[REPLAY] Adam Blitz – Inside Hedge Fund Allocation (Capital Allocators, EP.17)

26:36And it's small enough that I think we avoid the groupthink that, you know, we're not checking and corroborating with everyone else out there. But, you know, we feel that if you can interact with a family office or two, an endowment or two, you know, I'd personally love to interact with just what I think of as eccentric investors who have no institutional process whatsoever, but might have a good nose for it, might have good instinct, might have a way of asking questions that get at the person behind the fund a little bit more. Those tend to be the best sources of introductions for us would be among that group.

27:13And certainly if we get wind that someone is leaving firm XYZ and we think it's likely to be attractive, we might chase them if we think that capacity is likely to be challenged. But you very rarely see that in today's environment. So from that initial meeting, what is it that lights a spark? There's probably a checklist and people tick off the checklist, but what is it that you see after all these years of experience that's, okay, that's someone we want to keep talking to? Yeah, I first go back to the soft stuff, which is just the passion and love for it. I think having done this for 15 plus years, you get that sense early on versus people who are like, okay, now I'm at the point in my career where I'm supposed to leave and start a hedge fund.

28:01Or maybe they're a team who left some big investment bank and everything checks the box of, boy, this group has worked together, but they seem kind of joyless and it just seems like a struggle. You just sort of get that sense, right? Now, just because you're passionate about it and enjoy it doesn't mean you're any good at it. But it's hard to see a lot of staying power, even if you're very good, if you're not enjoying it and feel that passion and competitiveness to do very well. So I think in that initial meeting, you know, you're never going to know enough to say, boy, we're going to invest in these folks, but, you know, that soft stuff will shine through.

28:36And then from an investment perspective, it's really trying to figure out what is their edge and why is it repeatable and sustainable. So this is the hard part. This is where the judgment might come in. I mean, the capital introduction folks at the large investment banks might help these people put together a nice presentation and everyone sort of sounds the same with their funnels of stocks that they look at. But just because someone sounds the same doesn't mean they're good, doesn't mean that they're not good either. But going back to the earlier discussion, within long -short equity, we're much more likely to get a feeling that they have an edge in a particular strategy if they're really expert in one area, right?

29:18So if you're meeting with a healthcare team and, you know, it's a bunch of doctors and a bunch of people who've been in finance and investing for years and years, and they've been through ups and downs, and they have people across the different segments of healthcare, and they clearly enjoy what they're doing, that's much more likely to be interesting to us than, hey, we pick, you know, undervalued stocks and, you know, try to short, you know, overvalued ones, you know, and, you know, it's just, it's kind of the first screen there. And then I think on the, you know, when you get into the more esoteric strategies, you know, I personally, I love trades that have that positive convexity or optionality and that thought process when you talk to people, you know, you can kind of tell a little bit if that's the way they think in terms of, boy, you know, here's my view of the world, but here's how I might want to construct a trade that kind of expresses that view with much more upside than downside.

30:14And when I was at AQR, one of the things I helped with was kind of the execution of trades. And I think it's so dramatically understated how important trading is in any investment strategy, market impact, implementation. I think in an initial manager meeting, folks tend to spend 90 % of the time on, tell me your three ideas and let's go into excruciating depth on them. I like to focus a little more time on, all right, you have these ideas. How do you put them together in an actual portfolio? And just asking that question in an initial meeting, there's no right or wrong answer. But what we found over the years is that the more folks are confident and have a handle on their own approach to portfolio construction, as opposed to kind of blowing in the wind on it, the much more likely they're going to be successful in it.

31:07So then as you continue to do your work, you have a bunch of meetings, usually face to face. Then you go offline and you do homework when you're not in front of them. What does that look like? Yeah. So part of that is, I would say, sort of clinical work, whether it's done by the investment team or ops due diligence team. It would certainly be reference checks in terms of who is the manager work with, what do they think of their success, their character, all those sorts of things. Having done this for 15 years, you look down those lists and you say, who's not on this list? Who should be on this list?

