E199: How Rahul Moodgal Raised $99 Billion by Playing the Long Game

Most people pitch performance. Rahul Moodgal built a career on pitching relationships. In this episode, I go deep with Rahul Moodgal—Head of Investor Relations at Parvus Asset Management and one of the most trusted capital raisers in the hedge fund world. Over his career, Rahul has raised $99 billion across platforms like TCI and Parvus, building decades-long relationships with LPs, endowments, and mission-driven institutions around the globe. We explore how Rahul flips traditional fundraising on its head: opening with the negatives, focusing on long-term alignment, and avoiding the sales-y traps that doom many GPs. If you're a manager trying to understand how world-class LPs think—or an allocator looking to work with truly values-aligned capital—this is the playbook.

Episode Transcript

(00:00):
Rahul, welcome to the HowInvest podcast.

(00:03):
Thank you, David.
A real honor to be here with you.
It's an honor to have you.
So before we got started today, I wanted toconfirm exactly how much you've raised.
So you haven't quite raised a $100,000,000,000.
You raised 99,000,000,000.
But I'm excited to to hear the blueprint on howto raise 99,000,000,000, and I'm excited to
have you on the podcast.

(00:23):
Thank you.
You're really kind.
I don't know if it's a blueprint, but it's myway.
And I think there's no right way to do it.
There's just lots of different ways.
Tell me the story about how you raised money atthe Bear Stearns cap intro event in 02/2006.
Okay.
So at the time, I worked for TCI, theChildren's Investment Fund, which is founded by

(00:48):
Chris Hon, and I was head of investorrelations.
And we built a platform which grew to fivemanagers, TCI being obviously the anchor main
fund on the platform.
And I had the honor of working with Chris andthen raising money for him and the other
managers he brought to the platform and lookingafter all the clients.
And so we had taken on an ex Fidelity fundmanager who was raising a fund in the European

(01:13):
large cap space.
It's interesting, but it doesn't get you allexcited, particularly in 2005 when people had
too much money to put to work.
So BearSense invited us trying to engage us.
So I went and did two roundtables of 12investors.
And I sat in that first room, and I did theusual pitch about the fun, the platform, what

(01:38):
they were doing, the rest of it.
And somehow I kind of came out of my body and Icould see myself talking.
And I just thought this is awful.
It's so boring.
It's not compelling and everyone's asleep.
And I was just bored of what I was doing andsaying.
And I thought I've got another chance in anhour to do this a different way.

(01:58):
And I had to simply come up with another way oftrying to make it more interesting both for me
and for the investors.
And so I went into second session.
And by the way, from that first group of 12investors, zero people invested and had any
follow-up or interest.
I went into the second meeting, and I startedoff by saying, these are the reasons that
people don't invest with us.

(02:19):
And you could see people's faces going, what?
What's going on here?
People don't do that.
They always pitch.
And all of a sudden, I got people engagedbecause it was doing the complete opposite of
what they expected me to do, number one.
And number two, as I went through thenegatives, those are positives for some people
because it was different.
It was contrarian.

(02:40):
It was trying to fill a spot in theirportfolios where other people weren't fitting
and people got really engaged.
And at the end of that session, I had bigfollow-up and eight of those 12 people in that
room actually ended up investing with us.
So I thought, wow, this is actually a verydifferent way to do this.
And it changes your initial interaction withpeople.

(03:00):
Extremely stark differences at the same capintro event.
Double click on why you think starting with thenegatives had such a powerful effect on the
audience.
First thing is very obvious is that it was justdifferent because they're all used to hearing
the same old nonsense.
This is my fun.
This is what I do.

(03:20):
This is how I'm different.
Most of the time, it's not different.
And the reality is, I'll quote Anders Hall ofVanderbilt University who says, the world
doesn't need another fund.
There's enough funds out there.
And so when you're doing that, you have to tryand engage.
But I'll take it to the next level.
And I think the key thing that everyone forgetsabout this industry, the funds come and go, the

(03:42):
performance come and goes.
It's relationships.
It's all about relationships.
And I think when an investor, an LP tries tomeet a manager, a GP, yes, the strategy of
things there, but the key thing they're tryingto do is understand who this human being is.
How do they deal with stress?
How do they deal with bad times?
And it's the same way that when you meetanother human being and you want to determine

(04:03):
if they're gonna be in your universe, if theyhave the same values as you, if they're gonna
be someone you're gonna have a relationshipwith other person or as a friendship level, you
wanna know what are they what what are thethings that drive them crazy?
What are the moments that they're gonna lose ashit or, you know, be unbalanced?
And you just want to know all of the bad stuffas soon as you can because you wanna know, am I
gonna make an effort?
Is this gonna work out?

(04:23):
So I just kind of think people just didn'texpect that.
And straightaway, they're able to sort of do achecklist to say, well that's one less thing I
have to worry about.
That's one less thing I have to worry about youknow.
We are concentrated.
We had lockups.
We had high fees.
We had all the things that people wouldn't knowstraight away because they'll buy into the
strategy and then when they're doing the deepdive the negatives start coming.

(04:44):
But if you give them negatives at thebeginning, they're actually in spite of all
that, I'm still interested.
So it's kind of like you take your clothes offand say, this is who I am.
Are you interested or not?
And then you go forward and start saying, well,this is who I am inside.
Intuitively, you would feel like that strategywould maybe appeal to two of the 12 investors,

(05:06):
and then you wouldn't waste any time on theother 10, and it was a win win.
You'd build this deep relationship with thesetwo, but you got eight of them to invest.
So somehow this very, very specific type ofstrategy and this very specific segmentation
appeal to a majority of investors.
Why do you think that is?
I'm not gonna say it was a strategy that wasdifferent.

(05:27):
I'm I'm gonna say it was the initiation of therelationship that was different.
So, you know, when you meet people the firsttime and especially when you have friendships
with people that are very, very long term, younever ever forget how you met them ever.
Right?
It may be, oh, I met them because I put a drinkon them in the bar or I met them at a party.

(05:49):
They had no one to speak to I do and so we juststarted speaking.
You always remember those things and so for allof those people and I speak to many of those
people still now, they always say, I neverforget when I first met you and you did that
pitch to me.
It was just so different.
They were just a bit shocked that someone hadgone into a room doing that because it's always

(06:10):
about being the cheerleader for the manageryou're working with.
You're still the cheerleader, but what you'redoing is saying, this is what's under the
bonnet, first of all.
Everyone's showing you the beautiful car, butnot showing you what's under the bonnet
straight away.
But I went the opposite way and saying, this iswhat's under the bonnet, and then you can see
how that makes up the car.
I think in general, that's a very underratedaspect of fundraising is the anchor on how you

(06:33):
first meet the person.
In my world, I like to be introduced by ahighly credible mutual party, which forever
anchors you as this person introduced you tohim versus just kind of off off the cuff or
maybe even you listen to someone'spresentation, you come in with a lower status,
and you're forever anchored as an audiencemember if these things could play a big role in

(06:56):
how the relationship plays out.
200% agree.
And, David, it plays into, in my mind, so manypeople who do what I do are focused on that
transaction.
This is not what it's about.
The fact is a number of those investors I'veworked with now across different managers,
they've moved shop, and I've worked withdifferent managers.

