Investing Billions - E235: The First Thing LPs Notice That GPs Never Think About

Episode Date: November 3, 2025

How do you train the next generation of allocators—and what separates elite investment offices from the rest? In this episode, I speak with Alex Ambroz, Founder and CEO of the Allocator Training Institute, whose mission is to professionalize allocator education. Alex has spent his career building and leading investment teams across Morgan Creek, J.P. Morgan, Cleveland Clinic, Aberdeen, and now as the founder of Allocator Training Institute. We dive into the evolution of the endowment model, how allocators detect hidden risk, the difference between true alpha and disguised beta, and why collaboration—not competition—is the secret to better portfolio outcomes. Alex also explains how today’s top allocators use data, relationships, and operational excellence to stay ahead of market shifts.

When people ask me why I'm so interested in investing, the best way I explain it is the infinite game of investing. I think it's incredibly well said, and one of the things I've heard other people say, but the more I learned, the less than I know. When I started my investment portfolio, I remember thinking I knew how to invest. I knew how to pick stock. And I thought I was very fit that. Obviously, I knew nothing about death. There's more anything. And then after Warden Creek, I had saturated. experience there. I knew the appropriate and only way to invest for institutional

them, even with families on the foundation. It took me a couple of career cloned with my phone to do therapy well. How much I have learned, but how little I love. Alex, you've had a storied career going from Army

to Morgan Creek, to J.P. Morgan, to Cleveland Clinic, to Aberdeen. Oftentimes starting groups at these allocators. So let's start with Morgan Creek. So you started there in 2005. What was your experience like at Morgan Creek? Lord of Braid was just such an excellent place to start out as an analyst. And I didn't know that. I didn't know going into it that I was going to have this amazing experience. It was a new investment team, our new investment firm, really.

the University of North Carolina of Chapel Hill had hired Mark Yushko from Notre Dame with the senior investor in Notre Dame he joined as the first CIO for UNC Chapel of the UNPIC system

in 1998 and then from 1998 until 2004 the UNC endowment was one of the best performing endowments nationwide and a large part of that was reflection of the investment philosophy that LAR and Global Marr's

album while at UNC. He wanted to do something bigger, we wanted to build something bigger. So at 04, he took the investment team with him and started working brief, and he brought this endowment model

to the Oceana which today is quite ubiquitous, but over 20 years ago, these were really just buzzwords that we all of them really were number four. So the fact that I was able to start with such a high-quality team that had such a sophisticated way of thinking about the world and investing was really just fortuitous. The real focus of the portfolio and the management, and this was a little bit different than others, was Mark and his co-founder's guy named Dutch Kuiper came from Wellington at the CEO-slash-C-O and Dennis Meider, who, what the sales cad that brought relationships

to help bound the firm. The real focus that they recognized was that holistic re-manageal of Western Assault. So the fact that I got to join, you know, be a part of that and be a part of a team that was focusing on

total portfolio mobile, focusing on it on a sophisticated way. As you mentioned, David Twenton, I just wrote the book on the modern endowment style, and Mark Usko at UNC was starting to invest into asset classes like venture and then offering that in Morgan Creek. As Morgan Creek went from zero to 10 billion in assets, what were the characteristics of the early adopter LPs that embraced the Morgan Creek model? And how does that relate to LPs today that embrace trends early? What are the psychographic characteristics of those type of

piece. The first thing I'd say is, where you mention this, and this was really what it was like, that the book, pioneering portfolio management had just come out. It's like just a couple of you over there. And it's not like today where people on Twitter, on TikTok, or a little bit of that exist. And so a lot of the sharing of these investment philosophy and then also sharing up investment revolts. You know, you went to Yale, you were in the endowment community. I remember back then, I'm a Cubo used to put out in the annual report are the performance of multitudesians.

