Invest Like The Best
Episode 7 A Deep Dive into Hedge Funds
Invest Like The Best

Episode 7: A Deep Dive into Hedge Funds

A Deep Dive into Hedge Funds

Ted was the founder, president, and co-chief investment officer at Protégé Partners and also the author of "So You Want to Start a Hedge Fund?". We cover David Swensen’s model for investments at Yale, the current state of fundraising, and his advice for hedge fund investors.

[00:01:32] – How he discovered Campbell and the Hero’s Journey retreats

[00:04:51] – A dive into Ted’s backstory including his time at Yale and the formation of Protégé Partners

[00:06:29] – Lessons learned from David Swensen and his work in endowment management

[00:08:22] – What were some of the checklist items that worked out well in David Swensen’s model for investments in Yale’s University Endowment assets

[00:11:06] – A look at the structure that Yale had in their investments given their massive influence

[00:14:04] – Shift from Yale to Protégé and how many seed investments they made there

[00:16:00] – The success rate at Protégé and how it was measured

[00:17:20] – What styles were most prolific at Protégé Partners

[00:17:50] – The economics that a seeder takes in a hedge fund

[00:18:34] – What did they look for in the managers that they made investments in

[00:22:27] – How Ted was able to get his first investors to support Protégé at the beginning

[00:23:46] – Exploring the current state of fundraising

[00:25:45] – What role does charisma play in raising money in a hedge fund launch

[00:26:51] – The state of fees and where they need to be

[00:35:26] – The paradox of skill and why we seem to have higher fees for lower-skilled managers

[00:39:29] – Ted talks about fee structures for hedge funds that mimic frequent flyer programs and why that could work for hedge funds

[00:43:34] – Patrick suggests something radical, taking fee discounts, investing them over time, but investors lose them if they divest within a certain amount of time

[00:45:17] – A look at some unique styles of funds

[00:48:54] – Which of the edges would be most important to Ted in an investment decision: a strong pedigree, an impressive track record, or a unique idea?

[00:51:05] – Patrick questions whether or not all of the folks who are “successful” are in fact talented or did they just become lucky to be a part of the right team/company

[00:55:25] – Advice to allocators in terms of over-concentration vs over-diversification

[00:57:40] – A look at the most memorable investment during the Protégé Partner days

[01:00:22] – How would Ted counsel someone that wants to start a hedge fund

[01:04:27] – Is it getting too hard for allocators to compete with hedge funds

[01:07:43] – What other authors/resources have been helpful to Ted over the years

[01:10:45] – The habits that have been most helpful to Ted’s wellbeing

[01:13:03] – What have been the benefits of meditation for Ted

[01:14:28] – What are Ted’s next interests

A Deep Dive into Hedge Funds

Introduction

Patrick
My guest today is Ted Seides. Ted was the founder, president, and co-chief investment officer at Protégé Partners, a multi-billion dollar alternative investment firm. He is also the author of the very interesting book, So You Want to Start a Hedge Fund? This was the most helpful and insightful conversation I've ever had on this topic. It will be useful for managers, allocators, and any investor interested in the world of hedge funds in general.

All right. Well thanks very much, Ted, for doing this with me. I'd like to start, as I sometimes do, with something completely far afield from investing, which was when we were corresponding to set this up it came up that we are both huge Joseph Campbell fans. So maybe you can start by telling me how you discovered Campbell, and then maybe a little bit about the Hero's Journey retreats that you've turned me on to.

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