(07:19):
And they always remember how we first met.
They don't even remember the investment.
They remember the relationship.
Right?
Because people transcend organizations.
This is not about executing.
This is about, am I gonna be able to pick upthe phone and call David in twenty years time?
Yes.
Because I didn't pitch him.
I wasn't aggressive about selling himsomething, and it didn't matter to me whether

(07:41):
they invested or What mattered to me is that webuilt a relationship where we mutually respect
each other's space and time, and we call eachother and talk about things.
And that's, I think, the big thing thateveryone misses when they do what I do.
They always focus on the short term.
I care about is that person who I sat in theroom with in 2006 going to take my call if I

(08:02):
call them tomorrow twenty years later?
That's the difference.
And when you have those relationships, theyalways remember how you met them and the fact
you've worked them through different guises,good times, bad times, and you've just
communicated and stayed in touch.
And I think that's the key thing about it.
Over time, have you also learned who you wantto invest into over twenty years or who you
wanna take money from?

(08:22):
Don't wanna work with everybody.
I think I've I've it's kind of like a humanbeing's evolution and maturity.
When you don't know any better, you want towork with everyone.
But I think over time, I'm not really arsyabout many things, but I am really picky on the

(08:42):
quality of capital that I work with becauseit's about long term relationships and it's
about people understanding what you do versuswhat they want and how you fit into each
other's universes.
I'll happily speak to people that I wouldn'twork with, but I'm really picky about who I

(09:04):
have as clients because there's just got to bethat understanding of what you do versus what
fits what they do.
And a lot of times there isn't a fit, but to meit doesn't matter.
So I've I've spent a lot of time trying tonurture relationships with the best
organizations and I split investors into assetowners and asset allocators.

(09:25):
Now there are good asset allocator investors,but I tend to focus on asset owners and what I
mean by that are the people who are thefiduciaries for that capital itself or that the
principles of that capital and so you'redealing with the people who are making the
final decisions and part of this stems fromhaving a few bad experiences whereas if you

(09:48):
work with gatekeepers, asset allocators, younever know what's going on on the other end.
So I want to know who are the underlyinginvestors who are giving us capital because
then I can understand what their time horizonis, what are the parameters they invest in,
what are things they look for, number one.
Number two, when you work with assetallocators, a lot of the time they're

(10:09):
protecting their business first and thenthinking about investing second.
And I'll give you an example, you know, one ofthe firms I worked at, we had a huge firm as a
client that had $20,000,000,000 and they had70,000,000 with us.
And they phoned me up and saying, we wanna giveyou guys much more capital so we can be 200,

(10:30):
250,000,000 out of our 20,000,000,000 with you.
I was like, great.
We're closed, but there will come a point wherewe'll call you and there'll be opportunities.
Two weeks later, they called me saying, we needto redeem.
I said, sorry.
We spoke to you two weeks ago, and you wantedto add, you know, 180,000,000 to us when the
opportunities came.

(10:51):
And now you want to redeem it.
What's going on?
They never ever told the story, but through twoor three connections, I found out that they had
a huge corporate pension plan that was theirbiggest client decide to pull the money.
And rather than being transparent about it andtelling us, look, we're interested, but things
have changed and longer term, we still wannaget there or we don't wanna get there, they

(11:11):
just went cold turkey on us.
And my PM, I'd never seen him get angry, notthe one I work with now, but one I'd worked
with previously just got just went mad andsaid, you guys had promised me you were long
term, you were committed and all this stuff,and we said we'd work with you, but you weren't
transparent about it.
And so those people were interested inprotecting their business, and we just didn't

(11:31):
know what was going on underneath because wenever knew who the clients were that had money
from them and that they've given money to us.
And so that's why I always worry where there'sintermediaries.
Now that's not all always true.
There are good alloc asset allocators, but it'sjust one of those things where I'm much more
hesitant because they've got two angles tothey've got to keep these people happy that
give them the money and then they've got toallocate that money versus me just dealing you

(11:56):
know A to B directly rather than A via B to C.
So that's kind of how I think about it.
So I do really care about the quality ofcapital.
I don't care about the size of the capital ifit's five bucks or 500 or whatever, I care
about the quality.
That's just so important to me.
A lot of people when they reach a certain levelof success they see being able to pick their

(12:16):
clients as in many ways, the ultimate luxury,being able to deal with who you wanna deal
with.
Is there also a cold, hard rationalist approachto why you want to build relationships with
certain types of people, or is it more of aquality of life aspect?
It's not quality of life.
I certainly want to continue loving what I do.

(12:37):
I'm I'm honored to love what I do in terms ofthe day to day, the people I work with, and the
investors I get to work with.
It's great.
I want to interact with people who are smart,thoughtful, who challenge me, who I learn from,
I get to interact with, and who I can help.
And I particularly love mission drivenorganizations who are doing incredible work

(12:59):
where I can help them meet other equally drivenmission based people or people who work in the
same missions as them, help them findinvestment ideas, bring them together, allow
them to share the things they're worried about,the concerns they have about things in the
portfolio in the world in terms of governmentpolicy, whatever it may be.
Those are things that I get real energy from.

(13:21):
Bidding to peep people together is what I justlove.
I love people and I love seeing them interact,share ideas, compound knowledge.
You know, I've stolen that one liner from TedSides, but that's literally what we both love
doing and that that's I just get such apleasure from doing that.
When I was a kid, I wanted to be a diplomat,and I think I get to do that in this world of
finance.

(13:41):
That's really what I love doing.
I've been really thinking about this concept.
There's no real term in the market for it.
I call it LP capture and where an otherwisegood manager could be captured so much by his
LPs and the feedback from his LPs that couldactually affect a strategy.
The relationship between GPs and LPs could bebidirectional, and the opposite is true too.

(14:05):
You might have the Yale endowment or a veryhigh profile endowment that's coming to you in
the depths of a bear market where there's bloodon the streets and saying, we wanna we wanna
back you.
Here's $200,000,000 to go out and buy thesedamaged assets.
You could actually get propelled by your LPs aswell.
But I think not enough is talked about how LPscould actually improve the performance of the

(14:27):
GPs, not just GPs improving LP returns.
Absolutely agree with that.
And I think it's this this it's such a complexthing to talk about this because I think when
people start out, a lot of people are what Icall refugees.

(14:50):
When you build your own firm, you're a refugee.
And when you're a refugee, you leave for abetter life where you're in control.
Right?
There's either something you didn't like atyour previous firm or you didn't you stopped
fitting in or what you're doing didn't workanymore, whatever it may be, but you leave for
a better life where you're in control.
The thing is a lot of people who leave for abetter life to be in control have no idea how
to build a business because they've usuallyworked at a shop where everything has been done

(15:14):
for them.
Right?
They have a HR person.
They have a COO.
They have someone who does a fundraising.
They have someone who does the reporting.
They don't need to get involved in anything.
But when they leave, all of sudden, they'revery exposed and they need to know how
everything is done.
And so I think one of the things that I've seensmart people do is to create an LP advisory
committee or an LP advisory board, an LPAQ,whatever it may be, where they get one or more

(15:40):
smart investors who are working with them to bekind of a a bench of safe people that they can
talk to about things they're thinking aboutwith their organization.
We're thinking about a, b, and c, or we're notsure how to think about fees, or we're going to
hire, whatever it may be, but they're a groupof people who are fully supportive.

(16:01):
And I think this plays into one of the thingsthat I really say to people today more than
ever is when you're investing time in buildinga business, the LPs obviously are interested in
your strategy, but they want to know more whatyou're trying to build.
Because if you make an investment and it goeswrong, fine, you'll lose money.

(16:23):
But if you build a firm and you build it thewrong way, you're gonna you're dead.
So it's not about strategy, it's aboutstructure.
So what are you trying to build here?
What's the culture?
What's the structure of your fees, of yourfund, of your team, of your incentives?
And if you get that right and do it properly,you'll build a great organization, which then
means you'll flourish, and then you'll keepyour investors forever.