And if you were in an endowment, you could see the list of how every institution did one by one. And you could see at the very top, you know, Harvard, Jack Meyer at Harvard, David Swetton at Yale, the folks who voted I mean it was just more consistent knowing the top

and so that philosophy that engalment model philosophy that David Sleichen his files and that we were the biggest found as well that was something new

but there was another key to the puzzle that Mark Dennis and Dutch realized O'Yon and that was that a lot of

ultra-high network individual of families and involves institutions below a billion dollars, we're receiving piecemeal solutions from consultants, from banks, a little by them.

It was, you know, they might have something that helped them with equity, someone else that would have been in your folks income, someone else that may have helped that way to alternative generally. But there was nobody 25 years ago that was thinking about a total portfolio solution and thinking about

the necessity of a spending policy that reflects the spending needs of the individual institution as well as the liquidity availability of the otherline assets if they're thinking of a multi-asset class approach that includes exposure to deep private aspect that will not be liquid or semi-liquid asset like some absolute return funds. And so putting that all together into one solution

is something back then, you know, sophisticated endowments, the other institutional would go. If you were under a billion dollars didn't have your own investment office, you really didn't have that holistic viewpoint. And so that, you know, which was brought for the Morgan Creek clients,

ranging from 20, I think the smallest client on the team's asset sheet was $25 billion. I think the largest individual client was one Belmont, most for around $250 to $500 million in assholes. So bringing that kind of holistic view as well as, and this was something people talk about today a lot back then was still kind of new, forward thinking about active to high-quality managers

or differentiated philosophical viewpoint. So something that David talked about in his book, that a lot of sophisticated investors talk about today, it is the view philosophically that if an investment manager is down performance-wise, that may be the best time to end up. And today, a lot of people know a lot of people have heard this.

Well, 45 years ago, 20 years ago, that was still very controversial. And a lot of performance, we call the performance chasing, people trying to buy last year's pool. So that view and implementation of a holistic portfolio solution, recognizing that sometimes it's best to enough when a manager was down, that was new back then. One of the best times to invest my view when a manager is down. presumably that's because the entire market is down. The manager might have not made a mistake. It's just the nature of cyclical markets. You also mentioned about separating sustainable returns or alpha versus beta.

Alpha is somewhat intuitive. You might have structural alpha. You might have proprietary sourcing. You might have a special right to win. What are some hidden ways that managers, advertise beta in a way that maybe they mask it in a way that maybe it looks like alpha, but it's actually a high beta risk. How do you know when a manager is actually masking a high beta strategy?

It's an excellent question. The first thing I'd point out, and this is something that seems to be systemic within the alligator community. I've seen it. My whole career, I still see it for this day. When you look at pitchdecks for managers and when you look at the other side

of a pitch stack, you look at the holistic performance report or risk report or something presents you to an investment committee from the out of the side. So the GP side about how that fund is due and then from the outside when they're reporting to an investment committee

or they're reporting publicly their potential. Something always jumps out. And that's a lot of statistics. around risk or performance evaluation are focused will have a number in the other just part of the table. And so you'll see

something when people will talk about, oh, you know, our beta or the beta plug, you know, it's 0.06, or 0.7. And there are choices in my career will be focused on a number when we wanted to have a beta closure of X, no, where I get them have a manager. But data from cap M is just a starting point.

And when Fama and French did the three-factor model and then the five-factor model, if you had a five-factor model to follow French, cap M is the beginning part of it, and the first part of it is beta, which is just the factor exposure to the market is full. The problem is a lot of allocators to this game do not do factor exposure or beyond it,

because beta is a factor, it's normal, the largest factor exposure. And moving beyond that takes a little bit of quantia. to date and then qualitative work. So in large part, a lot of funds have been able to kind of get away with it because

they are reporting a true number and they're just talking about the other number as much. For those that don't know, Fama French improved on the capital asset pricing model cap M and they found that there was additional factors like whether the security, whether

the company was small or large and whether it was value or growth. So they found other ways to more efficiently price the historic returns versus just the beta of the stock. So by adding those other factors, you're able to more effectively price whether it's actually beta exposure, which is maybe it's a smaller value kind of investment versus where it's two alpha, where it's outperformance for the same risk and return. absolutely on that that's something that I find to this day

