143. Stacking Up: What does it take for emerging hedge fund managers to scale?

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0:30The Long-Short team: Well, welcome to the Long Short, AMA's podcast examining the people, trends and forces shaping the alternative industry. I'm Tom Keogh and as ever, I'm joined by my host, Drew Nicol. It's a special podcast that we have today and we're delighted to introduce a guest in a few moments. But before that, Drew, we're returning to a part of the hedge fund industry that AMA has been researching for more than a decade now. That's emerging hedge fund firms. Specifically for today's conversation, these would be managers running less than US$1 billion assets under management. It feels like a particularly interesting time to take stock.

1:08The Long-Short team: The hedge fund industry has enjoyed a strong period of performance, including through the first half of this year, while its managers have had no shortage of market and geopolitical events to navigate. Absolutely.

1:21Lawrence Obertelli: And I'm really hoping that today's episode will be a good continuation of our recent exploration of the health of the hedge fund industry so far this year. But there is a particular trend we want to focus on, and that is the spin outs and the launches, which is arguably a better proxy for the health of the hedge fund industry than just looking at the big multi managers. And it's important to look at these firms because once you have launched, there are many challenges even once you're up and running. There's the raising of the first institutional capital, building a team, investing in operations, managing costs, and ultimately turning an investment proposition into a sustainable asset management business.

2:04Lawrence Obertelli: So it raises the fiendishly simple question, what does it actually take to build a successful emerging manager today?

2:12The Long-Short team: And that's where our latest research with Marix comes in. Our new study is called Stacking Up. The research surveyed 180 hedge fund managers running up to a billion in assets under management alongside 50 or so investors that allocate to the sector. And there are some encouraging signals. Investors appear increasingly willing to look at managers earlier in their development at lower levels of AUM and with shorter track records.

2:41Lawrence Obertelli: but but but there is a very large asterisk to these findings because earlier does not necessarily mean easier some investors might be more flexible when it comes to the minimum AUM or the length of track record but they are still setting a very high bar when it comes to things like the investment proposition operations and the quality of the business behind it

3:05The Long-Short team: and rather than simply walking through the survey results we're going to use stacking up as the starting point for a wider conversation around the sub$1 billion hedge fund universe. How healthy is that market? Where are firms being built? Where is capital coming from? What do allocators expect? And what separates the firms at successfully scale from those that don't? And joining us is someone with a particularly useful vantage point across that market. We are delighted to welcome back Lawrence Obertelli, head of AMA, prime service sales at Marex. Lawrence, great to have you back in a long short hi guys thanks great to be here so lawrence when you look specifically at hedge fund firms managing less than a billion in aum how healthy do you see that

3:49Lawrence Obertelli: part of the industry today yeah i mean if i look across our client base both the existing clients that have launched but also the pipeline of clients coming through and new launches and so on look i mean it's it's a it's a long list so that's obviously uh that's quite encouraging Now, there's an obvious divergence. There's a widespread across that list, as you'd expect. But there's some genuine, really good stories in there, right? There's some managers that are doing a great job in scaling up. There's genuine tickets being written across the board in cross-asset classes and strategy. So I'm encouraged on the whole in this sort of sure but steady growth.

4:25Lawrence Obertelli: The thing I'd say as well is when I think about now versus maybe five or ten years ago, the very encouraging thing is i'm seeing less let's say a proportionate less number of clients getting stuck for a long time with low AUM that might have been more prevalent more often maybe like i say five years ago but nowadays i think that's happening less and less so that's that's

4:48The Long-Short team: very encouraging are you seeing a healthy pipeline of launches then throughout this year yeah i mean

4:52Lawrence Obertelli: i think this year particularly i mean look i think it's true and everyone knows that sort of two or three years prior have been tough. It certainly feels like this year there's been a bit of catch up. So no, it's looking particularly healthy and there's quite a long list of pipeline right now. So it's good. And just to crack open that term of emerging managers, which we bracket as you say, Tom, be running up to a billion. There's obviously huge divergence of stories and challenges in the firms as they scale up to that threshold. So it might be useful just right at the beginning to ask you to briefly explain to listeners what those challenges are if you're a manager at 50 million 500 million 750 all the way up i'm sure that that's the nature of the challenges you face changes as you grow absolutely look they're completely different challenges if you think about the most earliest of managers the most earliest startup managers it's really about survival in the first instance things in the first instance we're talking about early scaling up, early tickets.