(16:45):
Because people initially start up by having afund, but does that fund become an asset
manager?
So these are all the kind of things I thinkpeople spend a lot of time doing.
So I always say to people, get one page, do atimeline.
We're 2025 now.
By 2030, where do you wanna be?
Think about three things, assets,infrastructure, people.

(17:06):
As your assets grow, how many more people doyou need to hire?
What infrastructure do you need to build?
And what's your capacity on terms of assetsunder management?
What's your breakeven?
How much do think you can manage withouthurting yourself?
And you just need to spend time thinking aboutthis because when a manager opens, a lot of

(17:26):
time they're just open and they're like, can'traise any money.
I'm like, yes.
Because as far as the investors can see, you'reopen forever.
You don't have a capacity limit on what you'retrying to do.
There's something niche you're not trying tocapture.
You're just open.
And when you're just open, you're never gonnabe a priority to investors.
So think about all of these things.
Think about what you're trying to do, whatyou're trying to capture, what you're trying to
solve for.

(17:47):
Again, the words of Anders, the world doesn'tneed another fund.
So I think to that point, it's always aboutthinking about the organization and then help
the LPs helping the GPs generate institutionalalpha, you know, GP alpha.
Help them to think about team incentives, teaminstructions.

(18:08):
You know, we talk to our clients regularlyabout things like this.
We're very open with them.
You know, we hire someone.
It doesn't work out.
We'll tell them why it doesn't work out and behonest with them.
And then also ask them their opinions aboutthings they've seen.
They've been doing this a lot longer than wehave.
They've invested managers for a lot longer thanwe've been around.
What are the things that have worked in termsof evolution, team build out, culture,

(18:33):
retaining talent, all those sorts of things.
So there's nothing wrong in asking.
And I think when you ask, people feel reallyhonored and humbled to be asked.
They really feel like you really care abouttheir opinion it really matters.
And, of course, they've got immense experience.
So I think it's a great thing that enough isnot done on that side
to capture that.

(18:53):
In terms of asking your LPs for feedback?
Asking your LPs for your feet for feedback,asking them for thoughts on an organization, on
culture, on structure, on incentives, onretention, all of those things.
I don't think enough is done on that.
And it doesn't have to be everyone.
It's just, you know, one or two.
I've had a number of friends who've been insituations and they've called me and said,
they're gonna we're we're we're struggling witha b and c.

(19:18):
We don't know what to do.
I'm like, which investors are you closest to?
They said, well, these three.
I'm like, pick up the phone and call them.
They're like, really?
I'm like, yeah.
And in each of those situations, thoseinvestors have been so empathetic to them but
have really appreciate them being called on youknow, taken over the wall and them explaining

(19:38):
what's going on.
And they'll be like, okay.
Thank you for telling us this is what we think,and this is how we think you should communicate
it as well.
Because when you're on the other side of that,it really matters.
The communication is so important because youdon't wanna lose control of the messaging of
something because a rumor mill can start if itgets into the wrong hands.
Right?
When I interviewed John Merrill, he workedclosely with David Swanson.

(20:01):
One of the things that he said about him whokind of popularized this Yale endowment model
is that he was a great ecosystem player.
He knew how to get the right economics forYale.
He knew how to get the right economics for theGP, and he knew how to get the right economics
for the coinvestors.
He knew how to build ecosystems in sustainableways.
Is this a trait that you see around the topLPs, or do the some of the top LPs have very

(20:23):
sharp elbows?
And talk to me about kind of the the pros andcons on those approaches.
There may never ever be anyone like DavidSpencer.
I was lucky to work with him across twomanagers.
His ability to sniff out talent, And it it it'sabout finding those human beings that were just

(20:46):
special.
For ten years plus, I had dinner with David.
Our team had dinner with Dave.
It was incredible.
And he'd say the same thing to me every year.
We just want to find smart people that dosomething consistently that allow us to sleep
at night.
It was that simple.
It wasn't about, oh, let's look at theirhistorical track record, because historical

(21:06):
track records tell you nothing.
It's like, what is special about these people?
Do they have integrity?
Are they good fiduciaries of the capital of theYale University?
And that that was something special when hebuilt the Yale model.
It was at a time, you know, doing privates inthe eighties and nineties that that most people
were not touching that.
He was a revolutionary.

(21:27):
He he implemented that model and it workedincredibly well.
And look, there are there are investors whohave sharp elbows.
But one of the things that I would say, and I Isay to a number of investors I open close to,
is that I think a lot of these guys shouldspend a lot of time effectively pitching their

(21:50):
organizations to GPs about why their capital isthe best around.
What's their mission?
What do they do with that money?
What happens to the returns that are generatedby the GP?
What do they what impact does it have on thecommunity, on the world, whatever it may be?
And so a lot of times, particularly forcapacity constrained managers, which are often

(22:11):
the best managers in the world, there are shellpuddlers because people are fighting to get in
to these guys.
So I almost think those guys need to be as muchflag bearers for their organizations as the GPs
are for their organizations.
This is all about alignment more than anything.
And even when you think about what I do, Ithink the most important, the number one factor

(22:34):
is this.
It's finding alignment between your IR, yourmarketer, your fundraiser, whatever you want to
call them, and the principal.
You need to have that alignment.
It's so important.
You know?
If you don't have that alignment, then the theIR person always running too fast or too slow.
It just needs you need to sit down and say,what is the plan here?

(22:56):
What organization are you trying to build?
Are you in a rush?
Do you want the best quality capital?
What what is it that you're trying to achieve?
And you need to have that alignment.
That's the number one thing that you need tofind when when you work with someone.
And, you know, I remember when I moved overfrom Tisai to work for Parvis, and we had a
terrible 02/2008.
And I said to Eduardo, it would take us fiveyears to build this firm back, but I'm in.

(23:18):
And he said, I'm trusting you however long ittakes.
Let's just get the best investors, which whatwe did.
We took five years.
We got the best investors and we closed and itwas perfect.
And that alignment was there.
He understood that I was gonna focus on thebest quality capital, that it was gonna take
time.
And this is not about performance.
The the big thing that people get wrong, howmany people you've met them, I've met them,

(23:41):
hey, my returns are amazing, but I can't raisemoney.
If you focus on trying to raise money becauseyour performance is good, you know what?
When it's not good, those people are gonna goaway because they're investing me for the wrong
reason.
It's about alignment of philosophy and process.
That's what it's about.
There's multiple layers of alignment here.
One is making sure that everybody within yourorganization is thinking like a principal.

(24:05):
And the best way to do that is to make them asas principal, have them have equity in the fund
or even on the underlying manager.
And then there's alignment with the LPs.
How do you build that alignment and doubleclick on that?
The initial starting point in terms of the teamis, right, what is it that we're trying to
achieve?

(24:25):
Does everyone buy into that mission?
And does everyone have the willingness toparticipate in this culture of what this
organization is?
That's literally how you start.
Now sometimes you carry that culture away ifyou only have a team lift out.
They come with a culture.
Sometimes you have a new culture that startsout, and sometimes you have to brainwash young

(24:46):
people and pin them in saying this is how we dothings.
So there's no kind of one size fits all.
It's kind of case by case.
It happens.
And sometimes cultures evolve.
You know, things change.
Organizations grow.
They compress.
They change.
They become dynamic.
They become multiproduct shops.
So I don't think there's one kind of size fitsall for that.

