The $9B Portfolio That Fits on One Page

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0:58Welcome to Swimming with Alligators, the VC podcast from the LP perspective. With your hosts, Alexa Benz and Ernest Sepp. You ready? Let's dive in. Today's episode, we have Frank Mihail, Chief Investment Officer at North Dakota Trust Lands. He's the CIO overseeing roughly$9 billion across North Dakota's sovereign wealth and permanent funds. So you can think of this as a model closer to the Texas permanent and Alaska permanent funds than a traditional pension We're so eager to have you. Thank you Frank for being here

1:32Frank Mihail: Yeah, thanks for having me Alexa, Ernest. Pleasure to be here We have discussed how you ended up in North Dakota We've got a shared alma mater at UCLA And what it took to convince your family they wanted to become North Dakotans can you bring us on this journey of how you have ended up where you are? Yeah, well, I grew up in Los Angeles and started my career in the oil and gas industry as an engineer. At that time, like 2006, pre-GFC, everybody around me was making money in real estate in Los Angeles. And so I started moonlighting as a real estate agent. And my timing was impeccable. By the time I went full time into real estate sales, it was 2008.

2:33Frank Mihail: And so, you know, I started learning about like distressed real estate investing in like apartment buildings. And And that was sort of my first taste into investing. And I wanted to learn more about investing. So I pivoted from real estate to wealth management when I was 30 years old. And I was hungry to learn. So I got the CFA. I enrolled at the UCLA MBA program. And I used that to pivot into institutional investing. and left Southern California for the first time in my late 30s to take a job with New Mexico para the public pension. I was covering the hedge fund portfolio over there and yeah I moved up pretty quick and got responsibility over the hedge fund book to build a portable alpha program and I think that set that experience set me up to then land the opportunity in North Dakota.

3:37Frank Mihail: And my wife is a teacher, so she can get a job anywhere in the nation in like two weeks. So yeah, we moved up to North Dakota in early 2023. And for this opportunity in North Dakota, what really drew you to it? I know you're eager to learn and you've shown your aspirations throughout your career of like, oh, there's something new that seems interesting and you jump right into it. What was it about this opportunity? Well, it was an opportunity to move from just focusing on hedge funds to having decision making over the entire portfolio. And I love the idea of covering all asset classes as a generalist because it never gets boring.

4:25Frank Mihail: And when I joined in 2023, a lot of the mature endowments and pensions were suffering from the denominator effect. But we have a really young private markets program and a very liquid portfolio. So I essentially inherited a blank canvas, which is like the envy of all allocators. And a willingness for change. I feel like the combination of the two, where did that come from? So where was the impetus to start an ALT strategy? Well, the history of the plan is it was very fixed income oriented. And I think over time, you know, the board is structured as a five person board with elected officials that are generally termed out right for your terms, possible reelection.

5:19Frank Mihail: But there's turnover. So there's been, you know, new board members over, you know, the last decade that might be younger and more risk, you know, seeking or have a willingness to accept more risk in the portfolio. And so I think the timing was sort of just aligned there. I know New Mexico has a more established alternatives program. Was there anything, have you pulled any learnings from there, having been on the outside, managing a different pot of capital? Is there, you know, those are your fellow allocators and your community. Is there anything that you sort of see looking back building your new program?

6:10Frank Mihail: Yeah, like you mentioned, the New Mexico program was more mature and built out. They had been investing in private equity for 20 years. And so the team was bigger. We have three people here all in, including operations. They have, I think, 10 with dedicated operations staff. And so, you know, they're able to manage like a 200 line item book. And, you know, we have 40 line items and we try to keep it pretty tight. And so, yeah, I think, you know, one of the things I noticed when I joined over there was like there's a lot of like with the closed end fund investing, especially through the GFC. There was a lot of line items that had just been sitting on the books for like well over a decade, you know, like 15 plus years.