5:57Lawrence Obertelli: And that's tough. That's challenging, right? And again, this word survival, what does that mean? It's really trying to get up to a point of not losing money, of breaking even. And if we think about larger contemporaries still within the emerging managers sphere, still within sub-billion dollar managers, it can be a very different story if you're 250 or 300 or even 500 plus. You're thinking about very large institutions breaking into those firms, that's not easy. Once you're in touch with these people, it's still not easy. It's a very long process. Three years on average is a track record that's required with these types of institutions.

6:33Lawrence Obertelli: And of course, a very long RFP process that goes with it. So I would classify these challenges as proving that you're investable in the first instance for emerging managers and the smallest of these to proving that you're scalable in the larger ones.

6:47The Long-Short team: And the research found that more than 70 % of our managers are running less than 250 million. And while at the other end, we also did have firms that reported that we're between 500 and a billion or so. At what point, Lawrence, from your vantage point, are you seeing the nature of the business beginning to change? Is there a particular AUM threshold where raising capital and hiring people and accessing investors becomes noticeably easier?

7:14Lawrence Obertelli: Yeah, look, there's things that change and then there's things that don't change. I think the thing that we saw that was very encouraging that did change a little bit in the most recent survey is that investors are engaging earlier with smaller AUMs. And that's definitely true. And we saw that and it was played out in the stats. But what doesn't change is that this number of 100 million is still that magic number. It does change the game. There's a step change in the type of investors that you can speak to. That hasn't changed. and so that's not just true in terms of raising further assets and tickets that's also true in terms of encouraging talent to the firm so yeah this this hundred million dollar figure still is the one that changes the game we have talked on this podcast and and i think it's broadly accepted in the public conversation that hedge funds have had a pretty good uh 2026 so far that is obviously a huge generalization and i think a lot of the time people are just focusing on the larger more established firms that people are more aware of.

8:14Lawrence Obertelli: When we think about the positive environment today, though, is it fair to say that those smaller firms are also benefiting from the opportunities that are coming about from that more favourable environment? I think absolutely. All of the, I mean, you mentioned in the intro, lots of geopolitical tensions, lots of volatile markets. This, you know, when I speak to the capital introduction team this has brought in many requests for hedge much more so than in the past um and of course now there's a greater focus around sharp ratio and so yes i mean there's an there's an opportunity there for smaller and new players as more and more assets are coming into the hedge fund industry looking for something more protected against these volatile markets um now clearly there's a disproportionate amount of aum that is we're then going to the larger managers there's no getting away from that.

9:04Lawrence Obertelli: And when I say larger, I mean, you know, multi-billion dollar managers. But there's always demand for hungry new talent, talent that can pivot into new strategies, new requests that are coming in from these investors. And, you know, there's evidence out there to say that smaller emerging managers outperform their established peers. And frankly, they're more open, of course, to, you know, things like fees on, breaks on fees and customization and things like this. So there's definitely opportunity for newer managers in this environment. One of the other things I really wanted to ask you, so I'm just going to jump straight in at the top to get your view on this.

9:42Lawrence Obertelli: One of the most interesting things I've observed, and I'm sure many others have this year, is a reversal of what we've seen in previous years of something of a downtrend in the number of big headline launches, but a lot of pod shops sort of hoovering up these talent and teams because the launch environment is quite tricky for various reasons. It seems that this year, at least maybe even a little bit longer, there has been more of a reversal of that, as I say, and some spin outs and a greater number of launches. And things seem to be more favorable, as I say. When we are looking at where that new generation of hedge fund managers is coming from, Do you primarily see it as those spin outs?

