Sukesh Pai, CFA

Did you know that you can have multiple RIA firms all representing the same fund? For instance: One firm is the traditional wealth management type who has a pretty decent AUM but very little allocated in alts and funds. Firm 2 is 100% fund management and all in alts. They have the back end and management track record. When you combine the two, now you have a big pool of LP's from RIA 1 and the experience form RIA 2. Win Win Win!!! This is where a lot of emerging mangers get caught up thinking that they have to be the whole package on fund 1. Sure, it's the end game, but why not partner and Co-GP with an experienced firm on the first one and then do what you want on all future funds? To each their own of course!

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A must read for anyone curious to know how we intend to create alpha in large-caps. Their strategy is in place, and I have utmost confidence on superior and diligent execution. A big shout to Satish Kothari, CFA Kshitij Kaji, CFA for the maiden memo of SLMP, SageOne’s large-cap oriented portfolio. Do share your feedback with us by writing to SageOne Investment Managers

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In our latest episode, Justin Carbonneau and I talk with Anupam Ghose about the huge growth potential of India and how he builds a concentrated portfolio to take advantage of it. We also cover the basics of both the Indian economy and stock market, the impact of the recent election and a lot more. https://lnkd.in/erwkUJxY

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The business of the business… Read it.

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New or smaller VC, PE or HF manager? AUM less than $50 million? Great Performance? Trying to raise assets? Struggling and failing?   Sounds all too familiar: It’s due to poor or non-existent marketing Let’s get real about raising assets for “sub-institutional” managers, those with AUM between $0 and $50 million. IT’S HARD AND A STRUGGLE.   Raising assets in a crowded, hyper-competitive, complex and complicated market from investors that are risk averse, stringently selective and idiosyncratically demanding is more challenging and difficult than most new and sub-institutional managers understand. The fact is the majority of sub-institutional managers fail to get AUM beyond personal capital long with small amounts from family and friends even when they have exceptional performance. Plainly speaking: There is a lot of BS, hype, propaganda and completely wrong information about marketing and fundraising for small managers with AUM less than $50 million Since 2011, Johnson & Company has specialized in meeting the marketing challenges for "sub-institutional" managers. 25+ years experience, expertise and skill uniquely equips a new or smaller manager with the FACTS and proven structured, disciplined and focused PROCESS supported by independent high-integrity data and research, accurate information, objective insight, expert instruction and frontline intelligence that optimizes marketing process execution to maximize the success, efficiency, economy, expedience and effectiveness of raising assets. If you’re a new or smaller manager, with AUM less than $50 million struggling and failing to raise assets, first get the facts: https://johnsn.com/facts If after your review of the “FACTS”, you’d like a candid, no-nonsense conversation about marketing and raising assets, contact me, I welcome the opportunity. bryan@johnsn.com

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📈🏢 Aby Rosen's RFR Holding is facing a staggering $2.5B debt bill as defaults pile up! 💥 🔎 According to a recent Bisnow article, RFR Holding, a prominent NYC real estate firm, is grappling with mounting debt and defaults. The company, led by billionaire Aby Rosen, has a portfolio of high-profile properties, including the iconic Seagram Building and Lever House. 🏢🏦 📊 The firm's debt load has surged to a whopping $2.5B, with $1.1B in loans maturing this year alone. 💸 The pandemic has hit the commercial real estate market hard, causing defaults to skyrocket. RFR Holding is no exception, with defaults on several properties, including the $200M mortgage on the Seagram Building. 📉 🗣️ "The pandemic has created a perfect storm for commercial real estate," said one industry expert. "Companies like RFR Holding are facing unprecedented challenges as they navigate this difficult time." 🌪️ 🔜 So, what's next for RFR Holding? The company is reportedly exploring options to refinance its debt and avoid further defaults. 💡 With the commercial real estate market showing signs of recovery, there's hope that RFR Holding can weather this storm. 🌞 Stay tuned for more updates on this developing story! 📰🔔 #RFRHolding #CommercialRealEstate #Debt #Defaults #NYCRealEstate