one of the first analytic we always run I mean at least for the last decade or so and just one and through a pharmacist by-tactor model see what you're doing that's the easiest things to do with part of the easiest way to find out the thing where it gets tricky I've discovered in that for equity law only

equity long short I did well how you might put it fat of these. It's relatively easy to come up with a useful factor model to be assessed whether a manager is adding number one, whether they're adding alpha, number two, will try to your consistency of the factor exposing what they

have. We're free, whether you have any interest in you of attempting replicate those factor exposures. If they're only giving you a beta at a certain factor exposures, maybe that's the kind of beta that you want. The top thing is, in my career for a macro

managers, so like the bridge waters of world, for example. Coming up with a good factor model to explain what, you know, very sophisticated macro managers like that are doing has always been difficult. Going back to the asset allocators that embraced this new Yale model in mid-2000s and other forward-thinking LPs, what are some characteristics of either the institution or the individuals that are first movers in new strategies. One thing I would love and sitting on the allocator side

of the table is that allocators don't see other allocators as competitors. So they're very open to sharing information, very open to seeing processes, sharing about on, doing about strategies, something that when I was working on Wall Street

to get you fired. If you did, if you follow the competitor up, even if it's someone new and what they were working on it. for the ones that are able to kind of leap forward in terms of their investment focus and hopefully blow on their investment outcome, it's really two separate things. Well, the one, and this is the first part, not as exciting, but it is useful, is operationalization of epaucases that allow the investment team that focus on and on

blocks. So a lot of times, actually in my career, I used go to physical with us. A lot of times you'll have young analysts or member gate investments in me focused on what we call them ETL processes. Extract transform and models. Or they're extracting data

from different sources. They're transforming it into a way that in the view and fight others and when they're loading in a lot of it's a lot of them. So a lot of Excel coming up, a lot of PowerPoint, a lot of PDFs that they email out. They want to fight it now. And all that worked.

We always said, later in my career, if this is, if the task that we're doing is something we could hire a high school student to do, we should not be doing. If this is just a time and answer to the task that doesn't really add value, then it's not worth of school. People, the real focus on the investment team,

the real value add is analysis. Analysis of the investment, analysis of markets, analysis of the portfolio, everything focused on the analysis in the decision book, how in that analysis. So the second thing, so the first is really operationalizing and the second is focusing on, and I think they use this term because people of Egypt, but so long,

but I think it's appropriate, is focused on where the plot is going to do it, not where they've right now. So having a good sense on where the markets are moving to or seeing, in some places, virtually seeing, you know, something who they're a very slow rate. Where markets

and therefore where portfolios have owned to go, as one easy to be able and phase by the same interest rate to drop by $0.5.5th. Most people have a very good bent with the change from the operating thing that

will probably continue downwards out of interest. And so it may not be a As is people expect, unless they're a cattle at the only move by the end of election, and being ahead of the expected drop in interest rates, being better than being behind. That's really the two, and that's, that can be almost the toughest of investing and thinking about the portfolio in the future state, and where he wanted to be in airport trying to invest there, knowing, and this is the other part, it's kind of cliche, but it still exists, and

it's still hard of our career, so we have to acknowledge it. is that if you invest in a differentiated fashion from others and you're right, well, people might just think you got lucky. People may not recognize that you took, well, a well-populated risk, you know, full definite of a portfolio. If you take the differentiated you and the implementation of your portfolio on your wrong, well, you might not have a career. And that's very difficult.

