How One Family Office Principal Built and Sold Over $500M Across Real Estate, Pharma, and Insurance

0:02Let's give everyone a little round of applause for our panel number one. all right morning everyone we'll all be moderating uh today our first panel of the day so um i think the exciting part is we're going to start off with one of those panels where you're going to learn a little bit more about investment allocation opportunities and that makes your networking more targeted for the rest of the day and a little bit easier to navigate um so we'll just do a quick sort of round intros with a very specific sort of name firm and your investment thesis and what you're allocating to at this point in time is a priority and Jody we'll start with you.

0:38Okay I actually graduated with an MBA from this school. I'm not sure it really helped me very much but I did I think I learned a couple of things two years. So I formed my family office in 2021. I come from three different industries. One was real estate. I was a partner in a REIT, which owned 10 ,000 apartments, and we sold to Sam Zell. And I think it was probably one of the clients that Tom was just talking about that didn't leave a lot of money for his kids, based in Chicago. And I continued in real estate. I still do real estate today. We sold to him in 2002 and in 1999 I bought a pharmaceutical company.

1:30We made tablets and capsules and I paid$18 million for the company and sold out in 2021 for$358 million. So I became a big shot then, thought I knew a lot. and started the family office. And in 12, I bought my first insurance company. I thought I would copy Warren Buffett. And I bought one for$150 million, which was a lot of money for me. And I bought a second one. That was a 50-state property and casualty homeowners company. I bought it cheap. And in 14, I bought a garbage insurance company. So we insured garbage dumps and landfills and bought that one for$100 million and sold them both in 2017 and made a lot of money on that company.

2:26So I really have been a cash flow buyer. I look for cash flowing niche companies. It's been very difficult the last several years to buy anything with a good return. I sold my last company off for$350 million with cash flow, and I'm not going to be a buyer at what I sold them for. And it was sold to private equity. They probably took the investment 50 % and debt 50 % in equity. Rates have gone up significantly. When interest rates were zero, they borrowed half. and that's come up a lot and they're not willing to unload at a loss. That company is probably worth 25 % less than what I sold it for.

3:19So right now, what I'm trying to focus on, it's just been impossible to buy the kind of companies that I bought and sold. So I'm looking at secondary, finding secondary interest in limited partnerships. It's a big opportunity. The big guys, the Blackstones, the Neuberger Bermans of the world are capitalizing on that. I can't compete with those guys. So I'm looking at smaller partnerships. And people want to clean out their estates. And they're really looking to, they'll take a discount. So I'm in the discount business. I'm not in the premium. I'm not paying premiums for any companies unless it's really special.

4:07So I'm looking at buying out secondary interest. I'm looking at continuation funds. What do I mean by a continuation fund? A lot of private equity promised their investors they'd be out in five to seven years. So when I sold my last pharmaceutical company, it's now going on five years. It'll be five years in December. So investors want to get out. The sponsors don't want to sell the companies. And I'm here with my checkbook. So if you know of anybody, please let me know. And the last thing I'm really focusing on, again, I've been hitting my head against the wall for the last three or four years.

4:54I made my money when I was a poor kid, went to Pace University, and now I have money. So I thought I'd become really, really, really rich. And like I said, it's been difficult. So I think one of the problems I've had is that private credit has gone in and they're lending people money at 15%. And I'm not sure how much due diligence. It's impossible to do all the due diligence on the companies that they've owned. So I think it's probably much better now to look at the public markets than the private markets. Because if you look at a Blue Owl, which has been a significant investor in private credit, their stock has gone down 50%.

5:45And I'd rather own their stock at$10 when it was$20 at a discount than try to pay a premium to buy the same private companies that they're lending to. So those are really the opportunities that I'm seeing right now. And, you know, I've looked at a couple of sports situations. I've tried to buy NFL football clubs. I'm looking at some racing. if anybody wants to join my 430 meeting today, as long as they're willing to write a$100 million check, come and join the meeting. But that's what I have been looking at lately. Thank you. Thanks, Judy. So make money on the buy. That's the key takeaway. Great.

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