Year in Review 2023 (EP.358)

0:01Capital Allocators is brought to you by my friends at WCM Investment Management. To outperform the markets, you have to do something differently from others. In my 30 -something years investing in managers, there may be no one I've come across who does that as clearly and as well as WCM. I've seen it up close as an investor in their international growth strategy for the last five years. WCM is a global equity investment manager, majority owned by its employees. They believe that being based on the West Coast, away from the influence of Wall Street groupthink, provides them with the freedom to live out their investment team's core values, think different, and get better.

0:43As advocates of integrating culture research into the investment process and advancing wide moat investing with the concept of moat trajectory, WCM has delivered differentiated returns while building concentrated portfolios designed to stand out from the crowd. WCM is committed to defying the status quo by dismantling outdated practices, believing in the extraordinary capabilities of its people, and fostering optimism to inspire each individual to become the best version of themselves. To learn more about WCM, visit their website at wcminvest .com. and tune into this slot on the show to hear more about WCM all year long.

1:27This testimonial is being provided by Ted Seides and capital allocators who have been compensated a flat fee by WCM. This payment was made in connection with capital allocators testimonial and production of podcasts and does not depend on the success or level of business generated. The opinions expressed are solely those of capital allocators and may not reflect the opinions of others. Investing involves risk, including the possible loss of principle. Past performance is not indicative of future results. Please visit wcminvest .com for WCM's ADV and further information. Capital Allocators is also brought to you by Morningstar.

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2:32Hello, and welcome to our annual review episode. What follows is my annual letter to you and a countdown of the top five episodes of 2023. Here we go. What if we gathered all our podcast guests in the same room? What if we removed the typical constraints of industry gatherings? No panels, no pitching, and no speed dating. What if we just let them talk to each other, share ideas, and build relationships? That's what we did this year at the first Capital Allocators CIO Summit. Our guests gave an epic response. It was the best conference I've been to, and I've been to way too many. You better invite me back next year.

3:19Ian Charles, co -managing partner and founder of Arctos Partners. The event was remarkable and totally unique. Stefan Strain, Chief Investment Officer at the Cleveland Clinic. Greetings, stakeholders. This year was the most exciting yet for capital allocators. We launched summits, created more content than ever, and started a new investment advisory boutique. I'd like to take you on a behind -the -scenes tour of our gatherings, podcasts, and investing activities. We hosted two summits and two university cohorts that brought the community together to connect and learn. Our inaugural CIO Summit in April was an overwhelming success.

4:05We invited CIOs across allocator and manager organizations to meet in small groups and discuss topics of interest. Every guest gained insights, strengthened old ties, and made new ones. We hosted a second summit in September, and that one was also great. In 2024, we'll host three summits, spring for CIOs, summer for public market leaders, and fall for private market leaders. We extend summit invitations to people we know and follow a strict, no assholes policy. But there are many outstanding managers and allocators we haven't met. So if you're interested in joining us at future summits, please apply on our website.

4:50Hank, Morgan, and I couldn't pull this off by ourselves. So we partnered with our friends Rahul Moodgal from Parvis, Jen ProSec, Katie O 'Reilly, Jackie Dorman, and the team at ProSec Partners, Ron Biscardi, Caitlin Malin, Anne Ayer, and the team at iConnections, and Matt Spielman and the team at Inflection Point Partners. We're incredibly grateful for their help in creating the Capital Allocators Summits. We hosted two gatherings for allocators not yet in leadership seats to learn new frameworks, network with each other, and ask questions of leading CIOs at Capital Allocators University. We'll host two more of these in -person one -day events next year.

5:32Allocators with 5 to 15 years of experience can join our next cohort on February 22nd in New York City. Registration is available on the website. We want to do more to help the industry connect and learn in between our gatherings. In 2024, we're partnering with an organization experienced in community building to experiment with a new idea. More to come. Podcast content keeps rocking. We produce three podcasts, Capital Allocators, Private Equity Deals, and Investment Management Operations. And I write an investing blog. 2023 was the busiest year yet for all four. Capital Allocators is the hub of our flywheel.

6:18It launched in 2017, and this year reached 94 ,000 followers, averaged 100 ,000 weekly downloads, and crossed the 18 million download mark. DealCloud named Private Equity Deals the top podcast for dealmakers this year. We released seasons two and three on familiar companies and middle market deals, respectively. Next September, I'll publish my third book, aptly named Private Equity Deals. It's a set of case studies across strategies, firms, and industries selected from the podcast. Investment Management Operations focuses on the behind -the -scenes professionals who set the stage for investment excellence.