And so the default, the natch equilibrium outcome from that fight-owned career optionality is that many investors then tend to fall back to, you know, what are the safest type of proposal, where the consultants signed off on? And that, I mean, you still have decent returns for the portfolio, but that you'll be in the middle of the path. relative to fears or relatively to accept it out from the immune giving inflation environment and the increased spending with the portfolio and as well this is a concurrent thing that is

happening more and more so these days when I ever see my entire entire rule the much lower rate of distributions on private assets which for grant making salvations or pension plans or endowments for spending

you know, that actually would trick them up. So having a forward-looking thing in your portfolio and stuff with the implementation and philosophy and separately, the first thing I mentioned, having an operationalized process

the team can focus on analysis versus data. That's a way that teams can really... I mentioned that the top allocators don't see other allocators as competition. Explain that. How do

the top allocators collaborate with other allocators. Give me a very specific use cases. I was very fortunate in Mike Clare to work on Law Street and work in the allocation community. So I got to see what it's like on both sides of the state. When I was working on Wall Street, if I had called,

well, while I was at the office, I was one of the office, if I called a friend, I mean, one of the guy, and asked them, well, I'm going to be think about the markets. Well, how were they, Instead, what fun do they like? What tool do they use?

I would have found it in contrast. What I experienced when working on the outlet at the table, and I'll give you a specific example on it because I'm so proud of it. Is that you could always call me a fuse. And if you didn't know them, you know, if you wanted to reach out to a fear, Alex later, you have no connection.

You're not connected on LinkedIn. in, you've never met this person, but I saw, you know, Hey, this institution was in the recent magazine articles when I really forward to leap into value. They've implemented choppy apps. What's just talking about now? I don't know if you should call them. You can just either then with the name.

Well, not to pick your brain about how you've got to catch this. Fossets, how you guys are doing some of what things. I've done it a dozen to them. I'll give you one specific example of that I think every alligator for Lincoln. It was phenomenal. I was so glad to be a part of it. I was part of the Steevlin-Pittsford-Alatheta group. This was a non-topic volunteer, led by Alex Gavis. And once a quarter, we would get together in first room at somebody's office, but we didn't hang for a lot on. And before the meeting, you would send around a template.

Well, that was the president of notice for two years, so I was well ordered. We would send out around at Sunkley where allocators would put in their portfolio. And they could put in the actual names of the managers or they could put in, or just some code if they were comfortable with that. And you would put in your exposure sign, either dollar or something.

Yeah, we could put a good sign so how everybody was allocated. This little group would maybe $25,000, and achieve them good for carrying. And then we would get together, once a quarter, and when we would sit around, with a big content staple,

or one by one, we would just talk. Talk about, you know, if you're a DB pension, if you're thinking about doing a PRT, a pension with France,

and maybe you are, maybe you are thinking about it, maybe it happened. If you're an endowment, you know, and you got a new spending policy that is in the month of, the policy behind which

you guys decided to go through that process and how's that going how to get through the investment committee. If someone's investing in a new asset class, class or a new country or they're going to visit some country. We would like to know, hey, do we know any managers in India? You know, people raving in. Yeah, I talked about that.

We would do that for about two hours. And it was a closed-door session, allocators only, you know, Chatham House rules, so nothing said in the room, could leave the room. And then we would invite a GP to come by for lunch. and the GP, you got a little well ahead of time, they were going to be there, they'd come in for lunch, you'd open the door,

GP would come in, we'd have lunch delivered, paid for by the GP, so GP would find that you wanted to bucks on lunch. And over lunch, for about an hour, the GP was allowed to talk about whatever they wanted to talk about.

Zolli was something interesting to the aisle. I remember Goldman Sachs came in one time, wanted to talk about private credit, had a really great discussion, learned a lot with them, Goldman Sachs loved it because they had an opportunity to meet with a lot of allocators in one space and it was kind of a friendly space

and then after lunch we all at home so this was something we did once a quarter all volunteer led no cost to the institution but it was a way for our little group of allocators to get together, share information, share best practices it was a really unique group and it was really reflective

the fact that for allocators you know we were trying to sell tell each other anything or require to do other's information or employees. We were trying to share best practices so that we could all, you know, all state provide a better out for the beneficiaries of the capital

with the people in a possible moment. Perhaps this is obvious, but the reason allocators are willing to trade information with each other is because most of the new trends and most of the top managers are not capital constrained. In other words, it's truly not a zero-sum game. Whereas,

let's say, venture GP, at the Series A may not be as willing to share deal flow because there could only be one winners in that space. Is that basically what it comes down to or is there more dynamic to it? No, Dave, that's a phenomenal point. And I'll give you just a quick, you know, sound light on that part because this would come out.