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Torn between not saying anything about the who-cares verdict yesterday in New York or ever commenting out loud about the issue of possible or imminent statehood for a certain Mideast province? city state? pile of ruin?, I thought I'd turn my attention to the NBA Finals so as to not lose all my beloved LinkedIn connections in one fell swoop. I did not see this coming. Kyrie Irving was teetering for years on irrelevancy status as he bounced around from team to team, and every time he left a franchise barely no one could stand him. Ends up in Dallas because, sure - why not, and gets paired with one of the most solid young players the league has ever seen: Luka Doncic. I do not think it is sacrilege even in Boston to compare Mr. Doncic to a certain Celtic who once wore the jersey #33. These two played different positions, mind you, but the results look pretty much the same: a ton of scoring, myriad assists, boards, defense, teamwork and, most important: wins. In the case of the afore-referenced Mr. Larry Bird, this also meant championships - three to be exact. I predicted Boston - Denver in my overview series several weeks ago. So I guess I got it half right. I picked Boston to win it all but I have since changed my mind in the interim based on what I have seen thus far in the playoffs. The Celtics have fallen into a bad, predictable trap of constantly playing to the level of their competition. This works against an Indiana Pacers team depleted by injuries. It does not work, in my view, against a Dallas squad with two future Hall of Famers and a bunch of 6'9" freak athletes who can run, defend, rebound, block shots with the best of them. I like Jayson Tatum and Jaylen Brown a lot, they are both amazing talents, and will win championships at some point. I do not think, however, they will reach the pinnacle of a championship season in 2024. Maybe next year. Predictions: Dallas in 6. Luka MVP. As for the other headaches at the top: national embarrassment; still, unlikely to be decisive in the fall. Coin flip as to who wins. You tell me who wins Cuayahoga or Dade County and then you probably have your winner. It's certainly not my call and I have no idea. Headache #2: I think you can grant statehood and neighboring countries should and must defend themselves. Not granting statehood is indefensible for too many reasons to count. We're on the wrong side of history but that does not mean we shouldn't defend our loyal allies - we should. Let me try this again: you can have statehood and defend Israel; those two ideas are not mutually exclusive. That's my thought.

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Listed closed-end funds are an underfollowed, underutilized tool in portfolio construction. Understanding the z-score may help navigate this small, but interesting corner of the market.

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DBi seeks to find the simplest, most efficient path to replicate the pre-fee returns of #hedgefunds. Allocators often question whether it's too simple. Here's an astonishing quote from Nick Patterson, a pioneering quant at Renaissance Technologies LLC: "I think the most important thing to do on data analysis is to do the simple things right. So, here’s a kind of non-secret about what we did at Renaissance: in my opinion, our most important statistical tool was simple regression with one target and one independent variable. "It’s the simplest statistical model you can imagine. Any reasonably smart high school student could do it. Now we have some of the smartest people around, working in our hedge fund, we have string theorists we recruited from Harvard, and they’re doing simple regression. Is this stupid and pointless? Should we be hiring stupider people and paying them less? And the answer is no. "And the reason is nobody tells you what the variables [are] you should be regressing. What’s the target? Should you do a nonlinear transform before you regress? What’s the source? Should you clean your data? Do you notice when your results are obviously rubbish? And so on. "And the smarter you are the less likely you are to make a stupid mistake. And that’s why I think you often need smart people who appear to be doing something technically very easy, but actually usually not so easy." "Do the simple things right" and "don't make a stupid mistake" sums up what Mathias Mamou-Mani and I have sought to do for fifteen years. #hedgefunds #ctas #ucits #etfs

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May was a whirlwind of activity! Fresh from the launch of my new book, 𝑨𝒍𝒘𝒂𝒚𝒔 𝑳𝒆𝒂𝒓𝒏𝒊𝒏𝒈: 𝑳𝒆𝒔𝒔𝒐𝒏𝒔 𝒐𝒏 𝑳𝒆𝒗𝒆𝒍𝒊𝒏𝒈 𝑼𝒑 𝒇𝒓𝒐𝒎 𝑮𝒂𝒎𝒆𝑺𝒕𝒐𝒑 𝒕𝒐 𝑳𝒂𝒖𝒓𝒂 𝑴𝒆𝒓𝒄𝒊𝒆𝒓 𝒂𝒏𝒅 𝑩𝒆𝒚𝒐𝒏𝒅, the GameStop saga took another turn with a new meme stock frenzy.   Amidst all this excitement, I had the privilege of sharing my insights and stories on several fantastic platforms.   Here’s a quick roundup of some notable interviews from the past few weeks:   • FandomWire with Vibha Hegde: We dove into the parallels between the GameStop stock phenomenon and Taylor Swift's loyal fanbase. A unique exploration of how passion impacts markets! Read here: https://bit.ly/4aXl2XK.   • Innovation and Leadership Podcast with Jess Larsen: I shared my journey of starting GameStop, creating a $100M+ makeup company, and leading Kinko's (eventually FedEx Office). Listen here: https://bit.ly/3yIhRFJ.   • The Main Street Business Podcast with Mark J. Kohler: Discussing the audacious bets that made GameStop a household name. Watch here: https://bit.ly/4e0OkY1.   • The MILMO Show With Lacey Langford, AFC®: A deep dive into strategies for business growth and strategic exits. Tune in here: https://bit.ly/4e1IRAi.   • Observer interview with Sissi Cao: Reflecting on the GameStop meme stock frenzy and why it didn't catch me by surprise. Read the full story: https://bit.ly/457tulM.   • The Hype Happy Hour Podcast with Michael F. Schein: Exploring why I decided to found GameStop and Laura Mercier Cosmetics without having a passion for either video games or makeup. Listen in: https://bit.ly/3yQ3b7o.   I thoroughly enjoyed these discussions and am excited for you to dive into them.   For more in-depth insights and lessons from my diverse business journey, my book is available on Amazon. Whether you're looking for leadership wisdom or entrepreneurial inspiration, 𝑨𝒍𝒘𝒂𝒚𝒔 𝑳𝒆𝒂𝒓𝒏𝒊𝒏𝒈 has something for you. Grab your copy today: https://amzn.to/3xEBvSk.   #Leadership #Entrepreneurship #Mentorship #Teaching #Learning 