7:06Frank Mihail: And they might have like an asset that was distressed because of the GFC, but it was just still sitting on the books like with a million dollars. And I think cleaning up those old line items is helpful, which is why the secondary markets are around for us. So we've had a lot of people come on and talk about having a blank slate. And, you know, from some of the allocators who have been on, they've expressed some kind of hesitation to venture capital specifically, because it's one that it's an asset class that typically has an inverse relationship with dollars to time spent in learning. how was your approach when having a blank slate specifically around like venture capital which is a little bit it's different than you know covering hedge funds when i joined yeah we didn't have any venture in the book and it was an area that i wanted to start adding to the portfolio um and so i was trying to figure out like what yeah what's the best way to go about it um it is one of the areas where you pretty much have to do closed-end fund investing.

8:24Frank Mihail: And so my focus on trying to reduce line item sprawl and add as few line items as possible, we thought about, well, how do we write a large check, like a$50 million check, to a manager, but get access to a suite of or diversified portfolio. And so I think the larger platforms made more sense for us there. And so that's sort of where we started. It feels like the line item is a helpful shorthand for us as VCs to understand your perspective of, you know, what you're prioritizing and why, what does that represent for you? Like when you describe trying to stay below 40 or 50 line items? Our entire portfolio fits on one page and like I can recite it like the back of my hand.

9:32Frank Mihail: And I guess I don't know if all CIOs have that convenience, right? Like if you've got a thousand line items on the book, and you're like a$200 billion pension, it becomes hard to, I think, hard to even like managing your head, right? And so I think there is, I've met a lot of allocators who have, like they're in that place now, and now they want to come back and say, hey, let's reduce the number of relationships and have fewer relationships, higher conviction, write bigger checks. And so I guess we were lucky in that we didn't have to go down that path to then come back. We're sort of already a pretty concentrated book.

10:25Frank Mihail: And I think we want to keep it that way. I think another thing that's really interesting when we were speaking in the prep call is the structure of just North Dakota trust lands. And I learned that it's funded by oil royalties and pays out 5 % to public schools without touching principal. That's just fascinating. I was curious that, and you guys have grown about, I think about 6 billion and 9 billion in three years and cover about a quarter. No big deal, Frank. Our most successful allocator on the show. And you cover about a quarter of the state's education cost. This is an amazing case study.

11:16I'm curious with those numbers in relationship with actually being able to benefit the public. How does that influence your risk tolerance?

11:27Frank Mihail: We're pretty blessed because we're one of the healthiest plans in the nation. The way it's set up is we receive the revenue from the land owned across the state. That's both renting to farmers and oil companies. As you can imagine, the oil royalties and taxes are the bulk of the income. and that that is an it's a natural hedge for the portfolio and so and i'll use like 20 the year 2022 as an example in 2022 um when stocks were down 20 percent and bonds were down 10 percent Our portfolio was down 8%. We use private markets and long-short strategies to try to mitigate that downside. But our NAV actually only went down 2.5 % because of the boon we got from the oil royalties coming in.

12:37Frank Mihail: And in a year like 2022, when it's driven by inflation, that was actually our best year on the revenue side of the state-owned lands. And so because we are an endowment and not a pension, we don't have any liabilities. We do have the ability to take risk. And so even though today I think our asset allocation looks pretty comparable to more pensions, and so one of my goals is to start incrementally taking a little bit more risk. So last summer, we did a strategic asset allocation review and moved a little bit from credit to equity. Are there any other intricacies or unique elements that you would want managers to know when, you know, approaching you based on this process that you go through?

13:41Like, are there things that are helpful for them to understand kind of how decisions are made?

13:47Frank Mihail: I think it's not too different from most plans. Our board, we meet like 10 times a year, which is just a little less than monthly. And then our process, you know, usually, you know, we like to have about like three months to diligence a manager. And then it usually takes us like a month to get through legal after board approval. and yeah I actually don't have investment discretion like some other plans and so that means I do have to bring every recommendation to our board for approval and because of the cadence of meeting frequently like every month it hasn't created any issues for me in terms of like meeting fund closing deadlines or anything like that.

14:42Now, that seems remarkably fast, actually. Yeah. There are some public record constraints, I believe. What should managers know about a public plan in that case?