10:27Lawrence Obertelli: Are they organic teams launching from the ground up? Is it some combination or is there sort of a third route to market there? I think there are increasingly large numbers of pod shops and the pod shops and the multi-manager shops that are there are getting larger themselves. and so what i think is happening much more so nowadays than maybe in prior years is yes spin outs from the large shops there are of course independent spin outs and there always have been and there always will be but i think this is now becoming a little bit of a part of the journey is is to spend some time at a larger shop and this helps in all sorts of different ways i think that we can get into a little bit more in in this conversation yeah there's an interesting tension

11:10The Long-Short team: there, Lawrence, in that, you know, Drew has talked about, we're seeing more of these firms wanting to, individuals at these firms wanting to go it alone. If you're a successful PM at a large platform, you know, you're getting all of that operational burden taken off of you. You know, you're getting the backing behind you. You already have the capital. You've got the technology. You've got the infrastructure in place. Why would you want to go and do all that then and, you know, do it on your own, right? That's all gone. You got to start again?

11:41Lawrence Obertelli: Yeah. Well, I mean, I think I'd sort of repeat what I said earlier. Some things change and some things don't. I think there's that entrepreneurial spirit that never changes. There's always that there. The freedom to do as you feel best and as you see fit. And so I think that's something that just hasn't changed. Things have become more difficult. That's true. But I think there's still that entrepreneurial spirit to go out alone and have your name above the door. And one thing I've always wondered, actually, when you're thinking about these spinouts is, are there particular strategies that lend themselves more to making it easier to go it alone, as you say?

12:21Lawrence Obertelli: And is when we think about the environment today and the names we've seen take that step out from under the umbrella of an established firm, is that just because of the opportunities set that presents itself today in today's market? Or are there sort of an evergreen rule that certain strategies do lend themselves others just have a higher threshold uh i'm thinking of data costs technology and all that kind of thing yeah look i think the thing the strategies that we've seen that have done particularly well are anything that are capacity constrained in some way and the reason for that is um smaller AUMs uh typically require smaller investors.

13:02Lawrence Obertelli: Smaller investors can go earlier and are more flexible. And so that's something that's definitely been helpful. It's a little bit tougher when your strategy and your offering is far more institutional in nature. For example, long only buy and hold type strategies. This is clearly going to require institutional money and getting institutional money from day one isn't the easiest route to market. Another tough one I've seen is when there's a sort of a deal-making primary type investing, so IPOs and such. These typically do require larger AUMs, bigger tickets, having a larger presence with the big, big prime brokers and the syndication teams.

13:47Lawrence Obertelli: So that can be a little difficult. And then again, going back to what works is when there's slightly racier, more interesting, somewhat more risky and more niche strategies. And again, same answer is because smaller investors can be a little bit more tolerant of these types of racier and more niche type strategies, more flexible and can make decisions quicker and earlier.

14:13The Long-Short team: Now, Lars, you work for Marex, which is a global business, a global service offering for managers of all sizes but in particular this paper is looking at the emerging manager space so from your vantage point then can we do a quick whistle stop to around the world what two points to my question here is how healthy is the market in uk in emea and asia in north america um and also if you could maybe add to that as well in terms of the fundraising appetite in these places Sure.

14:47Lawrence Obertelli: London is and always has been very, very busy. So there's that. That's an obvious thing to say. I just think that there's a bit of a shift. We talked about it earlier. I think what's happening now in London and everywhere else throughout the world is there seems to be more of a mature, more of an established manager. When I say manager, I'm not talking about the firm, I'm talking about the individual, the CIO, established in their career. And that's the difference that I'm seeing in London particularly, but I'm sure it's true across the world. If I think about other areas in EMEA, UAE has been an interesting one for quite some time.