(25:07):
But with GPs and LPs, it's about spending thetime at the beginning, which most people who
sit in my seat do not spend.
They go in and they pitch.
They don't spend time under who thoseorganizations are, what they're trying to do,
what they're focused on, what their concernsare, how they think about volatility, fees,

(25:31):
structure, liquidity, all that sort of stuff.
Right?
Someone recently said to me, and I love it,Alex Chung at CommonSpirit Health who deserves
a shout out, said to me, this has really becomeabout is this a jigsaw puzzle or is this a
treasure hunt?
And if you think David Svensson really was ajigsaw puzzle, right, where David had a model

(25:53):
portfolio of things that he was trying toachieve.
Right?
We're gonna have a bit of timber, a bit ofinternational equities, bit of domestic
equities, some private venture, whatever, andhe had a structure of what he was trying to
achieve.
And then your asset allocation moved based onwhat that jigsaw puzzle was gonna be.
There were gonna be some pieces that werebigger sometimes, some that were smaller other
times.
And then you got Seth Alexander who's an ALalum and obviously was on the team took a

(26:17):
different stretch and said let's just go andfind the best money managers in the world.
I don't care what asset class they're in.
I don't care what strategy they're in.
Let's just go and find the best people, the newtalent on the street and go and back these
people.
And that is really about, you know, a treasurehunt about finding that talent.
So it's very different.
Now they both can achieve the same things,they're doing it in very different ways and I

(26:39):
think more and more people have transitionedfrom the jigsaw to the treasure hunt.
Now the jigsaw is still there with a lot oforganizations, but over time people are saying,
how can we be more dynamic?
How can we be more capital efficient?
How can we take advantage of opportunities thatcome?
How can we be more tactical?
There's lots of different ways that peoplethink about things now.

(27:01):
And the market's changed.
It's completely changed.
Right?
So you have to think about how you become moredynamic as the market changes and as the world
changes as the opportunities arise.
And and when you look at the very elite LPs inthe world, many of them which are LPs in your
fund, do they tend to be today more like Jigsawor treasure hunt LPs?

(27:24):
I'll say hybrid.
They kind of have their base of what they'redoing, and the rest of it is kind of dynamic.
So, you know, visually, I guess you you almostthink about a a building where you have
temporary kind of marquees that come indifferent parts and are added on and taken away

(27:47):
as and when the opportunities come.
Last time you we chatted, you said somethingthat surprised me a bit.
You said that the longer it takes for someoneto invest into you, the longer they will stay
with you.
What did you mean by that?
There's two aspects to it.
The first aspect will be twenty years ago,there was so much money in the market.

(28:09):
A lot of it was not high quality, and peoplewere just allocating it as and when they could
and as and where they could.
And a number of investors said to me, I wantedto get into the tier one managers, and I
couldn't.
And so I gave the money to tier two and tierthree managers.
They were just in interested in allocating,getting that exposure.

(28:29):
Post GFC, it's changed.
And there's a real process now in terms ofpeople investing capital where people are being
much more thoughtful about what they're doing,how they're doing it, who they're doing with.
It's it's it's almost like they've gone fromsaying, actually, I don't I don't I'm not
interested in just what the performance numberis.
I want to understand what the quality of thatperformance is.

(28:52):
Where is it coming from?
How much of it is leverage?
How much is driven by one or two stocks versusa diversified portfolio?
So people are much more thoughtful about it andsubsequently, it takes longer and longer for
people to do things and allocate capital tomanagers.
But I think post 02/1920, it's gotten evenworse because a lot of investors have a lot of

(29:19):
issues going on in their portfolio, especiallywith COVID.
There are interest rates, inflation, China,illiquidity, venture privates not paying out,
and people all of a sudden thought my goodnessthey've got a load of things on and then
recently obviously with things like theendowment tax and everything, everything was
just put on pause.
And I think what you've got to understand it'snot that people are not interested in doing

(29:42):
work on you, not interested in investing you.
The priorities just change and they have somuch more to deal with now.
And then governance issues and things like DEI,ESG came into the agenda and people having to
deal with all of those things as well.
And so I always akin it again back to humanrelationships is when you meet someone, you

(30:02):
know, if you're meeting your partner, your lifepartner, and the longer it takes for you to get
to know them and build up, you really, reallyknow them if you take a long time before you
commit and marry them versus meeting them infive minutes and then marrying them five
minutes later.
You don't really know that person.
So when people take their time, I appreciatethat they're trying to understand that if we go

(30:25):
into their portfolio, what they expect for usto do for their portfolio, where are we gonna
be additive, and really, really just understandwhat our role is and how we're gonna perform in
certain market conditions.
What is it that we're really trying to solvefor?
And I always say to people it's like eating asandwich.
If you eat the whole thing at once you'll besick but if you take bites of it you can taste

(30:46):
it and so people keep taking bites over a longperiod of time and getting to know us and
tasting what we're like then really they get toknow us.
And I think that for me, I I I love it.
And it's just about stepping in and it'sappreciating and respecting the fact that
investors have a process, but the reality isthey spend 95% of their time doing research and

(31:07):
only 5% investing.
So they need to do comparatives.
They need to see how we're gonna fit in.
They're gonna need to know who our peers are.
They're gonna understand what the opportunityset is.
There's all these things to think about.
Right, as well as their daily jobs in terms ofespecially like I say, a management team,
reporting to a board, thinking aboutgovernance, team structures, hiring, letting
go, firing other managers, all this sort ofstuff's going on.

(31:28):
There's so much going on.
The problem is is most people who sit in myseat think that the only thing that the LPs
care about is them as as the manager that theywant to put in front of them.
You know, we're one tiny bit of sand in thiswhole, you know, beach full of multiple billion
grains of sand.
It's just a tiny thing.

(31:49):
And to try and be the one that gets someone'sattention is always hard.
And to get that attention just takes time.
And I think that's the thing.
It's about duration.
It's not about execution.
And that duration just shows respect and itshows that you appreciate someone's process,
but it also shows that you understand they'vegot a lot going on.

(32:10):
And back to the point I made at the beginning,if you focus on duration, those people are
gonna take your calls.
If you email them every five minutes ago,you're invest in my fund.
You're invest in my fund.
They're not gonna answer your messages.
How do you reconcile this duration or this longtermism with check size?
I know you said you're fine if it's $5,$5,000,000, but that almost by definition is

(32:32):
not scalable.
How do you make small check size work?
My mentor taught me this and said, neverunderestimate the small investor.
And I remember back at my first firm, we run a$3,000,000 check from the University of
Virginia who at the time were investing viacommon fund into our EFA strategies.
And two years later, University of Virginiagave us 400,000,000 direct.

(32:56):
Right?
And that really was testimony to thinking likethat and being long term that sometimes the
smallest guys become the biggest guys.
When I joined TCI, I'd worked for a fund offunds where I looked after all the
international institutional clients.
And one of the clients I had was Timasak, oneof the government Singapore's investment

(33:16):
entities.
And we ran a portfolio of 50,000,000 for them,and 2,000,000 of that was invested in TCI at
the time.
And when I left working for that fund of fundsto join TCI, they messaged me and said, we
wanna be your first client that you've been onboard.
And they were the first client I brought toTCI, and they gave us 50,000,000.
And I just said to the head of, alternatives, Isaid, how come you've given us 50,000,000?

(33:40):
You've got to she said, we use that portfolioas a means to screen ideas for the best ideas
out there.
So that 2,000,000 went became 50,000,000.
Again, it was testimony to say, think aboutthese things being long term.
People move around, things change.
I I just care about the quality ofrelationships.
Yes.
It's a lot of, it can be a lot ofrelationships.

(34:01):
I don't have many of those small investors, butI don't really care because they're as good to
me as as the big ones because the missions theywork for and the work they do is incredible.
And when you can be part of that and contributeto that and have relationships with those
amazing people, that's all that matters.
It it it really does.
And I mean it sincerely.