14:58Frank Mihail: Yeah, yes, because we are a public plan, we are subject to FOIA, public records requests. And so, you know, most of our managers who work with us are aware of that. And, you know, there are state laws that protect managers who are sensitive, like to certain information, confidentiality about their underlying deals. We do have, you know, the ability to protect that information for them. So one thing I was enamored by, it was a lot of things I was enamored by when we first spoke, but you run a$9 billion plan with a three-person team. and so what tell us tell us about chill yeah tell us tell us how we've heard the 40 line items on one page that's one but is the efficiency you just have some stellar I know you have some stellar people is it AI too what's going on you know what yeah I got I got a stellar team I wish we were like more on the front lines of AI than we are, but we're getting up to speed.

16:17Frank Mihail: One of the first things I did when I joined, and just to simplify my life, was for the public stocks and bonds, they can be set up where you're in a commingled fund externally or a lot of allocators have internal SMAs where they're custodied internally at their custody bank. There's pros and cons to both. When they're custodied internally, you get the liquidity as soon as you sell. It's already in your hands, in your possession. And so you get, I guess, a day quicker liquidity. but from an operations standpoint and like accounting standpoint like closing the books every month and and doing your annual audit you if you have a bond portfolio you literally have to reconcile like a thousand bonds and um i just like you know what i i can't spend my time doing that like i i need to outsource that and so um we had a few few of those internally custody at SMAs, and I converted those to external commingled funds.

17:36Frank Mihail: And it makes my life a lot easier having to spend less time thinking about operations and accounting, and that way I can focus more on investing. I believe you also lean on some consultants and fund-to-funds to extend reach. How did you decide not only when to add layers of fees versus go direct, but like who to do that for you? To keep a concentrated book, we have to write a large check, right? And so right, like our minimum check size has grown as our portfolio. I mean, a lot has grown. So yeah, that makes sense directionally. I think, you know, like 50 million right now is sort of our minimum check size.

18:24And so where it made sense to hire a fund

18:28Frank Mihail: to funds manager, as an example, is we hired a seat, like a venture seed fund to funds manager, where we could write them a$50 million check, and then they could go out and write$5 million checks on our behalf to like smaller seed funds. And so that was one area where it made sense. Now we're going to take a quick break to speak with our sponsor. On the show today, we have our stellar partner and industry expert, Shane Gowdy, leader of Sidley's Venture Funds Practice and now host of the podcast Talk VC. We highly recommend you listen. Your practice is concentrated on the fund formation and representation of venture capital and private equity funds, focusing on the fundraising side for a bit.

19:16has anything changed about how you're forming funds today versus a couple years ago? Yeah, that's a great question. Yes and no. I think the main element, you know, when I look at a brand new fund formation, I think is how can I be impactful, not just from the blocking and tackling of the, you know, the work, the drafting of the fund agreement and looking at a PPM or a deck and, you know, doing all that great stuff. But it's just the value add impact of it. And so I think it's just being purpose driven about being proactive with the advice and not, you know, I don't know if that's just, you know, more gray hairs on my face and on my head, or it's just, you know, the more practical approach that I think a lot of VCs want and need, in particular they're emerging managers.

20:12A, they're cost sensitive, of course. And so I think what we really try to tailor our ability to do is meet that from an expectation and pricing standpoint, but just how we move in the project itself. It's trying to answer questions like, do we need a PPM? Nope, you don't need a PPM. And here's what it would cost you in hours for you and legal fees. And so I think it's really just trying to be incredibly helpful for, and again, proactive to help VCs understand what the choices they make during the fundraising. And that's not only just kind of what do the terms of the fund look like and what does the structure of the fund look like and kind of where are the offices and, you know, what is the fundraising strategy?

20:58Are you of an anchor investor and are they going to proselyte? So it's being just super involved in more of the business elements and the decision and the strategy. Now, that's always been something that I think has been present in every fund formation. But I would say that I have found that more water from the well is drawn by emerging managers on those just practical McKinsey-like business consulting type of relationship and helping them steer the boat a lot with respect to that. Now, much larger managers, they've just been around the block longer, and they usually have their own IR teams and their own ideas about how things will need to be constructed.