15:30Lawrence Obertelli: Marix has been there for a long time. We in the Prime Brokerage and Outsource Trading Team put somebody there in the Marix office a number of years ago, predominantly to cater for local spin-outs and less the very large firms that had set up shop there. And so maybe three, four years ago, there were less of those local spin-outs, but we were there for them. But I think now as that market has evolved, that's definitely increased. So that's a natural thing as the market has grown, that spillover of people spinning out has naturally evolved and happened. So that's there. Um, talking about the, uh, the cap intro and the raising environment, um, in the UAE, the thing that's always been there is the sovereign wealth funds.

16:20Lawrence Obertelli: Now everyone knows about that. The thing I think that's changed with the sovereign wealth funds is, um, I mean, clearly in the past, these were huge tickets, clearly for institutional money. What's changed is, is there are now emerging manager programs. So that's good. That's very helpful to this section of the community. But I think if you ask managers for feedback on that, most will tell you that those programs are still at the larger end of those emerging manager programs. We've noted that emerging managers are anything from, you know, 50 million, for example, all the way up to a billion. So that's been the feedback.

16:52Lawrence Obertelli: So if that continues to trend down in terms of AUM, that's interesting for these sovereign wealth programs, these emerging manager programs, that will be very helpful. the other thing that we've seen in the Middle East is less let's say non-sovereign institutions so smaller institutions family offices that are more palatable in size to the smaller emerging manager community so that's been very good that's been very helpful and so if more of those start appearing that will only continue to help the industry and so there's enough there's enough going on in the Middle East that we've actually put somebody in cap intro in place there permanently to handle all of that flow and help our managers there locally.

17:33Lawrence Obertelli: So that's very interesting. One other area still in the Middle East that I wanted to talk about was Tel Aviv. That's quite interesting. It's admittedly a much smaller market from a hedge fund perspective. It's a very large market, clearly. But from a hedge fund perspective, it's admittedly quite small, which makes all of the managers nearly emerging managers. so that's quite interesting um and it's obviously why we're there we've we've put somebody there permanently in sales um and and tickets are being raised um and if you fast forward five years or so i think that market could be many multiples of what it is today and this is

18:15The Long-Short team: in addition to you know obviously the home market here where we are in london today in the uk market but you know you you talked about it to drew and i about how vibrant the market is here US market as well and of course you've got a presence in Asia and we have at the long short talked a lot over the summer about the events that are taking place in Asia that's likely to lend itself to providing more support for the industry to compete and to grow when you think about how these jurisdictions face up to each other globally.

18:49Lawrence Obertelli: Yeah so when I talk to my colleagues yeah I mean let's start with the US. When I talk to my colleagues across the pond I mean clearly it's a much, much larger market. Do I get a sense that it's easier over there? I wouldn't use that term easier. There's clearly more AUM there up for grabs, many more investors. I would say that there is a similar spread of managers all the way from the very smallest to the very largest. And so we have a similar spread. I think that the clear difference is that there's just a much larger number of startup managers and emerging managers. But no, I wouldn't say that managers are launching with bigger AUMs in the States, but they are able to scale up.

19:37Lawrence Obertelli: And again, I don't want to use that word easier, but let's say they're able to scale up with less difficulty than perhaps across the globe. If I talk about my colleagues in Asia, the thing that they told me that I found very interesting was that because of the tech sector, semiconductors in particular, but tech across the spectrum, is that the performance has been very high, which is clearly helpful for the industry as a whole, particularly for the investors, but also for the managers. But for the very recently launched and launching managers in Asia, there's a higher bar to compete with in terms of performance.

20:15Lawrence Obertelli: So whilst there's more focus and interest in Asian markets, you're going to have to do a lot more to get that allocation.

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20:58The Long-Short team: Can we touch on some of the findings of the research? I think two findings really struck me, Lawrence. More than half of the investors we surveyed would consider a manager with less than one year of track record. And I go back over what you were saying earlier in the episode, where you were saying that most have the view that you need to have a track record of three years or so. And 70 % would consider firms below 100 million in AUM. And the average size of the smallest funded investors will consider allocating to has fallen from 150 million to just under 100 million, 94 million dollars today.

21:37The Long-Short team: What's changed? Lots.