(34:21):
I don't I don't you know, some of the biggestallocators in the world, some of the biggest
pools of capital in the world are a nightmareto deal with.
So there's no correlation between quality ofallocator or LP and size of assets.
Right?
There's none.
You mentioned mission, multiple times.
For somebody that's raised 99,000,000,000, thatmight be paradoxical.

(34:43):
But I think one of the things, even thehardcore capitalists, what they come around to
this idea is in order to wake up every morningand to come in with full energy, you really do
need a bigger why than just making money.
And a lot of times, you could borrow that whyfrom the LPs from the mission.
I know a lot of Sequoia partners talk aboutthis, how focused they are on the end impact
that they have.

(35:04):
It sounds kind of like virtue signaling or likea bumper sticker, but there are true believers
that truly come in every day and work eitherfor the GP or for the LPs directly and are so
focused on the mission that it make does makethem more and better investors.
It makes them take that incremental call.
It makes them take the interim incrementalbusiness trips.
So I think it is something that's highlyunderrated in asset management.

(35:28):
Massively underrated.
And I know when I take my PM to see the workthat one of our endowments does, and we do a
campus tour, and we go and see all the thingsthat they're doing with the money we're making
and the money we're managing, it just is thenumber one, the most humbling experience ever.

(35:49):
But number two, it just it it just reenergizesyou.
And you're like, wow.
If we make these guys money, look at what theycan do.
And we're lucky enough to have some amazingprivate family offices that work with us who do
incredible philanthropy work and they alsoshare what they do with the gains they make
from their managers.

(36:10):
It's just incredible.
It's incredible.
These guys are just they're literally the workthey're doing is just groundbreaking, life
saving, world changing.
It's it's amazing.
And to be able to be in a situation where youcan work in finance but have an impact on the
world at the same time it's it's it's a dreamright?

(36:32):
I studied development at university and so Ireally care about this stuff.
It's a really important thing for me.
I sit on a number of charity boards so this isthe stuff that's real.
The reality is that everyone wants to makemoney and have a good life and do things, but
there comes a point where you're like, okay,what what are you working for?
To have more stuff?

(36:53):
What does it mean?
It doesn't bring you happiness.
Right?
There's only so many cars you can drive, somany houses you can stay in and whatever.
The reality is if you can do something in theworld that either improves people's lives or
gives people who don't have a voice a voice oryou can say some historical artifacts or
whatever it may be the mission may be, it'sincredible because those people are using their

(37:13):
wealth and their position and their platformfor good.
And that for me is sharing values with theworld and showing people this is a mission and
we all have a responsibility at some point tocontribute.
Right?
So this is a way to contribute as well.
It's that icky guy thing which I live my lifeby.
Right?
You know, what does the world need?
What do you love doing?

(37:34):
What can you get paid for?
You know, it's just bringing all of thattogether, and it's it's great.
I wanna really lock in in this concept thatyou're talking about, which is if you pitch
just performance to an LP, the moment thatperformance goes away, they'll redeem.
What what more is there to pitch thanperformance?

(37:54):
Maybe you could distill the nonperformanceaspects that you're trying to align with LPs
around.
I always use this example with investors.
I'll say, if you've got two managers that cometo you and pitch you the same strategy and one
analyzes 30% a year, It gives you no access tothe manager, no portfolio transparency, doesn't

(38:18):
really report on what they're doing.
Versus the manager analyzes 15% a year, isfully transparent about what's in the
portfolio, gives you full access to the team,and will come and meet you, which one you're
gonna invest with.
Very few of them, not all of them, but very fewof them will say the first one.
Because what you've got to understand, and SethAlexander is the one who taught me this more

(38:40):
than anyone, is when you work for anorganization like he does, he has a fiduciary
responsibility to that organization and to acommittee and to a board who he has to explain
what he's doing to.
And when you sit in my seat, you don't alwayssee that.
You just see the person that's in front of youand you're like, they going to give me money or

(39:00):
not?
But it's much more complex than that becauseultimately it's not that person's capital.
They're allocating that capital on behalf of anorganization and that comes a lot of layers of
complexity.
And so I think when you're doing this, you'vereally got to understand all of that there.
And that for me is a really, really importantthing, which is why I spend time getting to

(39:21):
know all these people and really, reallyunderstanding that.
And so I think those people really want to findthe partners who understand what they're trying
to do and what they're trying to achieve.
And if you're able to explain to them whenyou've made money, when you've lost money,
they're able to then report that back.
But if you're constantly performing and all ofa sudden you stop performing, they don't

(39:43):
understand why you're not performing and you'renot opening up to them, I think you're left
fighting to raise capital.
Now I'm not saying that's true in all casesbecause clearly there are many organizations or
platforms that are not transparent thatcontinue to raise capital.
But when you have a quality relationshipbetween a manager and an investor, you achieve
that through transparency and you achieve thatthrough an alignment of values, philosophy, and

(40:06):
process.
If it's a transactional relationship where it'sall about you've made me money, oh no, you
haven't made me money, then I just don't thinkit's sustainable long term because it almost
comes about what have you done for me lately.
Every single manager in the world doesn'tmatter how good they are is gonna have a tough
time at some point.
Right?

(40:27):
And so I always try and spend time with peopletrying to explain to them, do you understand
what we do from a philosophical process andwhat our process is and how we find things and
how we're different and why we're doing andsometimes it's going to work and sometimes it's
not going to work.
So for example now my main manager I work with,we invest in European equities and everyone's

(40:50):
bullish on European equities and we have justsaid to them, listen, we're not buying into
this bull market on European equities.
We think it's overstated and we're going tounderperform this rally that's happening right
now because we're not going to own thosesectors.
And if you want to capture that rally and thatmomentum, these are the people who should
invest with.
Don't invest with us because we're not going toperform in this market.

(41:12):
We're just being honest about it because ourphilosophy and process doesn't align with that.
And it goes back to the point as well aboutwhen people invest with us, we always say to
them do not allocate full capital to us nowbecause at some point we're going to
underperform but there's going be a marketcorrection and that's when you should add to
us.
So this is about finding a partnership.
It's a spirit of a partnership.
It's not about us and them and an allocatorversus a manager.

(41:34):
It's not transactional, it's about how can wework together for twenty years, how can we be
transparent with each other you know and reallyreally help you achieve what you're trying to
achieve and you allow us to do what we'redoing.
It's that's a very different approach to havinga marriage which is focused around, if you want
performance, which is wealth versus one wherethe two people really respect each other and

(41:58):
understand what they're bringing to the table.
I probably meet three to five new managers aweek and they're like Rahul, look at my
performance, it's amazing and I can't raisemoney.
I'm like okay, let's look at your performance,let's look at your track record, let's look at
your presentation, let's look about how youpitch and whatever.
It's it's obvious pretty soon into five or tenminutes into speaking to them why they're not

(42:21):
raising money.
It's a matter if the performance is good.
It's just not about that.
And their inability to approach it like adoctor, find out what the LP is suffering from,
find out what they're concerned about, find outwhether it even aligns with them.
You wanna be qualifying them as well.
I love that analogy of a doctor that that Daveis incredible.
And I think that's definitely an aspect of itas well but this is a personal relationship

(42:47):
right where you have to understand if theperson who's investing with you respects you,
trusts you, appreciates you and knows that ifsomething goes wrong this is not about when
things go right.
This is about when things go wrong.
When things go wrong, are you gonna beavailable?
Are you gonna be transparent?

(43:07):
Are you gonna tell them what's going on?
That's what this is about.
When a manager goes like that, it's finebecause no one cares.
But when it goes like that, everyone's gonnabe, what's going on?
Is everyone still there?
Is the team structure still the same?
Are they doing something different?
And it it it's that.
It's not about when things are going right.
It's about when things are going wrong.
And you don't wanna have the people who when itstart goes like that, they run away.