7:01Hank came up with the idea, and when experienced COO Scott McDonald reached out earlier this year, they decided to run with it. Scott hosts our newest show, which has gained loyal listeners across the industry. My blog, What Ted's Thinking, explores investment ideas. What topped the leaderboard for engagement this year? Posts on the Yale model, NAV loans, active management of public equities, fraud, and uncertainty. I want to touch on the podcast business. A friend told me there are two types of entrepreneurs, those who find a business idea and those whose business idea finds them. I fell into the latter camp.

7:45When I first started talking with friends and publishing the conversations, I didn't think it was a viable business. It reminded me of an old Saturday Night Live skit about a bank whose sole mission was to give exact change. When asked how it made money, an employee says, the answer is simple, volume. Charging nothing for a product and making it up in volume felt like a shaky business model. I was wrong. It turns out that advertisers, sponsored guests, and listeners are keen to engage with our valuable audience. Our first backer was Melanie Pickett from Northern Trust. She called a few years ago and asked if we accepted advertisers.

8:28I said, why, yes, we do. Since then, advertisers have leveraged our brand and shared their products on the show. 10 companies advertised this year, led by Northern Trust, Janice Henderson Investors, and 10 East. Our second revenue source is Sponsored Insights. Some investment managers pay to appear on the show and share their perspectives and opportunities. We screen requests for quality. Only 1 in 10 applications made the cut for the 16 Sponsored Insights on capital allocators in 2023. Sponsors consistently have given exceptional feedback. One manager told us that the podcast had the highest ROI of any marketing spend they had made in the firm's history.

9:15That's the kind of win -win we strive for. We've already filled half the capacity for Sponsored Insights in 2024. Our third and broadest revenue source is the listener community. Listeners support the business through individual and corporate premium memberships. Premium members receive our library of over 400 transcripts and a series of other benefits. Corporate premium members subscribe to company plans that provide everyone in their firm access. We'll enhance the premium transcript offering next year with both a keyword search and an AI -powered chatbot affectionately called ChatGPTed. Turning to investing.

10:03I manage my personal portfolio and advise several managers and allocators. Premium members can receive a quarterly transparency report listing my investments and advisory relationships. Rahul and I formed Capital Allocators Advisory this year to team up and provide strategic advice to managers. We invest in their funds and support them wherever needed. Our first relationship is with Gavin Baker from Atreides Management. Gavin is passionate, insightful, and driven to succeed the right way. He founded Atreides five years ago to invest in public and private technology and consumer companies. Today, the team manages $3 .5 billion.

10:47Onwards Our mission is to learn, share, and implement the process of premier investors by compounding knowledge and relationships with institutional investors. I described our goals for 2023 in last year's letter. One, make the podcast better than ever and share valuable content with the institutional community. Two, create summits and CAU experiences that leave attendees thirsting for more. And three, engage deeply in the community with ideas and investments. I'm happy to report that we did all three. So let's take a moment to celebrate. Okay, the moment's over. We've established the following objectives for capital allocators in 2024.

11:31One, create unparalleled experiences gathering investors and managers. Two, learn and share creatively through podcasts and writing. And three, build valuable tools for premium members to research our library of content. We're searching for a college senior or recent graduate to join our team. If you know someone interested in investing and financial media that could be a fit for our two -year program, please share the job description on our website. I'm grateful for our community of listeners, supporters, and partners as we evolve and grow Capital Allocators. Thank you for joining our pursuit of compounding knowledge and relationships.

12:14It's time to start our countdown of the top five episodes of 2023. In a year with an incredible roster of guests, these five rose above the rest. To add a little fun and suspense, we'll release one episode each day this week. Kicking us off at number five is Greg Lemkow, The Evolution of MSD, episode 291. I can't say I'm surprised by this one. Greg is beloved far and wide in the industry, and all kinds of people came out of the woodwork when this released. Wishing you a very happy and healthy holiday and new year. See you on the other side. Thanks for listening to the show. If you like what you heard, hop on our website at CapitalAllocators .com, where you can access past shows, join our mailing list, and sign up for premium content.

13:07Have a good one, and see you next time. You