21:41Lawrence Obertelli: so i think um i mentioned earlier that the market is changing in london but i think it's true everywhere is that uh managers and again we're talking about the individuals here are staying longer in their roles maturing um i think it's been quite well publicized by our work over the many years that we've been doing this um it's been quite well publicized and signaled to the market that there is this need to become more and more institutionalized. And so I think what's happening is that there's a more mature person setting up these management firms with their teams. And I think they all get the sense that they need to be more and more institutionalized and compete with their larger peers.

22:26Lawrence Obertelli: So this is naturally bringing more attention from investors. It's helping them consider managers earlier and smaller with less track record. Because there's a sense that there is a more institutional product that offer from the outset. That's interesting. I'm glad you raised that, actually, because I was going to ask that, because it does feel like you might be misled when you hear the headline that investors are willing to accept a lower track record or a lower AUM threshold. you might read that as investors becoming sort of riskier in some sense, when another reading might be that that's actually not the case.

23:07Lawrence Obertelli: It's the fact that hedge funds are setting themselves up in such a way from day one, as you say, that actually they are just more presentable than what you might otherwise have seen in years gone by. And maybe that's related to cost. Maybe that's related to just the appreciation of what's needed to get into those conversations. Is that sort of a fair summary of it? Absolutely. I do not see, and I don't think if you ask anyone in the industry or any of my colleagues that I speak to, I do not see anyone saying that investors are becoming riskier and having a higher tolerance for risk. No. I see startup and emerging managers and sub-billion dollar managers presenting themselves and their businesses as less risky propositions.

23:49Lawrence Obertelli: That is very clear. But there is an aspect of this conversation that's probably important to bring up as well, which is that I wouldn't quite call it a race to the bottom, but there is obviously a strategic reason to invest earlier as well. There is a part of that conversation where it might be the family offices or those investors, as you say, that are more agile, are willing to take a little bit more risk, where they see that opportunity. There naturally is some benefit to being an early doors investor to waiting. And of course, they have to make that decision. Could you sort of outline what the thought process might be for an investor to make that decision?

24:38Lawrence Obertelli: Look, the obvious and first answer should be and always is fees. fees. Clearly, there's going to be a conversation around fees, much more so with a startup and emerging manager than an established one. That's obvious. So getting beyond the obvious, what else is there? If you think about the client roster of a large and established manager, it's going to be very long and you're going to struggle as an investor for airtime, much more so than within a startup and emerging manager. So I think the whole point there is having a closer relationship with your money with your manager and expanding this relationship having some bespoke arrangements for example and your ability to ask for these arrangements is going to be far greater with somebody who's being more flexible and accommodating like an emerging manager and a startup manager that that's very clear um you know and this isn't true just of this cio by the way this is true of all aspects throughout the firm all of the c-suite so yes you might want to spend more time with the CIO, but you also might want to spend more time with the COO, with the IR person that's there or people that's there.

25:47Lawrence Obertelli: So I think the, aside from the obvious of fees, it's clearly around the relationship and getting more of what you want out of that manager. Yeah.

25:56The Long-Short team: I think it's also important to make the point that you've made in the research as well, that earlier does not mean easier, right so the bar in terms of operation due diligence and the standards that are being set by investors for managers even those smaller managers are extremely high yes i mean i think

26:20Lawrence Obertelli: yeah we've mentioned a couple of times already in this conversation but the requirement to be institutionalized has been very well publicized and signaled to the market so this isn't easy especially for a startup manager perhaps with a smaller team the thing I would say is perhaps now in the last couple of years versus 10 years ago is that it's pretty clear what needs to happen there are many many different guides and articles I mean we have a power to launch guide so do all of my competitors and peers so I think it's very clear what to do um it it doesn't mean it's easy like you say and um it also doesn't mean it's it's cheap and so the thing that um is is very clear is that it whilst it may be clearer and the roadmap is clearer and i think everyone would probably agree with this it's it's more expensive and all of this brings us to that perennial emerging manager question which is uh is it still true that the the first 100 million in capital is still the hardest they will ever raise or is that threshold moving up as the industry grows?

