Capital Allocators Monthly - February 2021

March 6, 2021 by Ted Seides

Hello Fellow Listeners,

Some of our favorite reads and listens this month cover market extremes, crypto, private equity, and SPACs.

Announcements and Gratitudes * Free Webinars.

I will be hosting our first sponsored webinar on March 18th – register here. We’ll be discussing technology in the investment office, sponsored by Backstop Solutions and hosted on the iConnections platform.

* Clubhouse!  Might as well join the party.  Rahul and I will be hosting a chat tonight at 7pm. Join us!

* What Ted’s Thinking.  I have started sharing my investment ideas with Premium Members. For a sample, have a read of SPACS: Croupiers and Incentives.

* Virtual Gathering with Annie Duke. A replay of our gathering with Annie for Premium Members is available on the Premium page. It was full of new nuggets of wisdom, including the following:
– The story of Annie’s botched book launch
– New research and her next book
– Trading strategies
– Manager selection without face-to-face meetings
– Shifting to long-term thinking
– When to have grit and when to quit

* Mini-Series. Crypto for Institutions starts next week, and two more, Innovation and Private Markets and Private Equity Masters, will follow. My special thanks go out to the sponsors of these mini-series, who you’ll hear from in due course.

Reading (Ordered by reading time: tweets first, books last, and blog posts and articles in between) 

Quote:  “Looking back, I’m struck that there is one lesson I learned early and then relearned over and over: Trust is the coin of the realm.”  – George P. Shultz, former U.S. Secretary of Labor, Treasury and State and director of the Office of Management and Budget, who passed away recently at 100 years young.

1.  A picture tells 1,000 words.  Displays of S&P 500 concentration and interest rates – say no more.

2.  Crypto for Institutions. Leading endowments have been buying bitcoin through Coinbase.

3.  Technology in the Investment Office or lack thereof. Backstop Solutions and Mercer surveyed 200 institutional investors and found that far too much time gets spent on “stuff.” AI-CIO summarized the paper in How Investment Teams Waste Their Time, and the need to improve led to our Webinar on March 18th.

4.  Private Equity Innovation: Continuation Funds. The team at Pitchbook discusses continuation funds, effectively GP-led secondary funds. Historically, GPs sold winners to other firms, incurred transaction costs for LPs, lathered, rinsed, and repeated. Continuation funds make a ton of sense for everyone involved.

5.  SPACs: Boom or Bubble?  Michael Cembalest at JPMorgan pens Hydraulic Spacking calculating the positive outcomes for sponsors, arb investors, and everyone else thus far. INSEAD professor Ivana Naumovska published The SPAC Bubble is About to Burst, sharing the history of reverse mergers from 2000-2012 and concerns of speculative excess. The two are not mutually exclusive – both conclude the going has been good and buy and hold investors in SPACs have fared poorly. Here’s my take.


Capital Allocators

Special thanks:

iConnections logo

Episode 178: Acting Chairman Rostin Behnam – CFTC Regulatory Perspectives on Crypto and Climate 

Episode 177: Jennifer Prosek – Business Development and Leadership in a Virtual

Episode 176: David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony

Episode 175: Paul Salem – Providence Equity Partners

Best of the Rest

Carlos Brito on Invest Like the Best. Patrick interviews one of the proteges of 3G, the CEO of Anheuser-Busch InBev. Carlos goes inside the headlines of zero-based budgeting.

Capital Allocators:  The Book Tour

iConnections Global Alternatives Summit: Interviewing the Interviewer with Jim Williams from Getty Trust. Covers the application of interviewing, listening, and decision-making to the manager selection process.

Decision Education Podcast: Probabilities vs. Absolutes with Dr. Joe Sweeney. Covers the power of premortems, the danger of overconfidence, and how paying close attention to your emotional state can dramatically increase the odds of making a good decision.

The Acquirers Podcast: Investing in Hedge Funds and the Bet with Buffett with Tobias Carlisle. Covers hedge funds, the benefits of active management, and decision-making in manager selection.

Have a good one,