(43:30):
What you wanna do is when it's going like that,the people who understand what's going on add
more money to you because they understand thatyou know what you're doing, but it's a short
term dislocation either in the market or in thesector or in the stocks that you're buying.
And you know what you're doing because ifyou're being transparent, then no one's got
anything to hide.
They know what the hit to intrinsic value isbecause the market went down because of Covid

(43:52):
or Ukraine or Brexit whatever it may be.
If you look around and you look at some of thebiggest asset managers in the biggest funds in
the world, they're not necessarily the bestperforming funds.
They're the people who do stuff consistently,they're the people who are most transparent,
They're the people who are doing somethingdifferent.
It's not always the best performing funds.
It's not.
It's kind of like this product market fit,which is what does the LP want?

(44:16):
So you think the LP wants performance,performance, performance, but the LP wants
transparency, predictability, they want to notlook dumb in front of their own constituents.
They also want performance, of course,sometimes they want to deploy large checks,
sometimes their problem is they have too muchmoney and they want to concentrate it on a

(44:36):
certain amount of managers, which is a big partof this podcast is to give people the context
for how LPs are thinking to kind of bridge thegap between GP LPs.
But it's important to understand what is yourproduct?
What business are you in?
100%.
And I think it's so important to understandthat, which is kind of spending the time with

(44:58):
the investor at the beginning.
It's just, and it doesn't matter if they don'tinvest with you.
For me, it's I always say to people, listen.
We would love to work with you, but even if wedon't end up working together, I would love to
stay in touch and just chat down a lot.
And look.
Sometimes people come back.
They're like, do you know what?
We've looked at the landscape.
We actually think you guys are doing somethinga bit different.

(45:21):
Can we talk?
You know, I've recently had a group that Iwould have loved to have worked with when I
first met them eight, nine years ago.
And I just met the CIO for a drink, and shesaid, look.
We really, really wanna do some work on youguys.
We should have done it before.
I just had too much going on with her.
The reality is if I had mistreated her, notrespected her, been transactional about it, she

(45:45):
never would have called me now eight yearslater and said, can we have a conversation?
We've stayed in touch.
I've connected her to people.
We've spoken about different things.
The mission work they do is incredible.
I'm very interested in it personally.
So she always shares stuff with me about thestuff they're doing, invites me to talks and
stuff like that.
You just don't have that if you're focused on,alright.
They they're not interested in investing me bynext person.

(46:07):
You don't maintain a relationship because youknow what?
You're not getting anything short term.
This is the thing that people forget.
And I I will tell you, I will I will name themyour Timco, and I worked I knew Kathy Iberg who
was there for a long time my whole career.
And but it took fifteen years for them toinvest.
They invested actually in two managers that Irecommended to them in the space of a month.

(46:31):
And Kathy jokingly said to me, it only tookfifteen years to record.
Said, didn't matter.
The key thing is that you would meet me.
I would meet you.
We'd talk about things, and that's whatmattered.
And it's just people just don't get that.
But the key thing I'll say is it comes from analignment with your manager.
So your manager, your principal, your GP needsto be aligned with the person who's fronting

(46:56):
their organization.
And when you have that, then you can buildthings the right way if they're aligned with
how you wanna build them.
A bit of a paradox, but I found that if youpursue this long this extreme long termism,
which is what you're talking about, thisfifteen year timeline, you actually end up
closing LPs and getting them to invest soonereven if that's not the the the purpose.

(47:18):
Do have you found that as well thatparadoxically when you try to be transactional,
it could take many decades, many years, ifever.
And if if you're relational, it actuallyhappens much quicker than you had initially
anticipated?
Totally.
Totally.
I think people I joke about it with investors.

(47:39):
And I have to say, sometimes they forward meemails from other managers, and they're like, I
told this guy no five times, and he's stillsending me stuff.
He's still adding me to the mailing list.
I never ever add anyone to a mailing listunless they ask for one.
It's you you've got to understand, and I I andI'll I'll I'll quantify this that there was a

(48:01):
small foundation in New York that I workedwith.
It was 1,200,000,000.0 at the time.
And the person who was our key relationship atthe time, he he invested in a manager I worked
with in Singapore.
I called him to speak about something, and hisvoicemail said, thank you for calling.
I'm sorry if I don't come back to you, but dueto the volume of calls I receive, I'm unable to

(48:21):
call everyone back.
And I said to him, can you just do me a favor?
I'm just curious as to how many people calledyou last time.
Do you have a log?
He goes, yeah.
I actually have a log of all that stuff.
And it's a $1,200,000,000 foundation.
And he came back to me two weeks later andsaid, do you know what?
Rahul, I've I've counted all the people thatcalled me.

(48:42):
What do you think the number is?
I said, I have no idea.
He said, go and throw me a number.
And I think I said two to 300.
He said 936 firms called me last year, separatefirms.
And that doesn't include the people that arewe're invested with or the people we're doing
work on.
And that's just for a $1,200,000,000foundation.
So I kind of thought to myself, how on earth ishe able to cope with what the volume of emails

(49:08):
received, but also to focus on doing what he'strying to do?
And if one of those managers contacts him everyfive minutes, you know what?
It's easy to just ignore them rather than totry and get their attention.
So and I have other CIOs that I'm very close toshow me their inbox and say, look, I've got a
100,000 unread emails, 200,000 unread emailsbecause they're just constantly bombarded by

(49:29):
people sending this up trying to get theirattention.
None of those people spend their time gettingto know the organization and who they are, how
they invest, what they're looking for.
This is not about you selling something.
It's about the people on the other end tryingto see if what you do is a fit for what they're
trying to do, and that it's just finding thatsynergy there.

(49:49):
It's not about selling.
It's just not about selling.
Time and time again, I've never hit anyone inmy life.
But if someone says to me, you're a marketer,you're a seller.
So I get so angry.
Just I wanna hit someone because that's justnot what it's about.
It's not about selling.
It's just not that.
And so all those people who constantly sendemails saying, are you gonna invest with us?
Who constantly send their reports and theirstuff like that.

(50:12):
You know what?
Pick up the phone and understand who you'resending that to and really what they're trying
to achieve.
Because most of time, they're gonna ignore you.
I wonder if there's some evolutionarypsychology principle here where people can
almost literally not keep an organization intheir head.
They keep people in their head.
So you say that you're building a relationshipwith them, you, Rahul.

(50:32):
In many ways, maybe our brains are not wired ina way to even build relationships with
organizations.
It almost has to be to the person.
A 100%.
A 100%.
The firm I've worked with the longest in mycareer is the Hewlett Foundation since 1998.
Twenty seven years I've worked with them, andthey've invested in 11 managers that I've
either worked with, recommended, represented insome way.

(50:56):
That's a personal relationship that the firsttime I met Anna Marshall, the current CIO, she
fired the firm I worked at.
But the reality is it didn't matter because Irespected and understood why she fired us and
the fact is about maintaining a relationship.
And then I went to TCI and she called and sheinvested with us.
You know, it it's and she's done that severaltimes since.

(51:18):
And I understand from her perspective, we havea relationship where she will call me and say,
look.
This is what we're looking for now.
Do you have any ideas?
Or we've met these three guys.
What do you think?
That's not about the institution or who I work.
That's the personal relationship.
Right?
And over these couple of decades, I've got toknow her and understand who she is and what she

(51:40):
does.
And there's times she'll call me about amanager.
I'm like, listen.
The returns are great.
You will not like that guy.
It's that guy is not your guy.
You know?
That's not the guy who's gonna be transparent,open with you, able to give you access to his
team.
Well, all the stuff that I know that she caresabout.
So it is a one on one.