21:39And we want to be receptive and open. But it's also still having a very active voice in those rooms as well. And it's just, you know, it's a different game we play a lot in those kinds of funds because, you know, now we're dealing with, you know, government sovereigns and pension plans and university endowments and, you know, foundations. and it's being more prescient about how do they move through the world and the angulator of their atmosphere and how it hits you as opposed to more just venture 101, just kind of hand-holding, making sure that we go through the world because you're just not going to get the same kind of investor impact on the documents and everything else for maybe an emerging manager who's primarily high net worth and family office as opposed to, you know, a much, you know, a fundraising$500 million or a billion or$2 billion or whatever it looks like.

22:32Your job's just different in that context. And, you know, it's being mindful and being ready to kind of, but also transmigrate lessons learned in both avenues to, hey, look, you know, maybe have a little bit more of an emerging manager approach on some of this here. The way in which you're talking to this LP really is, you know, even though you may have leverage, they're going to remember that the next fund. And so I think it's just, you know, again, being incredibly prescient about being a business partner for me is what it really is, you know, what has changed in the last three, four or five years.

23:11And I've seen VCs receptivity to it, because they're being educated themselves about, like, really good lawyers who do this work all the time, like there, you could, again, draw so much water more from the well, from just then just, hey, how do I put that in the partnership agreement? And what does that subscription agreement look like? And help me draft this out? You know, no, let's look, what do you think? What's your perspective? And that's how I choose what funds I want to work with, is because they will want to have that dialogue, and they will take that feedback, and they will at least, have a great amount of respect and self-reflection and understand where their own needs are.

23:54And look, it's nice one-stop shopping. And we also are very adamant about introducing our emerging manager and other clients to LPs that we know are investing in the industry and that we've seen across. And so some of that is also business development help for them. And so it's just become this holistic thing. And again, these elements have always been there, but I think it's more now than ever before being proactive about that approach and not being as reactive. Yeah. And what would you tell a fund one manager who might think they can't afford Sidley? Yeah, I would say don't ever think that because we, and because there are a ton of managers just say they're going to do an angel list or, you know, sidecar or so, you know, whatever, whatever they're going to do because they just, you know, they think it's just prohibitive cost.

24:52The right legal partner for you will make the right economic accommodations. So, but they will also tell you like if they think you're badass crazy for your expectations that, you know, you want somebody who's going to tell you, I think you're badass crazy. but I think that don't be afraid to ask for it and don't sell yourself short because having the right counsel in your deals says a lot about you and your relative level of sophistication like if Sidley's taking you on as a client that means something to a lot of LPs and you know family office or whether it's high net worth or frankly institutions the more and more you get into the institutional waters, you're just going to need a firm like us because, A, we know what the playbook looks like.

25:38And just from a cost efficiency standpoint, you know, there are many parts of Sidley which they have clients that are cost agnostic. Venture ain't one of those categories. And so, you know, my business is also about being very price accommodating. It's, you know, having the collection of any invoices that's going to happen only on a first closing and, And, you know, probably giving some pricing accommodations as we ramp up through some closings. And so it's doing things that are very venturi. And because the way we look at these relationships is, like, we want them to be very big, juicy pieces of fruit for the entirety of our firm.

26:16We want not only to do the fund formation work, but we want to do your deal work. And if you've got a credit line that you need established, we can help you with that. And if you've got employment stuff going on, we can help you with that or litigation. and God forbid you get in some tax trouble or litigators or you need some regulatory, right? So we're just very mindful about the holistic nature of the relationships we have with our clients and probably pricing accordingly on this very first intersection point that we're going to have with them just so we can become a trusted partner for them.

26:47And it's also being open to honest discussion about, well, you guys could charge way too much for that side letter you negotiated and knock it off some amount of it, right? Because this is a partnership that we have with our clients. And if you don't view it that way, then you need to not be kind of be responsible for any billing relationship with any client. So that for me is kind of some of the kit and caboodle of the secrets of success in this client relationship management stuff. Thank you for joining us on the show, Shane. If you're a GP or LP looking for expert guidance on fund formation and venture capital legal matters, You can visit Sidley's website, S-I-D-L-E-Y.com, and now back to our LP interview.