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Narratives drive public markets. And as George Soros noted with respect to market movements, narratives are also reflexive. The narrative itself feeds into ancillary threads of support for the macro narrative. DISH Network equity performance has been driven by a single overarching narrative of negativity. Simply put, the narrative states that a fourth network is not a viable business and that by pursuing a vision of such, DISH Network is destroying value in the form of malinvestment in network capital expenditures and associated negative operating cash flows. This negative hyper-reflexive narrative has turned to profound negativity that a cloud-based Open RAN network architecture has any unique value. It has been extended to the belief that the business will ultimately file for bankruptcy. This is where the reflexivity takes a comical twist. Analysts have intellectually contorted their belief about the company that in such an inevitable bankruptcy, due to some miraculous twist is fate, and defying precedent, that the company would be forced to sell their spectrum at a deep discount to book value (25% to 50% per the analysts at Morgan Stanley). This belies the fact that there is now a scarcity of spectrum and material excess demand beyond what is presently in the market INCLUSIVE OF DISH Network This is how markets work. Narratives are formed and as they take root, subordinate threads become easier to believe as the primary narrative has become common knowledge. Narratives have never equated to value. Technology markets often suffer from becoming victimized by Amaras Law. Amara's law is a statement that people tend to overestimate the short-term impact of new technologies while underestimating their long-term effects. In markets, this often leads to bubbles. The enthusiasm around AI is undergoing this effect. For DISH Network perhaps what we are seeing is Ergen’s Law. Ergen’s Law states that markets tend to misprice value migration driven by structural and technological change. When an industry structure and supporting technological architecture and business models have been in existence for the duration of an analysts career, seeing change is quite difficult. In fact the change is so profound as to call into question fundamental assumptions about market reality. Narratives change. Asset value has a persistence that withstands all market sentiment shifts. The best managers focus on asset value not security prices. The value of the DISH Network spectrum alone is materially higher than the negative market narratives indicate. The race is long and is far from over. The markets mispricng of the assets of DISH Network will create a terrific case study down the road. But for today, we have a narrative fever dream to witness. Enjoy the show.

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I spoke with Bilal Jafar at Financial News about the FTCs recent ban on non-competes. While senior PMs can make as much as $120MM, they often have to sign straight non-competes to not join rivals or launch their own fund, sometimes for years after leaving their current firm. “The FTC’s announcement will not only increase the flow of talent and growth of newer funds, it could also force firms to be more competitive with retention strategies instead of the threat of sitting out for 18 months,” said Max Heppleston, managing director at hedge fund recruitment and consultancy firm Fredriks. “This could be massive for newer funds as top portfolio managers, analysts, and teams will be able to move more smoothly, and startup hedge funds can get going quicker, which can be so important to their success,” he added. Obviously, as a headhunter I am slightly biased, but the unrestricted flow of talent is core to a free market, I believe this will drive healthy competitiveness in the space and could help reverse the trend of declining launches of new funds.