(52:00):
It is a personal relationship.
I don't care what anyone says.
You know?
Yes.
You can have great relationships betweenorganizations, but those organizations
effectively build those relations based oninteractions between individuals.
Right?
Those institutions are not speaking to eachother.
It's people that's speaking to each other thatrepresent those organizations.
You spoke about this $1,200,000,000 foundationthat had 900 plus calls in a year, not even

(52:25):
from managers they were looking for or in theirportfolio, but but other other managers
soliciting.
There's so much noise when it comes to LPs,voice mails, inbox.
How do you break through?
Everyone's trying to reach an LP.
No one could get through, and you're havingthese fifteen year relationships.
What are you specifically doing differently?

(52:46):
I'm I'm always trying to be helpful.
That's the first thing.
It's not about me.
It's about them.
What what are they doing?
What are they solving for?
They're looking at a space, a strategy, anasset class.
How can I help them?
They're a new CIO.
What they're trying to achieve?
I'll give you some great examples.
During COVID, six female investors that I knowvery well all were calling me about the same

(53:13):
things.
They'd all become new CIOs of differentorganizations.
I thought to myself, listen, I'm helping theseguys, but actually they should all speak to
each other because they've all got the sameissues.
And I connected them.
And I'm so proud to say that that group of sixCIOs is now over 30 female CIOs from The UK,

(53:35):
from Europe, from The US, from Canada.
It's incredible and they all meet every courseand they talk about and it's just trying to add
value to these guys.
It's institutional alpha.
It's not about the portfolio or it's not aboutthe managers like how can I help these people
come together?
Similarly, when there's people who are lookingat a certain asset class or certain space, I
have people messaging me last week.

(53:56):
I'm coming to London.
I wanna look at credit managers.
Who do you recommend?
And I gave them a list of 30 managers to comeand meet.
So that's I think why people will take my call.
Not because of the manager I work with, notbecause of me, but because I can help them.
And I think that's the value add.
I'm not looking for anything in return.
All I'm looking for is ability to call them intwenty years time if something interesting

(54:20):
comes up in front of me that I think they'lllike or there's someone who I think they should
meet and that's really what it's about.
A lot of people do what I call wheelbarrowing.
They come on, hey David, do want to buy this?
No.
Do you want to buy this?
No.
Do you want to buy this?
And there's gonna come a point where you'relike, don't bring your wheelbarrow because I'm
not interested.
No one ever says, hey, David.
What do you want in the wheelbarrow?
Right?

(54:41):
If I'm just trying to show you stuff to try andguess what you might like or not, you're not
gonna you're not gonna buy in anything that'sin my wheelbarrow.
But if you say, Rahul, can you bring an orangewheelbarrow next time with brown vegetables in
it?
I'm gonna do that.
And then say, oh, by the way, there's thesegreen ones as well.
Maybe you should try them.
We'll have a look at them and see as well,rather than just bringing any random

(55:01):
wheelbarrow around to you.
So I just kind of trying to listen to peoplewho they are, how they think, what they want,
what their issues are with their institution,where they look, where they have holes for
things they're trying to solve for.
It's a lot of work and it's hard work, but Ilove it because I always get to speak to people

(55:22):
that I wanna speak to.
And you just can't do that by just droppingpeople.
Are you gonna invest in this fund?
Here's our latest report.
Oh, we were up last month.
Yeah.
Who cares?
It's one month.
It doesn't tell you anything about the trackrecord whatsoever.
Right?
People don't smart investors don't buy shortterm performance.
Right?
Again, back to David Swenson's point, it'sabout consistency.

(55:43):
Are you able to consistently do something?
Even sometimes when you're wrong, but you justdo what you do.
So there's some element of predictability whenyou go in someone's portfolio that you are
solving for something that they're looking forthat is going to be consistent.
When we build friendships, we build humanrelationships, We have consistency as a key

(56:04):
thing that we're looking for.
Consistency of relationship, of values, youknow, of interactions, whatever it may be.
And we have expectations, right?
There's some friends we deal more consistent,more regularly with, some we deal less
regularly with, but there's a consistency.
And I think that's again back to the point Isaid for this is all about human relationships,
right?
It's not about performance.

(56:25):
It's just I think people just forget that timeand time again.
Yeah these relationships transcendorganisations, they last decades you know we
have investors that have invested with us two,three, four, even one, five times across
different organisations.
That isn't about me, It's about it's about therelationships between human beings.

(56:48):
It's not about our firm.
It's about the relationships between people.
And that's they they know what to expect fromus, and that's a consistency thing.
So I just think it's, you know, important.
So tell me about Parvis Asset Management, whereyou've been for almost twenty years.
Parvis is a European equity house.

(57:10):
We manage about 11 and a half billion euros.
Most people don't know us.
We sit on the TCI platform with what we'rereally trying to do is invest in companies that
are growing through some source of transitionchange or have been impacted by news, short
term news, that people either don't have thetime or the time horizon to do the work to

(57:35):
understand what's really going on.
That's really what we're looking for.
So we invest in a very concentrated manner onthe long earning strategy, 10 to 15 names.
On the long short strategy, 10 to 15 longs and25 to 30 shorts.
And what ends up happening because timearbitrage is our edge is that we end up being

(57:57):
very contrarian.
So we go in when everyone else is leaving.
02/2012, big euro crisis.
We bought financial institutions in Europe.
02/2015, Eugene being clamps down and Gibson incorruption.
We buy luxury names.
02/2018, everyone thinks Juul's gonna take overthe world.
We buy British American tobacco.
So we do the opposite of what everyone else isdoing.

(58:20):
And our clients have afforded us long termcapital.
And I work with, you know, the most incrediblepartners in the world.
It's it's just amazing.
It's I wake up every day and pinch myself, andI'm humbled.
And even though we have, you know, quite alarge asset base, now we have about 70 clients.
It's not big.
And just really, really high quality people whosupport us and we have great relationships

(58:44):
with.
I have an incredible team.
There's only eight of us in the wholeorganization, and then we outsource everything
to TCI.
But our mission is to be below the radar, notpeople not to find us because most people don't
know who we are, and I like
And you have this contrarian approach whereyou're buying when stocks are down, then you

(59:06):
hold until the narrative catches up to to theintrinsic value.
We look over a minimum three years.
One name has been in the portfolio forseventeen years.
It's been anything from 2% to 25% position.
But, yes, we we look at we look at free cashflow over a market cycle.

(59:29):
That's really what we're looking for.
So minimum three years.
I think the headline should be, would we investin these companies if the market close to five
years tomorrow?
That's really what we're trying to trying tolook for.
So, yeah, a very strong relationship withmanagement.
We won't invest in companies unless we know themanagement, have a relationship with them,
understand their alignment, their ability toallocate capital, and just really get under the

(59:54):
bonnet in terms of all the organizations wemeet with.
And I'll say this proudly, as everyone goesmore digital, we go more analog.
So we do more trade shows.
We do more consumer surveys.
We meet competitor suppliers.
We go to more conferences.
You know, we've been in the field, in thecompanies that we're working with, going to

(01:00:16):
factories, going on ships, doing all that sortof stuff.
So we really we're not buying stocks.
We're investing in businesses and holding themfor the long term.
There's a famous saying, the market could stayirrational longer than than you could stay
liquid.
Even if there is intrinsic value in thecompany, how do you make sure that you're able
to hold that name for for the three yearminimum period?