27:33Is there any, for other allocators who are leading plans, maybe they're new to venture as well, is there any advice you have for them on how to diligence which fund to fund or consultant to use?

27:51Frank Mihail: The consultant world's pretty small space. There's probably a dozen of them, and there's a lot of them that are all really good. I think maybe one area where we focused on in our selection was there are a lot of consultants nowadays that sell their own proprietary products, and so that could create a bit of a conflict. but I mean I understand why they do it like you know it drives most of the revenue for them and then on like diligencing fund managers you know we we sort of just take the approach of we like to see a track record so I think doing emerging managers is a little tougher for us unless where we've done new products or strategies is where maybe it's a firm we've worked with and have built a relationship or know their track record and they're launching a new product is one area.

29:07Frank Mihail: But yeah, we need some kind of track record to diligence quantitatively. And then we'd like to see a stable team and skin in the game, GP commit. As a past wealth manager, Frank, I see these parallels where people say sort of the more you have, the more complexity that invites. and you are a very fascinating example of this, you know, sort of comparing your average dentist's portfolio to this portfolio that you've inherited where you are in the process of adding these alts and I think that's sort of happening to high net worths in droves right now, but they are also sort of thinking strategically about how to do this.

29:58Given that you have both worked as a wealth manager and now are managing$9 billion. What can folks take for their own personal wealth management from this strategy? What is the point of alternatives? Does this belong in the dentist's portfolio or is there a reason you're adding it and they shouldn't?

30:22Frank Mihail: Yeah, that's a great question. I think one of the, well, first of all, one of the biggest differences between like high net worth investing and institutional investing is in high net worth investing, I think your primary focus is tax awareness. Whereas we're tax exempt, so we don't think about that. we're more like benchmark awareness. When I was in private wealth, nobody really cared about benchmarks. They just cared about mitigating taxes, right? And so that's, I think, the first step to understand that different lens. But then also time horizon is really important because when you're talking about personal net worth or family money, there is always going to be liquidity events, whether that's birth of a child, death of a family member, marriage, and you're always going to need liquidity.

31:34Frank Mihail: And so there are a lot of these like private funds moving into raising retail money. And even if you're like ultra high net worth, I would say locking up capital for a decade, it should probably be a very small part of your portfolio. You spoke about when you first jumped into investing overall, or sorry, you jumped into the real estate space and things kind of went down. Is there anything in similarities and just now that you're a real macroeconomic person that you're seeing the similarities from that GFC to now? and how that's impacting your decisions on which asset classes to invest in? You know what?

32:32Frank Mihail: Obviously, hindsight's 20-20 and none of us have the crystal ball. But I think maybe the one way I think about it is there's this saying, bull markets climb the wall of worry. so as long as there's like healthy skepticism um we could probably like just keep marching higher um and um it's really when that skept like because you you still see like there's thought pieces and articles that come out every day that are like is this an ai bubble as long as the articles are coming out i think we're safe like when those articles stop coming out that's when you should start worrying. No one's not coming.

33:24Interesting.

33:25Frank Mihail: Yeah. So, but yeah, and for us, it's just so impossible to market time. So we just, we have to just stay invested and figure out ways to, we do use a lot of long short strategies. So we could at least like pick up some P &L on the short side during during bear markets and you probably are paying a lot of attention to the energy markets as well is there anything i don't i don't think we've had anybody who's quite so close to um the the energy world as you on the show anything sort of that you see from your seat that you know other folks don't recognize you know what like uh i don't like have my fingers on the pulse of like the oil and gas market um day to day but uh um i you know what from we have been moving more shifting our real assets book like from real estate to infrastructure so we're you know we're building out our infrastructure portfolio which includes things like um energy transportation data centers and um and so you know what i think with the continued build out of data centers, there is going to be just a huge demand for energy going forward.