27:34Lawrence Obertelli: No, I think absolutely it is. And again, some things change and some things don't. If you look at the number of tickets that it's going to take to get that first 100 million, it's clearly far higher than any of the other subsequent 100 millions. And again, what hasn't changed is investors cannot be a larger percentage and each have a different percentage but let's say it's 10 or 20 percent of the fund as a max limit so of course the percent the the amount of money they can give any one manager when they're small is going to be also small and so these tickets are going to be much smaller managers are scrapping around and of course um that that is all a lot harder work um in subsequent hundred millions and if you're fortunate enough to to do so you could raise a hundred million with with one ticket which is incredibly unlikely if not unheard of when you're starting up unless it's seed capital of course

28:27The Long-Short team: so we've talked about 100 million number and how critical that is and the research that we've done over the past couple of years has talked about break-even average break-even the firms and two points that stand out from from this research is that the break-even number has gone up and the average headcount has also gone up and then we're talking about that 100 million number firms will be very keen to hear what's our take on all of that yeah so i think headcount has gone up

28:59Lawrence Obertelli: um has that been intentional um i think yes is the general answer um what's true is post covid we did see some cuts um in terms of yes headcount but also across the firm people were cutting costs so there was this natural tendency for headcount and break-evens to go down but there's been some catch-up but I think since then there's been a very intentional increase in headcount and indeed you know we've been talking about this increased institutionalization so there's been this very intentional increase in both headcount and of course break-even in order to do both of those things and that is to grow and that is to offer something more institutional.

29:41The Long-Short team: Yeah, ultimately to scale the business, right? Moving beyond the first milestone of 100 million to the billion dollar number. Absolutely. And the steps along the way to do that, and part of that as well is not just smaller firms, but every firm, every organization is having to think about it, is how AI can influence that, how technology can influence that. But just talking about AI itself, one of the data points is that four out of the 10 managers we surveyed are using AI. So there's clearly an appetite to do that and there's clearly a view that using AI is going to help manage efficiencies and that's something that we concur with at EMA.

30:19The Long-Short team: But what was the research that you concluded around that and what are you hearing from managers who are thinking about AI in terms of managing the efficiencies of the business?

30:30Lawrence Obertelli: Yeah, we saw the respondents of our survey say that on the manager side that they were pretty much universally using AI. But the interesting thing that we saw as well is on the investor part of the survey is that it wasn't a prerequisite to getting their money. So this was quite interesting. So why is that? We asked lots of people and we held a panel and so on. And the thinking around that is that there's some very acceptable reasons to not enforce AI on the investor side, the two most obvious ones being concerns around privacy um and and of course um yeah the inaccuracies that you can see in these sort of hallucination hallucinations that uh ai can have so there are some very acceptable reasons not to enforce it upon managers but nonetheless nearly all managers were using ai and that is both you know in the front office in terms of investment process but also non-investment process.

31:27Lawrence Obertelli: And again, going back to this whole thought process around institutionalization, is this is a great tool for managers to compete with their larger, more established, and more institutional peers, and to level up the playing field a little bit and to get those allocations. It feels like emerging managers may have an edge here when it comes to AI. And I'm very interested to hear your views on this, because AIM has done a huge amount of research into how hedge funds of all strategies and sizes and various geographies around the world are using AI to various extents. And naturally, you would not be surprised to hear that the larger managers, the ones with the big budgets, in some sense are the ones who are leading the pack when it comes to this.

32:16Lawrence Obertelli: But they also have this huge burden of all these legacy technology and unstructured data and what have you, whereas a fund launching today has the ability to be what you're already seeing some firms from some sort of AI native or embedded in with these tools from day one. And that might provide them, as I say, with like a little bit of an edge when it comes to keeping costs down, getting a more immediate ROI on using these tools. Do you think that's true? Is that maybe a bit too generous? No, I do think that's true. And if you think about a startup manager and the business plan that they have, in the first section and phase of their business plan, they won't have all of the bells and whistles.