(01:00:38):
We keep on turning the stones and doing thework and making sure that there's nothing we're
missing.
We analyze the regulatory frameworks.
You know, a great great position we had for along time, UniCredit.
We held it for eight years.
We made seven times our money.

(01:00:59):
But for the first two years, it didn't work.
It just didn't work.
But we knew that the transition in management,the new CEO, his vision, his ability, his
understanding of the business, his relationshipwith the regulator was gonna get him to where
he wanted to go.
It's just gonna take time.
So anything we do is not for today.

(01:01:19):
It's thinking three years out.
We're investing for tomorrow.
Literally, that's what we're doing.
It's not about now.
What what when you think about markets, whatare markets doing?
They're pricing tomorrow.
That's literally what they're doing and that'show we think about investing.
We think markets are inefficient but I thinktrying to understand where is the value going
to be in three years time.
So sometimes we buy businesses and they'revolatile, it looks like we're crazy and look we

(01:01:44):
don't always get things right for sure but wewill do enough work where we really sort of
understand here's a really good opportunityhere.
We're looking for 35% IRR's over a three yearperiod as our hurdle to get into the portfolio,
earn up to 10% of the free float of a company.
So we don't buy the momentum, for example,right now in European defense names and in

(01:02:05):
financials.
It's just not what we do.
It's not who we are.
We're looking for the the contrarian, the underresearched, the under loved, the misunderstood
names.
And you mentioned you short 25 to 30 names atany given time.
How do you choose the stocks to short?
It's been an evolution.
Shorting was not something we were good at, butwe gave at the time who the person who was our

(01:02:30):
youngest analyst in 2017 said, take this shortbook and spend time on it and see what you come
up with.
And he spent eighteen months, twenty fourmonths analyzing what we'd done, tried to do it
again, then understood it wasn't working andthen sort of really went back to drawing board
and sort of figured it out.

(01:02:50):
So we look at fakes, fads, frauds, overpromotional, highly marketed, over levered, and
companies particularly benefit from short termmomentum.
So a lot of names, for example, were saved byCOVID.
We're able to go online, but the reality isthat this is what's sustainable post COVID.
So we made a lot of money in that period.

(01:03:11):
And that's really what what we look for.
So again, some of those names that we shortpeople would be like, how can you short that
name?
But people are buying the hype and the shorttermism of those names and don't really
understand the long term value that's going onbehind that.
So we never meet management there becausemanagement tends to be over promotional.
So we look underneath those businesses andreally spend time understanding what trying to

(01:03:34):
do.
We want a minimum 50% downside when we'relooking at these things.
And again, we can be wrong for a long time, butwe won't have now more than 3% any one name.
We'll just cover them as they get to 3%automatically.
John Viscardi on our interview when we talkedabout you, talked about your famous email list.
What does somebody need to do to get on youremail list?

(01:03:58):
So the email list is it's really for ourclients.
That's my primary focus because I always wannabe helpful to them.
So I receive so much research from everywhereall the time.
So I go through it and pick the best bits ofresearch that I believe will be helpful to

(01:04:20):
them.
And then I have a very small list of otherpeople who I have very strong relationships
with, who we mutually help each other, who'sorgan I'm on the advisory board for
iConnections.
And so, obviously, I've helped Ron since thebeginning, and it's really important to me that
I help them and they're successful.

(01:04:42):
And so them understanding all the things thatI'm seeing and that clients are interested in
is really important.
So I share that with the entire iConnectionsteam.
And then there's a few other groups that Ishare with managers I work with, stuff like
that.
It's it's hard to get on my list, but, youknow, David, I would add you to my list.
Well, I'm honored.

(01:05:03):
I know this kind of antithetical to to yourethos.
You like the in person meetings, but this thislist seems to be a useful tool for you to scale
your value add to to a small group of people.
What are some other technologies or processesthat you do to in order to gain leverage on
your time when it comes to relationships?
I don't use technology to gain leverage on mytime.

(01:05:24):
I do the opposite because the problem is, iseveryone's using technology to do that.
And I wanna be the guy who does the opposite ofwhat everyone else is doing.
So as everyone goes more digital, I go moreanalog.
The number of people that say to me is like,why do you go to The US every month?
Why do you spend?' It's like because that's theway that I maintain relationships.
I get in front of people, I spend time withthem, I understand what's going on with them, I

(01:05:46):
will have a drink with them.
If they've got some stuff going on at work thatthey can't talk about at work, I will meet them
outside work and all the rest of it.
So you don't get that from going on a Zoom.
You don't get that from having a call fullphone conversation.
You get that face to face.
You know, the the real connection with humanbeings is when both sides are vulnerable.

(01:06:08):
And when both sides are vulnerable, you becomeavailable.
And when you're available, people let theirbarriers down.
And you can only do that when you're talkingface to face with people.
During COVID, I had to do that during overZoom.
It was the only way to do it.
But a lot of relationships I made during COVIDhad turned out to be very good personal

(01:06:28):
relationships one on one.
But I still think the face to face is justunparalleled, which is why for as long as I can
travel, I will just travel and and meetinvestors.
It's just so important to get in front ofpeople.
They appreciate you making the time, especiallywhen it's places that are difficult to get to.

(01:06:48):
And just seeing someone face to face is justincredible.
I remember the first business trip I made afterCOVID was iConnection's first conference in
Miami post COVID.
And David, I travel so much.
I forgot how to pack.
I can do three weeks travel in the carry on.
But all of a sudden, was going away for fourdays and I packed this gigantic bag because I

(01:07:10):
just thought, what what do I normally take?
And I just threw it in.
That aside.
But when I started sitting down with people,remember, listen.
I watch this at 03:00 in the morning.
But once we got talking because it was allabout how was COVID on you?
How did it affect you?
How did it affect work?
How about your kids?
But and just people didn't stop talking.
And you people just really miss that personalconnection, that one to one time that they just

(01:07:35):
didn't have over COVID.
And so I think it's become even more importantbecause it's easy to have the lazy way out and
do Zoom.
Zoom's a great filter for investors to sort ofsee who they're gonna wanna spend time with, I
think.
But I just I think, for me, I'm never evergonna replace that face to face human

(01:07:56):
interaction because you just make connectionsthat you can't make using technology.
I think it even works to the extreme.
My former colleague, Max Stadler, who spentseven years at Goldman, he taught me this, to
me, which was crazy idea of flying for onemeeting 3,000 miles.
So you fly to LA for one meeting.
Obviously, you could build an itinerary aroundthat, but just how important that face to face

(01:08:20):
was that you would actually get on a planet andand fly for that long was very novel to me, but
ended up something that I integrate into intomy business every day.
I completely agree with that.
And I in 02/2006, I flew to Australia for a dayand came out with a billion dollars.
So I know sometimes you have to do thosethings, but I did it.

(01:08:40):
I left here Friday, landed Sunday, meansMonday, flew back Tuesday.
But it was, you know, huge.
Well, on that note, this did did not disappointthis true master class on being inside the mind
of somebody that has raised such a enormousamount of money and somebody that has done in a
way that actually builds these lifelongrelationships.

(01:09:02):
A lot of people think there's there's conflictbetween sale, quote unquote, sales and
relationships.
I know you don't like to be called asalesperson.
Internalize the relationship, internalize thevalue that they're bringing to their client to
such a degree that the sale kind of happens byitself.
So it's been absolutely an honor to spend timewith you, and, thank you for jumping on the

(01:09:23):
podcast.
David, honestly, it's such a pleasure to spendtime with you, and thank you, for including me
in in the amazing work that you do.
I'm really I'm really humbled.
Thank you.
Thank you, Rahul.
Thanks for listening to my conversation.
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(01:09:43):
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