Sfitting around that table or talking whether allocators. And for the most part, yeah, you're exactly right. Almost every asset class was not, phone in terms of we invests it and they invested. Actually, that's better for it. Well, that really helps. We're on the state we're locking our own. The one place where that may not be true is actually related to what you just said.

If our institution has a relationship with XYZ Venture Capital Fund, and we just got an allocation to XYZ Fund 7, well, that's great for us. but us having that allocation is not reflective of us shoehorning out other folks it's really a reflection especially for the very hard to access venture capital funds

building long-term relationships with those farms seeing them and them seeing lots and long-term partners and what they're global and what will invest in it and that does not infune on the ability for other allocated

we're out with cable around the country to also have built both relationships or provided both of those rules so it's usually this kind of separate thing where we're comfortable saying

yes we're invested in this liquid asset class this liquid on the period that's great and acknowledging you know hey yes we did get an allocation to X wide meme vector

on 7 you guys may not have invested or gotten an allocation but that's not because we get you know we got rich type of law on developing that relationship. I'm happy to introduce you to this tooling, but you guys are just

meeting than football. So it's a really different kind of world. And it's very nice when you're on the allocator side of the table. People are very friendly. Everyone always says, like, oh, what a great question. You're right. If you've been considering future straightings, now might be the time to take a closer look. The futures market has seen increased activity recently and plus 500 futures offers a straightforward entry point. The platform provides access to major instruments, including the S&P 500, NASDAQ, Bitcoin, natural gas, and other key markets across equity indices, energy, metals, Forex, and crypto. Their interface is designed for accessibility. You can monitor and execute trades from your phone with a $100 minimum deposit.

Once your account is open, potential trades can be executed in just two clicks. For those who prefer to practice first, plus 500 offers unlimited demo count with full charting and analytical tools. No risk involved while you familiarize yourself with the platform. The company has been operating in a trading space for over 20 years. Download the Plus 500 app today. Trading and futures involves the risk of loss and is not suitable for everyone. Not all applicants will qualify. Andy Golden, who used to run Prinko, he told me one of the reasons he retired is he wanted to see whether he was really that funny or whether it was tons of billions of dollars behind him. And perhaps this is naive on my side or maybe too direct, but whenever I find myself in zero-sum games, I'm just explicit about it.

You know, I'm trying to partner with this manager. I'm deploying in them. You know, this is maybe not the best time. Maybe in the future there'll be future allocation. And if it's non-zero-sum, I'm happy to make that introduction. What do you think about this perspective of being kind of extremely explicit on where you could be helpful where you can't versus kind of making excuses? Yeah, that's such a really great point. I believe the one thing, and this does come up, this did come up in my career.

I have seen this where, you know, if we are in a best hole, if we are an investor in a fund, especially a private fund, well, for the most part, comfortable sharing out of other allocators talking about it, you know, we've really discreetly without publishing this one. I let's go somewhere. sometimes it would happen though where we're evaluated funds we're looking at investing in certain types of funds

and so we need to keep that discrete either discrete because you know we know hey this is a new fund they're only taking a certain number of clients and well we're one of a few that's a positive because of legacy relationship falls well you know we really value that and we don't want to share that up with them

So, well, we're not going to share that publicly and we're not going to put it in people's face when, hey, we got to act with so it's funny. You haven't even heard up yet. So it's really a matter of just trying to be respectful, professional, and polite, and open where you can be. The other piece about that, too, is a reflection of the culture of the institution and a reflection of the culture of the senior leadership on your investment team. So I'm just fortunate that the leaders that I work with in the allocated community were very open to sharing, very open to meetings. Some allocators I heard don't really kick a lot of meetings. Your portfolio is all or no all you have they need. Whereas places that I worked, I was very fortunate with my person up a lot.