34:48Frank Mihail: And so, you know, and those types of trends are secular, like they're not something that like, you know, like when you're investing in public stocks, small caps could be in favor this month and out of favor next month. These kinds of trends are like a decade long. So if you think like, oh, you know, we're late to the game, like I'm pretty sure you're not. How do you tell the difference, Frank, between what's a way to diagnose if you're in a 10-year investment cycle versus a psycho media-driven investment cycle? What are the distinctions for you? Well, I guess what I was referring to is in real assets, even if you think about real estate, the Amazon effect of industrial real estate dominating retail real estate, that has gone on for a decade and it's still happening.

35:54Frank Mihail: And so that's sort of like a secular trend that's not going away. And I think this data center build out with energy demand is going to be very similar. Yeah, our use of chat GPT and cloud is not going anywhere. Interestingly, cool fact, half of token usage is consumer. So despite Anthropic being sort of heralded as like the very clever player to go enterprise first, consumers are using just as many queries. wow yeah that is interesting um it'd be interesting to see like where the like geography is coming from like if like if half of that is coming out of silicon valley yeah we we all have our personal accounts and our work accounts i guess it's it's it's probably yeah we're probably doing work from our computers on our personal computers and then copying and pasting I know we don't have the crystal balls, but where do you see public plans going?

37:08Because not all are moving in the same direction. Where do you see that happening? What are going to be some of the results and outcomes for the different public plans? Because a lot of states have different situations going on.

37:22Frank Mihail: Yeah. Yeah. You know, private markets has been around a while, at least like private equity and real estate. Public plans move slow. So I know there's a lot of public plans that still haven't even started a private credit book or an infrastructure book. because we all think about things in the strategic asset allocation buckets.

37:53Frank Mihail: If you haven't approved a private credit bucket, then you're kind of just like, well, where do we put this? So I talked to a lot of other allocators who they have like an opportunistic bucket and they kind of just like throw hedge funds and private credit in that same bucket. So I think maybe going forward, some plans will start to sort of set up those dedicated allocation buckets and start leaning into private credit and infrastructure. And, you know, there are some plans that don't do any private still. They take the 60-40 liquid approach, and that's fine too. I think a lot of those plans are sort of similar like us where they're like really lean staff, and that's why they stick to the liquid 60-40 approach.

38:52Frank Mihail: I've been trying to, I guess, challenge that and say, like, how do I move into private markets, but still, yeah, keep it really simple. I have many follow-ups to that because it starts to unpack for those who have never approached or pitched pension funds that this unique animal, like most emerging managers who are listening to this show, they are familiar with or, you know, maybe institutional investors who are not tax and not, not, not sorry, tax neutral. Except. Except. Thank you very much. The history is very fascinating. Would you mind giving like, is there any other examples sort of of the historical role of alternatives that you can give us?

39:56Because I think it just helps give more context as these managers are sort of going upstream, speaking to bigger institutions.

40:03Frank Mihail: You know, a lot of pensions historically, like they weren't really, it was like one accountant that was managing the pension fund and it was all like bonds. That was how almost all these pensions started back in the glory days of when interest rates were like 20 % in the late 70s, early 80s. But yeah, as I mentioned, they had to start taking more risk to hit their hurdle rate. So they started building out these investment offices and pursuing equities and pursuing alts. And so, yeah, the industry has evolved where a lot of plans are now. Alts have become a main part of the portfolio.

41:06Frank Mihail: And I guess the other part of your question was around, like, how the GPs should think about it when they're approaching them. yeah if if you realize that you are part of a potentially very new uh like this is sort of something that everybody's just getting rolling on i'm curious if you even can share like which are some of the pensions that are just dipping a toe versus are are more like well have a long standing history in venture i i think actually more the university endowments have been in venture the longest, right? Like the, you know, with Dave, Dave Swenson and the Yale model kind of kicking it off in the eighties.

41:50Frank Mihail: And, and I think that's, they kind of popularized it. Sure. Yeah. But I think a lot of, a lot of pensions have adopted it as well. And, and maybe, you know, it's more about like the the amount of allocation like i like i know some endowments they're like 50 private equity in venture capital whereas most pensions they kind of i would say they're more like 20 20 private uh the way we think about it is we call when we say private equity um venture capital lives under that bucket. And so it's like buyout and venture. And I think a lot of allocators maybe think about it as like a two thirds, one third split.