31:43And you try to find that person and try to figure it out. On the ops due diligence side, there's certainly a clinical aspect to that in terms of background checks, just corroborating their education and making sure there's nothing in there that shouldn't be in there. So those are kind of the clinical aspects. We'll certainly look at prior track record if there is a prior track record in a lot of depth. We'll look at old 13Fs and things like that and just old positions and just try to see if past performance, both the ups and downs is consistent with what we think their strategy should have generated.

32:20And a lot of times in the past, you might have what appears to be an optically good track record, but it was done on a very low capital base or there was some sort of issue that enabled them to do well out of the gates. But at any sort of larger size, you know, they're less likely to be to be successful. So that's kind of the, you know, the more the more clinical side. You know, I would say the the rest of it is more that intuitive, softer side. What's the feeling we're getting from this manager? You know, we have a term we just call sleaze factor, which is whether it's on the investment side or the operational side, if you're meeting with the manager and you're just not getting a great vibe from them, you're getting incomplete answers.

33:01Just it doesn't feel like a spirit of partnership or whatever. You can't even put your finger on it. We just tend to, you know, we just tend to walk away from that. I mean, we really want to think of these as, you know, as long term partnerships. As you get through that whole process, a lot of what you've talked about are very sensible ways of weeding out a manager. You're going to get to a point where there's more than one manager that actually meets all these criteria. What is the decision -making process that you use? And let's really get into it. Is it one person who's making the decision?

33:36And if so, what happens with the people on the team? How does a team make a good decision? We're an incredibly flat organization. So we have a nine -person investment committee that is the formal kind of investment body, if you will, of the firm. And we need unanimous approval of all nine of those investment committee members before someone makes it in the portfolio. Only really need one, though, to kick a manager out. So you need continuous unanimous approval, if you will. And what is that dynamic like? Because over time, boy, you have to get the approval of eight other people. How do you not degrade to kind of a group think?

34:14Yes, that is a great question. And really, I think the most challenging part of my job and the most important part of my job in the CIO capacity is to make sure we're not just making safe, easy decisions. Or one person raises their hand and has an issue or one person didn't like the way some question was answered. but in the scheme of things, it doesn't necessarily really matter. And so the overused cliche here, but the sausage making part of our process is a weekly meeting of our investment team. And that's where we'll bat around for an hour, often more just about all the meetings in the week, all the managers we're seeing, you know, where are we in the various stages of the process?

34:57And that's really where there's a pretty good debate among both existing managers and perspective managers where one person might say, you know, I'm concerned about X. And another person might say, you know, I, you know, I hear you on X, but I don't think it's a big, I don't think it's a big issue. Dave Wagner, our founder, I think is a tremendous people person. And I think one of the things that he's taught us all is when you have that sort of conflict or debate like that, instead of trying to necessarily forcing yourself to reach a resolution in the span of that meeting, you know walk away for the weekend you know come back the next week and revisit the topic and often people have moderated their views or often one person said you know i kind of see your you know your your perspective on that and it's it's really you know it's really served us well i would say we also have a rule in our firm that even if let's say there's people on the team who don't like a particular manager anyone on the team is free to keep doing work on that manager so So if I think there's a spark in a particular manager, even though maybe no one else does, I'm going to continue to do work on that and try to corroborate that spark and ultimately try to convince others why that's a good investment.

36:13So I think with that sort of process, again, the risk is that you make safe decisions. I think by having that healthy dynamic and walking away and having in your mind that we can't be safe, I think it's certainly helped us. But I think the pros outweigh the cons of that. I mean, I really think if we can't convince each other something's an interesting idea, it probably isn't an interesting idea. And we set up our whole, you know, we don't have anyone focused on any particular strategy. No one is compensated based on how their managers do. You know, there's none of that. There's none of that dynamic in place that might compel people to either push for against managers for any other reason than what's in the best interest of the portfolio.

36:59Yeah. So I'm having in my head like the jury scene in 12 Angry Men. It's nine not so angry Chicagoans, nice people. But how does that work? So does someone raise their hand every now and then and just say, look, I'm not seeing this. And I'm going to one person is going to turn down the minds of eight other investment team members. It happens more than you would think where we have people who just don't see it. And if everyone else sees it, it's not like we'll just necessarily just walk away and say, okay, eight to one and we'll just move on and forget that. We'll certainly try to convince that other person.