32:57Lawrence Obertelli: And of course, the bells and whistles that they do have will all be newer. And so, you know, these are more modern systems that are perhaps more susceptible to be used and intermingled with AI. One manager was telling me that in fact sometimes when they need a new system or a new some some sort of solution they'll build a system with using ai um and this this isn't some spreadsheet this is a proper system that they've built from scratch using ai so clearly newer managers with less legacy infrastructure have an edge here over their larger peers because clearly they're more nimble and able to use these these very efficient and helpful tools so lawrence aimer and marix have

33:40The Long-Short team: been doing this research for several years now and you know you have that vantage point of being you know the closest to what's going on in the industry you're seeing what's happening on the ground you're hearing from clients you're speaking to allocators we've touched on some of the findings drew and i in terms of what we found interesting in this research report but is there anything that we haven't touched on that you think a manager should be picking up this report to read about or an allocator who may be listening in today that you would like to share with them?

34:11Lawrence Obertelli: Yeah, sure. I mean, I think from a prime broker's perspective, I think that one of the interesting changes in the survey was that capital introduction was used at a significantly greater extent this time around than in previous year's surveys. And so I think this all probably chimes in with everything that we've been discussing today. Things are more difficult, things are more institutionalized and hence investors are more institutionalized and so they managers need more help and so if you're a manager listening listening to this that the message would certainly be is getting in touch with your capital introduction teams at your prime broker we at marix have 13 people in capital introduction so we're very happy to help here on the flip side for investors what's very interesting again in the survey is that the way in which they found their most recent tickets was also via Capintro more so these days than in prior surveys.

35:03Lawrence Obertelli: I think that goes a little bit to what I was saying earlier in that perhaps there's more quality in the managers that are coming to market now. I mean, I certainly think about our capital introduction events is that the investors that seem more keen to be there, the numbers of investors at these events are there at emerging manager conferences specifically, because again, the quality is there. So it's it's interesting and we're in a bit of a virtuous circle where there's more quality so there's more investors and there's more investors so there's more managers so that's very encouraging um and so i'm generally very optimistic uh for the space right now because people are scaling up people are raising money because they're institutionalizing themselves so we do tend to be coming out of what has been a little bit of a difficult period in in previous years and coming into something where we can be a little bit more encouraged by the various different things that we found in the survey i'm going to attempt to sum up uh the huge amount of useful information you've given us and thank you for being here today lawrence but it seems like we started this conversation by talking about the fact that there is a positive environment for emerging managers and the hedge fund industry more broadly and that that is that is to say that it is um i want to say that it's positive but i also don't want to um trip up and say that it's easy which you've been at pains to say that it's not easy so would it be fair to say that there is a good number of opportunities there but uh maybe the expectations are rising in line with those opportunities you you've got the infrastructure the technology investors seem to be more keen uh but at the same time um the the the hurdles are only rising at the same time and and really it is still just about quality coming through is that is that fair tom i think it's more than fair um listen i think it's it's very fair things are not easier but they're clearer if you get things right the moons certainly have to align but if you get things right, if you do things in the right way, both in the investment process, but also in the non-investment process, institutionalize yourself.

37:13Lawrence Obertelli: And again, none of this is easy. It is clear, but it's not easy. If you do all of these things in the right way, it is an encouraging time for managers because the stats show it, investors are interested in this space. So it is an encouraging time for the market. There's opportunities for sub-billion dollar and emerging and startup managers. So yes, I'm very encouraged.

37:34The Long-Short team: Well, all the stuff to do then is to thank yourself, Lawrence, for coming along today to this special episode. It's been a pleasure to speak to you and we look forward to seeing what the next series of research shows. But what we can say to our listeners is you can find that research on Marek's website. And indeed, we have it on AIMA's website and we will include that in the show notes. But for now, Lawrence Obertelli, thank you so much for joining the long short. Thank you so much for having me, guys. Thank you, Lawrence. Mm-hmm.