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The Times They Are A Changin’ The three pillars of Private Credit have evolved from 1) Middle Market Lending, 2) Lower Middle Market Lending and 3) Upper Middle Market Lending to a broader, larger TAM that is worthy of consideration. Capital allocators have greater flexibility with a strong potential for enhanced returns by optimizing and diversifying their portfolio of Private Credit holdings. Key to select upper-quartile, experienced managers, however the approach to strategy that has prevailed during the past 10 years, may not be optimal in the years to come. Looking forward, Private Credit will be defined differently. Direct Lending will continue to receive allocations, however Asset-Based Lending will begin to take a larger share of the growing pie. ABL is huge, the TAM is measured in tens-of-trillions and I believe will grow to be as large as Direct Lending in 10-years’ time. Marathon Asset Management has been actively running its ABL strategy for the over 15 years and as an incumbent and experienced ABL manager we see firsthand how this market is developing. Basel III-Endgame will advance the development of Private Credit ABL just as Basel III enabled private credit managers to capture market share for Direct Lending over the past 15 years since the GFC. As the global economy grows, both Direct Lending and ABL will benefit as they form the 2 key pillars of the Private Credit market. The 3rd leg of the Private Credit stool are Opportunistic Strategies, defined as Capital Solutions, Dislocation & Distressed. Capital Solutions are a critical component to lending allowing for both growth capital as well as bridge capital during times of stress or transition for a company. Capital solutions may require a turn of extra leverage, carrying significantly higher coupons (~200bp+), +warrants supported by super-strong covenant package that can provide the lender with higher IRRs and MOICs.. Given current market conditions, capital solutions are a key component for any opportunistic lending program. As companies go all out to avoid BK, distressed exchanges have added to the opportunity set, as new money solutions enable companies to exploit weak documentation within credit agreements lenders previously accepted. Today, Opportunistic Credit is robust and I see as many opportunities in Capital Solutions as I do in special situations and dislocation. The right combo for a Private Credit portfolio might be 40% Direct Lending, 40% Asset-Based Lending & 20% Opportunistic Credit. Private Credit performance is remarkably consistent with lower volatility relative to most alternative assets. Porfolio Construction is always top of mind for me - how would you build your Private Credit portfolio? What strategies, which managers, how big of an allocation across a balance book that includes Public Debt, Public Equities and Alternatives? Private Credit in aggregate is approaching $5T across various strategies. I believe it will 3x ($15T) in 10-years.

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Thanks for all the quiz responses to my previous post - over 120 in total from the CF / PE community with time still to run! I agree with the majority that False is the right answer. If you want an explanation, give me a shout, I have already exchanged messages with a couple folks directly. What I will mention here though is an observation from M&A training sessions, which is those who are new to this can sometimes (understandably) be overly focussed on equity value and neglect the rest of the EV to Equity bridge from a deal mechanics perspective... We have another Q lined up for next week, and this should cause a greater split in the group with a bit of luck! #corporatefinance #privateequity #investmentbanking

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Authors, part 2 One of my favorite episodes of the original Star Trek is Space Seed (this episode was a prequel to the movie, Star Trek II: The Wrath of Khan). Guest star Ricardo Montalbán’s character (Khan Noonien Singh) invokes a line from John Milton’s Paradise Lost (“Better to reign in Hell than serve in Heaven”) and on this day [April 27] in 1667, Milton sold its copyright. The image is a photo of the agreement. The British Library believes it’s the first written contract between a publisher and an author. Milton received for £5 (equivalent to £994 or $1,145 today) upfront plus three additional payments of £5 for each additional 1,300 copies sold. No money for Milton beyond those four payments no matter how many copies were sold. In fact, he only lived long enough to receive two payments. The first edition still exists, and I found two copies currently for sale: One for $45,000 and the other for $50,000. This story raises 3 questions. 1. Was Milton exploited or was he just a bad negotiator? He certainly wasn’t naïve about money. He came from a well-off family and had substantial assets throughout his life. With the benefit of hindsight, he did strike a bad deal, but that’s not the lens through which decisions should be evaluated. The correct lens is whether the decision made sense given the information available at the time. Before publication, Milton was so unpopular due to his political activities that neither he nor the publisher had their name printed on the earliest copies of the initial print run. It wouldn’t surprise me if he shopped the book to various publishers and only one was willing to take a chance on it. It’s always hard to negotiate a sale when there’s only one potential buyer on the other side. 2. How do authors fair today? Milton’s contract reminded me of Edgar Allan Poe’s miserable earnings (more on that here: https://bit.ly/ehnpoe). As for today, the Authors Guild surveyed its members and the median income for full-time authors was $10,000 in 2022 and $20,000 if all author-related income was included. If you’re writing the Great American Novel, keep your day job. As for Milton, he came from money and had earned some on his own, but by the time he dictated Paradise Lost he was old, blind, and condemned as a traitor (narrowly escaping prosecution). Was he seeking to publish it to make money, or did he to his story to be heard? I’m going with the latter. 3. Should Paradise Lost be on your summer reading list? I haven’t read it, so I’ll defer to Mark Twain. In 1900 he said (and I’m paraphrasing): I don’t believe any of you have ever read Paradise Lost, and you don’t want to. It’s a classic - something that everybody wants to have read, and nobody wants to read.

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