37:42But ultimately, if we can't kind of bring that other person around, we wouldn't make that investment. Like you said, it's all very collegial. But when I look at some of our best investments over the years, they often are the ones that have some hair on them, you know, in terms of, boy, that person was the number two person at some large hedge fund. And, you know, not every single thing that that person did or that that firm did was absolutely perfect. And so people who might have been in the larger hedge fund might not be investing in the spin out, you know, for those reasons. And you might not get a good reference from them, right?

38:18And so, you know, there's definitely very, very few of our best investments have had every single box check absolutely perfectly. And in fact, some of our more mediocre initial investments have been the things that kind of check every box. But again, that spark wasn't necessarily there at the end of the at the end of the day. It's not a bunch of angry people, though. That is that is for sure. It's all collegial. Collegial, we definitely have just a nice group of people, but very competitive. And it's a feeling that with the structure and setup we have, we should be making investments in interesting managers that not everyone is investing in.

39:00And I'd say when we do our day one investments, we do it with conviction and in size. And so, you know, we're not believers in, hey, you know, let's take a 10 basis point position in a manager so we can all pat ourselves on the back that we knew that that manager would be successful. They should be an impactful position, you know, right from the get -go. So once the managers are in your portfolio, what does the monitoring process look like? Yeah, so it's pretty intense. I mean, we want to draw that balance between we don't want to be a pest to the manager and kind of hyper analyze every single movement they make.

39:36On the other hand, we want to really know them extraordinarily well. And so by having a fairly small number of managers that we invest with across the firm, we feel we get to know these portfolios very, very well. And more importantly, the people behind these portfolios. portfolio. So we try to have five, six, even seven touch points with a manager in any particular year. Only a couple of those would fall into that sort of formal category where, hey, let's sit down and do a formal investment review or a formal operational review and go through everything in depth and kind of re -underwrite it, if you will.

40:12A lot of those touch points are softer. They're stop -bys. It might be take someone to dinner or breakfast and just, how are you doing? Are you having fun still, you know, what's going on. You know, we pay particular attention, I would say, when assets are going up in a firm. I mean, that's kind of an obvious statement, but it's probably the number one reason why we redeem from managers is the style drift that comes from asset growth. We pay a huge amount of attention to cultural change. This is just a critical factor. And And certainly after bad years for a manager, you just want to get a sense that morale is good.

40:51How are their investors doing? Are they sticking with it? But after very good years, you'd be amazed at people fighting for credit and feeling underappreciated and who needs to be coddled. And we have to be on top of all that as opposed to, hey, you had a great year, so everything is great. I think you have to monitor things like liquidity in the portfolio or things evolving in a way where we think they can continue to do well in the future. But even on this trip here, a lot of the meetings I'm having are much more related to the softer elements of it. How is a manager sort of evolving their portfolio now that their assets have grown?

41:30Are the people at another manager, they still love what they're doing? Or has it become sort of a bit of a burden almost? most, right? And those things are, you know, in many ways more important than, you know, kind of having a 30 -minute discussion of why their net exposure changed by 8%. What does your portfolio turnover look like? Turnover on average in a given year is about 15 to 20%. So five to seven year. That's exactly right. Now, you know, we certainly have some that are, you know, three or four years. We certainly have some that are, you know, 10 or 12 years. You know, We don't necessarily think that if we redeem from someone after three years that we didn't do our job right necessarily.

42:12I mean, it could be that if we're going into a trading -oriented strategy, which we don't do very often, but let's say we do, and we think they'd be effective at a small asset base but ineffective at a large asset base, let's get in them early at that small asset base. And if they're successful and raise a bunch of money, then great, and we can kind of move on. And it's obviously different from someone disappointing you and you wanting to get out early. But I'd say five, six years is the average. And where have you made mistakes? And what have you guys learned from them? Number one mistake gets back to that checking every box kind of mentality where the love and passion and risk -taking mentality just isn't there.