Well, hey, it's almost public town. You know, if we have time, you can meet with them. We'll be up for, blah, blah, well, we'll be able enough. Well, it's really, I think of the allocator community, well, in the community of discretion where necessary, but China, deep, light, and priming become a physical wall and long, and the allocator community at Baggins Carver is a very small loan. Everybody knows everybody.

And if you're not, in your first-line connection, you're all one, usually maybe to use a different one, the actual way from my boarderbought. Well, most people have a very polite and applicable application. Otherwise, they don't really work with it a whole lot. You mentioned that as an allocator, you always wanted to go where the puck is going. So let's say you had a thesis on GP stakes 10 years ago when Diala was just getting started. Assuming that you can't invest in a brand new asset class, how do you operationalize digging into the asset class?

And what are those steps for an allocator either getting into a new asset class or getting into either getting into an asset class that the allocator had previously not been in? So perhaps they're now getting into venture capital or getting into an asset class that's brand new or that's, you know, really risen in the last couple of years. That's a great question. At the first, and this is where being on the allocator side of the table, you're very lucky in this. guard that if you're encountering a new asset class that you haven't invested with before or not been coming asset class.

So thank you to try to spread it for the last 10 years, especially the last few years, has been a little hot quality. One thing that you're able to do easily is call every GP and ask to get smarted. So you will call the big banks about Jake you Morgan and Goldman Sachs,

asking to apply to wherever you are. If you're in Battle Creek, Michigan, or, you know, St. Louis, Missouri, they will all fly up to come to you. And you can ask it. We've done this many times. We just want to get smart on the SaaS defense. And every big bank, every consulting firm, you know, they get paid on, you know, not just, you know, the friendly meeting, but on the execution, you know, something after the bank. And a lot of times the execution can always start the initial process of education. And so you, reaching out and asking for that education,

well, people all and over a Bist to provide that for you. So you have this opportunity from the investment managers alone, and you can get locked different perspectives because they know, you know, you're just entering the dating pool and you're trying to see which type of fun you'd like to swipe right on. The second thing that you can do is talk to, like I mentioned, when the Cleveland-Fixbury allocatively, talk about the allocators.

So reach out, reach out first to your warn network and ask like, hey, has anyone invested in this specific fund, this specific asset pipe? And you may already know this, but it's a very quick turnaround. You know, within the next day, you'll have a response. You know, oh, we haven't, but you could talk to these guys. This team over here, she has the new CIO brought this try to be to the table. so she'd be a great person to speak with. And you can get them on the phone, even if you don't know them.

You just send them an email, hey, we're an alligator, we're looking for an investor strategy. We heard great things from someone else. A great friend would love to talk to you or not. So within just a day or two, you can have set up a bunch of calls with other allocators who'll find out and learn more. And then the final part, if they're getting closer and closer, people about investing in a new tech fund, new type of massive class, well, specific fund, meeting with them and one thing that's happened especially in the

COVID and post-COVID era is that a lot of meetings a lot of initial meetings especially take place over Zionahu or over teams types of calls one thing we always like to do where I came from

you might have that first call just kind of get to know people just kind of level set like okay is this something you know what's meaning about but then go see even. Goshi cans,

go see the office, going person. A lot of these funds are in major metropolitan areas, and there's always

an excuse to get New York City to Boston, Philadelphia, to Chicago, Los Angeles, where we're probably other

allocators, other funds that you can see around that. And if you can make a good day of it, then you can

make it worth it. Meaning, you don't have to have all of your meetings over Zoom. You can go to get to know

people. You get to learn a lot more about it. they watch teacher and that's you know really how else can you do it um one thing i've discovered especially with new ai tool that have come out like chat tvt a lot of people say you know well these tools will surpass all the need for the regular industrial oratory work but one of the obvious that you had especially with for example the oracle at the l5 you have the plus here the well one from threes is that even if the oracle has all the answers but we have to know what question

