Ted's Blog - Capital Allocators with Ted Seides

NAV Loans: Canary or the Gold Mine?

what-teds-thinking

October 11, 2023

Financial market participants tend to stretch at the end of a cycle in ways that look silly in retrospect. In 2000, public companies with millions of “clicks” (and minimal revenue) held market caps in the billions of dollars. In 2008, structured products that sliced and diced subprime mortgages professed to spin junk credit straw into […]

The Real Yale Model

what-teds-thinking

September 7, 2023

Investors following David Swensen too often miss the mark in their interpretation of his theory. Like children playing the game telephone, they listen to other voices and echo beliefs with shakier foundations than Yale’s. Anyone adopting the “Yale Model” is well served to revisit David’s writing from time to time. I had a chance to […]

Active Management Today is a Single Decision

what-teds-thinking

August 3, 2023

About twenty years ago, I sat down with a leading long-short hedge fund in Korea. The portfolio manager spent forty minutes offering an articulate bull case for Samsung, in which he had a 20% long position. When he finished his impassioned presentation, I responded with a single question: “That sounds great, but why are you […]

The Impermanence of Permanent Capital

what-teds-thinking

June 22, 2023

Back in 1994, I was overseeing Yale’s boring, internally managed bond portfolio. We benchmarked the portfolio to the Lehman Brothers Government Bond Index and occasionally sought to add value buying securities with the same characteristics as a bond at a discount. [1] One example was the Morgan Stanley Government Income Trust (“GVT”) a closed-end fund […]

I Don't Know

what-teds-thinking

May 24, 2023

I ask every guest on the podcast “What is your biggest investment pet peeve?” Mine is investors who express absolutes in a world of probabilities. The late Peter Bernstein defined risk as “you don’t know what will happen,” adding “even when you think you do.” There’s a fine line that investors walk between conviction and […]

Playing for Tomorrow

what-teds-thinking

April 7, 2023

What return was available on a 5-Year U.S. Treasury two years ago? Observing market conditions, you might have said 0.8%. That was the paltry current yield on a 5-Year U.S. Treasury at the time. Is that the answer? Yield-hungry investors like SVB thought so. They scooped up what yield was available and extended duration to […]

Short-Term Gain, Long-Term Pain, Part 2

what-teds-thinking

March 22, 2023

David Swensen lived and breathed long-term investing. From his license plate ENDOW to his aphorism “Don’t be so short-term,” David walked into the office every day with a mindset that embodied Yale’s perpetual time horizon. The issues I raised in Short-Term Gain, Long-Term Pain three weeks ago would have resonated with him. Since then, the […]

Short-Term Gain, Long-Term Pain

what-teds-thinking

February 25, 2023

Morgan Housel became one of the most popular investment writers by telling stories about the psychology of money and markets – the same today as it’s ever been. Sometimes that knowledge can elicit positive change. Sophisticated institutions can build processes to increase their awareness of behaviors that might comprise optimal decisions. More often, we repeat […]

The "Why" Behind Capital Allocators University

what-teds-thinking

January 12, 2023

“Our community already knows most of what matters within the field. It’s the interdisciplinary education outside of investing that allows us to identify new sources of return.” The hardest day to invest is always today. That investment truth seems particularly apropos today – a time managers competition has intensified and allocators are more sophisticated than […]

You Won’t Detect the Next Fraud

what-teds-thinking

January 11, 2023

In the fall of 1998, I sat down with famed value investor Michael Price and asked what he learned from having invested in the accounting fraud perpetrated by “Chainsaw” Al Dunlap at Sunbeam Corporation. He responded, “Absolutely nothing!” [1] Michael went on to explain a principle about frauds. When you conduct analysis on an investment, […]