42:53And so I would say we tended early on to invest more in lift outs from investment banks, you know, kind of teams that lifted out from those banks. And invariably, those teams would say, oh, no, you know, being part of the bank was a hindrance more than a benefit. You know, I had all these names that I was restricted in, and so on and so forth. And, you know, being part of the bank and the flow and all that was really not that important. Well, you know, it kind of turns out that it probably was important, there was a lot of value to the seat. And it's just a very different mentality from going from a large firm where everything is sort of figured out for you to, hey, I'm running a business.

43:35My first three months haven't gone very well. How am I going to get the gumption up to take risk? And, God, am I really enjoying any of this? Or is it like what did I get myself into? So we definitely made mistakes in that regard. I'd say on the macro side, I feel we've definitely improved our process. Finding good macro managers is incredibly challenging because it's often hard to distinguish if someone's track record or history is a function of incredible skill and foresight or if it's just dumb luck. Hey, they got some call on the euro right eight years ago and they're kind of riding that out.

44:10And so I think we've gotten much better at saying, you know, even with things like macro, what's a sustainable edge that a manager could bring to the table? something like the ability to structure trades very well or, you know, say, hey, here's my macro view, but I'm going to position myself in such a way that if I'm right, you know, I'm going to do really well. And if I'm wrong, I'm going to, you know, lose a little. We view that as a much more sustainable edge maybe than even your calls from a macro perspective. So those are definitely some of the mistakes we've made. I think sometimes we've been a little slow to get out from managers.

44:46I mean, it's always that art of, you know, you want to stick with folks who might be struggling. You know, there can be a regret factor in investing. Boy, you know, God, I know this thing's about to turn around. I can't get out now. But if you start to sense, boy, the mentality of the manager is changing or something about their strategy or something about their love for the business is kind of changing for the worst. even if they're going through a drawdown, you're still better off probably getting out than, you know, kind of magically hoping for some bounce and then get out. And so I think we've been a little slower, you know, at times than probably we should be.

45:24And, you know, I think, like, any single allocator, I mean, in the world, no matter what they say, I mean, there's some element of performance chasing, and you just have to resist that urge to, you know, you want to be reducing when someone's doing well. You want to be adding when someone's doing poorly if everything all else is equal. You want to be investing in a new manager, at least new for our portfolio, after a period in which they've been struggling, not necessarily a period they've been doing great. It's hard to do that. I think we've gotten better at it, but yeah, we're certainly not batting a thousand on that.

45:57What opportunities are you most excited about in your purview? Some of them are boring, like long short equity. I just strongly feel that all this movement into passive investing is a real boon for really great long short equity managers. And I mean, I would caveat that with, we think 90 % of them probably add no value net of fees. And for that 90 % who probably have weaker investor bases, the fact that day in, day out, stock prices move in a way that often have nothing to do with fundamentals is probably going to hurt that 90 % of managers because they're going to get jittery. Their investor base is going to get jittery.

46:39For the 10 % who are really good, though, we just think that the distortions between individual stock prices and their fundamentals is just going to continue to grow because it's going to be influenced by ETF flows and index flows and things like that. And so fundamentally, we think there's going to be great opportunities. The cost for that is going to be higher volatility, though, because there's going to be noise in how stocks are priced. So a long way of saying we think long short equity has prospects for very high alpha going forward among the top managers, probably with higher volatility than it's had historically.

47:15The other major area I would say right now is volatility across almost all markets is unbelievably low. I think the realized volatility S &P in the last couple months has been something like 7%. You extend that to currencies and interest rates. We're talking in the lowest decile relative to history. We were talking with one of our managers in the volatility space earlier. They're saying the markets are pricing the environment as if it's the least uncertain fundamentally that it's ever been. And no matter what you think about, boy, passive might be reducing volatility, or you could get into discussions about that, it sure doesn't feel that this is the least uncertain environment we've ever been in.