and there weren't a debt, the answer it is. I'm having an auto and shirk upon a country. I don't know if you went over a war. I didn't see that in either. So, the best way to get some of these bad ones, and I think the best way to develop relationships and truly understand

people and farm, the firm, and boss used to go meet them, to go shake their hands, he has to tell upon. Ask them questions. You know, I've asked them questions that hopefully they weren't asked by everyone else. It's funny. I

sometimes get frustrated with chat GPT, I ask, I ask it questions and it answers the questions literally. And then two months later, I realized I was clearly asking the wrong question and I get frustrated. I'm like, why did it tell me this was the wrong question? It just basically answered it literally. So it's kind of funny how underrated asking great questions are. You mentioned you like to go on site to the GPs, what exactly are you trying to ascertain? What are you able to see in an in-person that you're not able to see on a Zoom specifically? Well, what car do they drive? It's kind of a funny thing, but we always ask. We always check. We always go to the park you draw. I get a little, actually small thing, but

the first thing that we're looking for is really from the IDD and ODB perspective and something that I'm afraid to say that it took me too long to realize is that the ODD, the operation of the diligence slide is almost always the first point of counter-attack necissary what I mean by that is

historically in the allocator community operation and good diligence ODV, the last thing that happens. You know, you send the CLO or the head of ops or whoever that is where you're been stolen.

Usually with a checklist of important things to go see how things are flowing and they can't go to a number of times in my career with an allocator that you go down to the wire with a number of ponds, you go and bring with them back to if they're in and a afternoon at the long trip to go.

hit fires to them. And then before the D people come in last and discovers

there's a critical red flag. So a critical red flag for example could be what fog

is self-administered a guy that owns the arm is not commune and therefore that's a red

flag with the right and finally in my allocator career with that. We put these

not many, just a few ODD red-black questions up front. So not the full ODD work. But we want to know, hey, before we come visit the office before we come say hi and really get some of you guys, we just got to ask a couple of questions here.

We just need to make sure. As long as all of these are yet, then we're okay. You know, we're knowing. So upon his self-administered, no. No. we're not in impact unless it's

in Chippago and in cinema. If the fund, for example, is working with a non-top tier accounting or has recently changed auditors multiple funds, like that's the kind of red flag

where, hey, you know what, we've seen this many, many times before we cannot do it. So there was just a few ODD questions. Well, actually, put a buck But before meeting with any men, you think. And then when we're going on site, we're doing a few things.

I mentioned the cars. There's this whole joke that one of my first CIOs, Mark Eustoda, saying you would call it Red Ferrari Syndrome. They go into a PM's office and you'd see on their desk. You know, instead of 10Q, 10,000, late day, and all that, but you'd see books about yeah books about Ferrari you'd see them last before

you'd see the only see at the airport with a library guild or anything and you'd look into the parking lot and instead of seeing regular cars even a BMW could be a bunch of them you'd see you know a book after or you'd see a Ferrari Kepler for a company

thing we'd see actually nothing like it's it happened and you realize that the manager excluded they weren't the number he would always get the number one thing one thing I've discovered in the

allocated community as much of people say like oh performance you've got the most important thing I love to ask people when they say that how many banks are fucking used that that have bond with father to me what bond in Africa we're always meeting where top half Pop-cortile, up-depthile manager.

Well, performance is always, almost always, almost great. So you've got to look at everything else. So separate from the discussion on evaluating performance or what that's not do, where we don't meet with the managers, you know, we're looking at the parking lot, looking at the office,

looking to see, for example, security on the office. You know, will we be able to walk into the building and into their office by kind of tagging along behind someone? You know, that happens sometimes, something we notice. Some places, you go in, it's like a fortress. Nobody gets into any office without a keycard. All the servers are locked up, you know, with a separate keycard.

