ago structured credit was relatively nascent. You're talking about CBOs. Most people think of them as CDOs today, but then it was bonds as opposed to just debt. What did you learn from your...”

    2022-12-29 · Capital Allocators · 2022 Top Episode #2: Todd Boehly – The Next Berkshire Hathaway at Eldridge, EP. 223 · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “To CCCC, and we'd love to be able to make the statement that no AAA debt has ever gone bad. So basically we turned three CBOs that represented about a billion three into trading vehicles that were financed with low-cost debt.”

    2022-12-29 · Capital Allocators · 2022 Top Episode #2: Todd Boehly – The Next Berkshire Hathaway at Eldridge, EP. 223 · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “And having structured CBOs in my first life at CSV Boston, I had gotten to learn the left side of the balance sheet at Whitney and I had learned the right side of the balance sheet at First Boston. So that gave me the opportunity to restructure some CBOs that had gotten in trouble. Because at the same time, in 2000, you had a lot of this telecom business that ended up going bad, which made a lot of the CBOs go bad. So Mark Walter over at Guggenheim was the controlling class in three CBOs that had gotten underwater. So he called me and said, can you help me fix these? They're AAA bonds had gotten downgraded to CCC. So the rating agencies basically said, you can kind of do whatever you want with these CBOs now that we've downgraded them all the way from AAA.”

    2022-12-29 · Capital Allocators · 2022 Top Episode #2: Todd Boehly – The Next Berkshire Hathaway at Eldridge, EP. 223 · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “So they had a decision to make. And I was working on the credit side and was getting exposure to the private equity side and the private debt side. But there wasn't a lot of sponsorship for the credit business there. So rather than compete with everyone in the private equity lane, I decided, all right, I'll go deep on this credit thing. And we had a billion and a half, two billion dollars of assets under management. And I basically became head of special situations in bank debt investing at Whitney, really because no one else wanted it. I took that opportunity and I got to know the guys over at Guggenheim. And they had had some CBOs that had gotten in trouble.”

    2022-12-29 · Capital Allocators · 2022 Top Episode #2: Todd Boehly – The Next Berkshire Hathaway at Eldridge, EP. 223 · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Sure. Well, thank you very much for coming, and it's great to see you again. Was at Whitney, and I was super excited to be there. We were pretty cutting edge at the time. I think we were Blackstone before Blackstone became Blackstone. We had private equity. We had hedge funds, we had credit, we had private mezzanine debt. So we had the asset classes covered. And I think we were there in a really interesting time. They started at a mid-market buyout shop. And remember, they made that investment in con of communications. And they put $2 million into Khana, and it became $170. And all of a sudden, the partners at Whitney decided this is a pretty interesting business model. And Whitney 4 was a billion dollars. And I think when Nasdaq 5000 became Nasdaq 2000, it didn't look like a billion dollars.”

    2022-12-29 · Capital Allocators · 2022 Top Episode #2: Todd Boehly – The Next Berkshire Hathaway at Eldridge, EP. 223 · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “My guest on today's show is Todd Bully, the co founder, chairman, and CEO of Eldridge, a multibillion dollar permanent capital holding company with investments in eighty businesses, including high-profile brands like the Los Angeles Dodgers, Dick Clark Productions, and the Hollywood Reporter, and an array of companies across other industries, including media, insurance, real estate, asset management, and technology. Combining its structure and Todd's acumen, CNBC recently postured that Eldridge may be the next Berkshire Hathaway. Our conversation covers Todd's early beginnings in structured credit, growing in asset management business at Guggenheim, and the formation of Eldridge. We then turn to his investment strategy and investments in asset management, media, gaming, and technology. Along the way, we discuss Todd's thoughts on sourcing, negotiation, structure, management,”

    2022-12-29 · Capital Allocators · 2022 Top Episode #2: Todd Boehly – The Next Berkshire Hathaway at Eldridge, EP. 223 · IDENTIFIED FROM THE TRANSCRIPT · source