47:58And so it just seems to us from a perspective basis with volatility at or near historical lows across a multitude of asset classes and the ability to structure trades that have very minimal sort of drag on your portfolio and maybe even have a positive carry in addition of being long volatility, we think is a great addition to a portfolio, albeit one that's been painful recently, and probably, you know, for all we know, could get more painful, you know, in the short term, but we think long term, that's just a phenomenal kind of mispricing in the market. And the sort of thing that as a fit in people's portfolios, to us seems like just a fat pitch.

48:40I mean, something that has a good expector return, but would particularly deliver when other parts of people's portfolios might hit a snag. How do people go about playing that? I mean, you're going out and identifying a manager, but are there simple ways if people want to express a regime shift in volatility that they can express that either in their own portfolios or through a manager? What do people do if you shared that view? It's challenging because probably the volatility index most people think of the most is the VIX, right? And equity volatility, while it's low relative to history, can be very expensive to have a long position in because the term structure of equity volatility, at least in the US, is still very steep, you know, upwardly sloping, which means that I might buy a futures contract on the VIX three months from now that's probably priced a couple points higher than and the VIX is priced at today.

49:39And if I just buy that futures contract and hold it, I'm probably going to lose a couple points and have strong negative carry. And so part of the reason probably people have, you don't see as many people in those trades on the long side is precisely because of that negative carry. There's much easier ways to structure those sorts of trades outside of the equity market. So things like interest rate volatility, currency volatility, have much more favorable kind of carry characteristics as opposed to equity markets, but they're much more challenging to find ways to implement as kind of an everyday investor or not through a manager who's expert in the space.

50:20I'd call it maybe an orange flag or red flag on the equity volatility side, as you're seeing a lot of people today go explicitly short equity volatility, and it's being packaged as a quote unquote alternative strategy. We think that that's a very risky proposition. You understand the appeal in that you can go short volatility through a VIX futures contract. It's probably ETFs that help you do this. You can earn a positive carry and a yield probably in excess of anything in the market. But there's so many people doing that strategy today that if you add even any modest volatility the other way, you could really get hurt and see some strange movements.

51:01So that That would be a strategy at these levels of volatility. Again, who knows when it'll break, but we would certainly, I wouldn't say necessarily avoid 100%, but just be wary of and be sure you explicitly understand what the manager is doing. And are there broad risks that you're paying attention to in your portfolio that you're concerned about? Yeah, I mean, I think liquidity risk is a major one. And are you talking about liquidity within the markets, or is it the structure of the hedge funds you're investing with and the liquidity needs of their clients? Or is it the whole? I think the whole package there.

51:34Liquidity in markets, I mean, certainly in the credit markets is still very, very low. I mean, it is simply hard to execute any sort of large group of trades in any credit market, whether it's high yield, structured credit, you know, what have you. So if those markets have any sort of hiccup and credit spreads were to rise, if people were to seek an exit from some of these strategies in a short period of time, I think it would be problematic. You know, even in the high yield ETF, a large percentage of the high yield bonds comprising that ETF don't even trade hardly on a day -by -day basis, even though the ETF itself is very, very liquid.

52:12And so that all works until it kind of doesn't work. Then within the hedge fund sector, like you're asking, I mean, you certainly have some managers who have a clear asset liability mismatch where they might have quarterly liquidity or some sort of liquidity structure where you say this is not consistent with the liquidity of their underlying investments. And if they were forced to sell these investments into the open market, they would take a huge haircut. And so as an investor, you have to pay particular attention to whether those terms make sense and then also who are the investors you're investing alongside.

52:49If a manager is running $700 million and $500 million of it is through an investor who you think might be a weak hand, that can be very risky then if you're alongside a bunch of endowments and foundations who've been there for 20 years. And so those are more qualitative judgments that you have to make. Even in the equity market, I'd say liquidity is not great. So much of the liquidity is due to, again, passive trading ETF flows, quantitative flows that if you actually need to buy or sell something or express a fundamental view in it, in a short period of time, if you're trading enough, you're going to move that stock pretty meaningfully.