42:44Frank Mihail: I guess it could be different from shop to shop. But so yeah, if you've got, you know, so maybe like most pensions are probably only like five, five, 5 % venture capital. Frank, my last question is around, and you can go anywhere. We've had a few CIOs who remind us, venture capitalists, that there are other asset classes out there. I can't believe it, but apparently there are. I'm curious what strategies do you wish you saw more of it doesn't have to be inventor it can be in any like which strategies as far as fund managers do you wish you saw more of that you think some real opportunity is being missed what I'm seeing a lot of right now in terms of like you know I I do get a lot of inbounds I would say right like right now I feel like 75 percent of the inbounds I get are private credit.

43:45Frank Mihail: Um, yeah. And we're at a point in our private credit book where we're overweight and trimming. And so, uh, you know, I, um, um, you know, I'm basically not even thinking about private credit. And so, um, um, what I wish I saw more of i i feel like i um i see plenty of everything um and there's not um yeah i guess there are like we don't do a lot of like niche esoteric strategies but like for example like within within private credit there's um um that sort of bank risk sharing um and there's a lot of like there's some strategies out there that are dedicated to that and um but we haven't done anything direct like that we're uh we're just sort of taking the diversified approach to asset-backed lending um i guess um maybe like sports is sports private equity is um sort of becoming popularized now and um you know i'm curious to see how that evolves where some of the leagues are very exclusive with who they invite in to allow as investors.

45:14Frank Mihail: And I wonder, everyone I talk to says these sports teams, the valuations are too high. It doesn't make sense. But then you think about, well, the TAM is barely tapped where now leagues are talking about like marketing globally, like beyond the US. But then also like what happens if, and I don't know if this will ever happen, but like what happens if the leagues do like lower the gate and say, hey, all private equity is welcome to invest. I don't know if that'll ever happen, but like imagine the flood of capital that would go into sports. I don't know if that'll ever happen, but that could be a catalyst for driving values higher.

46:04You have these sovereign wealth funds and these public equity groups that are limited to, what, 10 % or 20%, depending on the league, of single-team ownership. That could easily be the equivalent of a meme stock where everybody would be very excited to own Lakers or Dodgers.

46:25Frank Mihail: Yeah, because if you think there's only like 36 teams or whatever in any major league. It's kind of like having an NFT collection where there's only 36 NFTs. There's a lot of demand. No, the scarcity argument. Talk about an industry that didn't have any skeptics for a while. The scarcity thing is real. I think we, I do quite a bit of sports investing with Connect Ventures and the idea that content is going to be very easy to generate because of AI. So the things that are actually like live, scarce, unique community moments are, there's a lot of reasons why sports has a really unique quality to it.

47:17When I truly feel like we're going to be inundated, like otherwise the amount of Basically, entertainment options is going to be abound and personalized, but sports is going to be one thing that we all actually come together, and there's still a Super Bowl. We all still get together to watch that live.

47:42Frank Mihail: Yeah. Yeah. Or Taylor Swift concerts. Yes. Exactly. Frank scored to add a 41st line item specifically for Tay-Tay. If you have an opportunity to invest in Taylor Swift, Frank would like an email.

48:04I'll hunt that down for you, Frank.

48:10It's been such a pleasure. What a cool story to North Dakota, Frank, And to go from six to nine billion in the past three years. Thanks for sharing with us how you've been doing it. We really appreciate it.

48:26Frank Mihail: Yeah. Thanks, Alexa. Thanks, Ernest. Thanks, Frank. Legendary. See you later, Allocator. After Portfolio Tile, investing with a smile. Mr. Monopoly here. Miss me? Monopoly is back at McDonald's with millions of prizes. A 2027 cheap charity. A Carnival Cruise vacation. Gift cards from DoorDash and Best Buy. He'll then play in the McDonald's app. Get your bag. No purchase necessary. 50 U.S. and D.C. age 18 plus. See play at mcd.com for rules and play at mcd.com slash AMOE for info and playing without purchase by mail by November 2nd. Chance card game ends November 8th. Game ends November 22nd, 2026.

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