53:29So I think liquidity is definitely a big risk. And then just, you know, I think other factors where you combine that illiquidity with leverage again. So certainly, you know, I wouldn't paint a broad brushstroke, but some of these quantitative approaches or factor -based approaches, if they're not constructed properly, you know, you could run the risk if you have a whole bunch of people kind of sort of doing the same thing with a whole bunch of leverage. and the rising tide has sort of lifted all of those boats to some degree. But if you have the opposite effect, it's not clear who's buying that stuff if folks are selling.

54:07Which wouldn't be a statement to avoid anything factor -based or alternative -based or anything like that, but just be sure that the strategy that you're in has been very thoughtful about how they constructed and how they would deal with that scenario. It's hard to go through a full conversation of the hedge funds and not talk about how challenging it's been and then maybe even like, what's this going to look like? So what do you think investing in hedge funds looks like five or 10 years from now? I would say that the, I hate to say this because it's not in one's control, but I do think the next performance node is a very, very important one.

54:40I think if markets struggle, hedge funds hang in there and do well, it kind of reminds people why hedge funds are in portfolios. Even most folks who are invested in hedge funds today They are still, at least mildly, probably disappointed with results over the last five years. So it'd be nice to have some sort of reinforcement from real data that hedge funds can play an interesting role in portfolios. So I think if markets sort of stumble, hedge funds do well, I do think there's the potential for pent -up demand into hedge funds. That'll fuel some of these startups that probably aren't getting started up because they can't raise money out of the gates.

55:18And I think, you know, the industry gets healthier again, especially for more boutique -y sorts of managers. I do think, though, the next node is the other way. You know, and let's say, you know, markets stumble, hedge funds stumble, markets, again, do a V -shaped recovery, hedge funds get whipsawed. It's just going to further kind of the negative momentum in the, you know, in the industry. Probably more money will come out and go into more passive types of approaches. And that's where, from a business perspective, right, having a diverse client base and just, you know, being able to ride through that period, you know, we think will be very important because that'll lead to a further shakeout of the industry, fewer managers, and probably more opportunities for the really great managers that remain.

56:04So I strongly believe that over a five, 10 -year period, the talented managers should deliver outstanding risk -adjusted returns, probably even more so with less competition these days. You just need to have a business and a path to sort of get there. And if you're probability weighting those outcomes, what do you think? I'm going to say, I'm going to go two -thirds on the side of the first one, where I think markets are, I mean, you know, certainly, even if markets continue up for another year or two, I think, you know, certainly most of the investors we talk to recognize that most markets, equities, credit are expensive relative to history and simply assuming they're going to continue to go up.

56:47I think very few at these levels of valuation are sort of willing to make that assumption. I think as interest rates rise, you know, which maybe they'll eventually do, that does raise the total return expectation for everything. And I think hedge funds should be, given all those dynamics we talked about, volatility that's incredibly low, less competition on the long short equity side, should in theory be able to ride through a period like that relatively well. I think there's always a tough period when markets sort of move to a more volatile regime, especially for long short equity, where in the middle of that, they might not do very well.

57:27But usually coming out of that, once the dust settles, they then tend to go on a very good run, especially the good ones. And so I think if you sort of explain to your investors and all that, that it's not necessarily the case that, hey, the market has one bad month and absolutely, positively, this thing is going to hang in there. You might be setting yourself up for trouble, but I think if markets have a sort of a prolonged malaise, hedge funds should do well. And if they don't do well, it's hard to see what the excuse would be at this point. Certainly, I think the other node, it's possible. I mean, every time we've hit a stumble, there has been a V -shaped recovery.

58:02I think a lot of managers during those periods have tended to overreact and change their portfolios and have gotten whipsawed. So we've seen that a little bit in recent periods. And so that would say at least there's some chance of that occurring again. But I think a lot of those managers have gotten sort of washed out, if you will. And I think that the conviction that they're seeing now at the individual security level probably would lead them to be less reactive this time around than they were in prior kind of V -shapes, if that's the outcome we get. Well, I guess time will tell. We'll have to see how this all plays out.

58:43Let's turn to some customary closing questions. What advice would you give someone early in their career? Cliche, but certainly do what you love and try to surround yourself with great people. I mean, I can't tell you, you know, like the AQR people as an example. I mean, they're great people, nice, you know, and, you know, when you're around people like that and smart people, no matter what your role is with that group of people, you just sort of put your head down, you know, work hard, listen to them, you know, you're going to learn an awful lot. And I think Sometimes younger people get so caught up in exactly what their responsibility is in a first job or a small difference in income or something like that, which is not to say that's not important, but certainly surrounding yourself and getting yourself with the best group of people possible.

59:32And again, it's very cliche, but I think it's true. If you're not doing something that you enjoy doing, it's very hard to have staying power to be really good at it. And so obviously it's important. What is your favorite thing to do that is a complete waste of time? Fantasy football. So I love fantasy football and really all following all sports. So I would admit to whiling away a few unnecessary minutes on Philadelphia Eagles message boards and things like that, that are not very productive time spent. So along those lines, I think I know what city we're going to, but what was your favorite sports moment, either as a participant or a fan?

1:00:11Well, I would have to say the 1983 Sixers Championship. Yeah, you've got to go way back in Philadelphia. I was eight years old, but I was just talking to my son about this as we were watching the playoffs. I mean, I remember jumping up and down on my parents' bed with just sheer joy. Then the 2008 Phillies World Series, because after so many dark years as a Philly sports fan, And actually make it over that hump felt good. And then the Eagles had some great moments in the early 2000s. And getting to the Super Bowl there and beating Atlanta in that championship game was great. What is your favorite book?

1:00:52What is my favorite book? The Complete Handbook of Pro Football. Yeah. No, I was reading a bunch of interesting stuff recently. I tend to remember what you're reading most recently. So... reading a book on just sports genes and what makes for a great athlete and kind of are you born with it? Is it the hard work predispositions some athletes have to, you know, those kind of heart disease and things like that? It was just a very interesting, kind of fascinating read. Who wrote that? Do you remember? I don't remember that. I don't remember. It wasn't John Wertheim from Sports Illustrated, was it?

1:01:30It was someone who's, it was Epstein maybe from Sports Illustrated? But yeah, very interesting book. It's on my mind. We'll dig it up and put it in the show notes that I don't have. If you could start over today, your career, money was no object, and you couldn't be an investor, what would you like to do? I would be one of these geeks who's involved in the data crunching for a sports team, probably for football, probably what those folks at the Cleveland Browns are doing now. I think that would just be great. I mean, I remember reading old Bill James books back in the early 80s, who was kind of at the forefront of all this.

1:02:10That would talk about a labor of love. That would be fun. What do you know now that you wish you knew 10 years ago? You know, I know I keep coming back to it, but just that soft side of it. I mean, I think, you know, in terms of just both managing the people within the firm, picking managers, interacting with investors, right? I think people have a tendency to make these things harder than they should be. And just picking up on those soft cues and really understanding what makes people tick and spending maybe more time on that as opposed to the nth degree of analysis, again, on position number eight, I just think is super, super important.

1:02:53Last one, you are 88 years old sitting in a rocking chair because that's what you do. and thinking about your life, what advice would you give yourself today? Boy, these are good questions. I think at the end of the day, I think treating people well and having a positive impact but being true to who you are, I mean, I think is, I think one thing about the people in our firm, I don't think we're cut out of that typical Wall Street mode and self -promotion and all those sorts of things, right? And so... I think for myself, it would probably be pretty quiet and understated, but kind of make a positive impact, you know, in terms of, you know, kind of using, you know, all the luck, you know, that I'd say, you know, I've had professionally, personally for good purpose.

1:03:45And, you know, I think certainly seeing, you know, my kids do what they want to do and kind of do it in an area that they love as well, right, instead of sort of forcing them in the rat race to keep up with the Joneses, so to speak. Great. Adam, thank you so much for taking the time. Thanks, Ted. It was fun. Thanks for listening to this episode. I hope you found a nugget or two to take away and apply in your investing and your life. If you've liked what you've heard, please rate a review on iTunes or Google Play to help others find out about the show. Have a good one and see you next time.