Well, they're really legitimate off-site, off-site, backup capabilities, things like that. One other, I'll just give you this one last question that we love to ask senior leaders and junior leaders, We've been in Beckman 5 when we go visit a GFU. And if you ask it on a Zoom call, you know, you have all the faces. Maybe they're all in the same row. Maybe they're a different level. But you're always going to get the same answer if you're out of Zoom call.

Is that when you're in person, you like to end anything we ask in a separate room. It will PM and to the analysts. What is your industrial blog? How do you make from life? How do you generate alpha? You know, that's wounds will come. And for the most part, not surprisingly, the answer were pretty consistent.

What you hear from the analysts, senior or junior, why you hear from the junior PM, and what you hear from senior leadership is usually very consistent. What can be concerning is when those answers is different. When the answer is different, like that. Now we made out of alpha here, we used to make alpha probably this process, the thought. difficult. And now we make out a different loan. And if the senior leaders say some phone must what little, but it's multiple. And we put fair notes afterwards. Hey, what was the vibe? You know, what did you sense for meeting with the junior staff independently of meeting with the senior

staff? We've noticed, I'll never forget the meetings where it happens because it doesn't happen and that's where you have to go and you have to meet with them. You have to see the feel like visible vibe that you get. The vibe that you get, the feeling that you get when you visit the manager and you meet with the team and the current way that they're excited to be there. They see great opportunities.

Things are gone well. Staff is being compensated from an equity perspective that leads you to believe what will be the next generation of leadership that they follow the car on senior leadership, the rent who leads. Or do you get a feeling that you're visiting of prisoners of war camp

on Park Avenue? and they're still getting fed, but they're going to get out of there as seen as possible if they think. And that has happened to 1 out of 25 meetings that I've done to,

but you won't tip that in a Zoom call because there will be all the same fate bigger and their friend's pocketism. While asking those questions independently, being a bike chap, the red Ferrari and its syndrome, And I think probably most important will Dome's few.

Well, this isn't the full OED shift menu, mind you. This is the red flag LD trial. You know, just a few questions up front that, hey, if these things are not hit that we're not meeting, telling that stuff done allows you to have much, much better meaning, what we're open to do. We talked a little bit about how LPs get up to date on news. strategies or up-and-coming asset classes, from the GP side, let's say they realize that they're

in a meeting with somebody that's getting up to date on an industry. What are the best practices? What have you seen in the very top GPs that are masters in this education process? And how do they turn that into an investment over time? Yeah, it's a great question. The real critical part, number one is being able to explain complicated things simply. and insuring as well because this was happening regarding the meeting's whole function and go to a meeting

and you ask exactly as you have or hop on the assurance information and you start getting a speech and the portfolio manager or the team team have the prepared speech and get a topic and they're going to work that way through and we're not really noticing whether the LP, the allocated across the table

are they really understanding what's happening? while other eye things over because technical language is being used that will not while you will sometimes especially younger elfies they may not know the right question and sometimes it's hard for the GP to discern that the LP is just rotting their head and saying yes but isn't really picking out the critical points so trying to discern like Richard Damon if you ever seen his lectures do you really understand the gaps will drive it into the year and if not let's awed and make sure each part is understood.

Because, I mean, they're sharing what they think is really critical alpha-generating capabilities and that's valuable. So we should highlight the value that they have and they're capable of them will divide in that alpha, especially on a consistent basis because that's hard to find. The other thing, and this is sometimes common, not as much common today. It was 20 years ago, but I still see it. Ask GPs for some information. they'll send you a link to their pitch deck,

you know, a link to the data room, or maybe they'll send you a PDF of their pitch then. But what you need, sometimes people like, Dave, save me the time, send me the Excel file for all the data that we're looking for. And sometimes that Excel file is just the performance or monthly performance. But you want much, much more than.

And so we're anticipating what ballotators are looking for, of, hey, you know, here's the historical performance monthly in Excel. And also, if you're on the historical exposures and the local attribute reports to show the bridlers of alpha on a given basis, here to factor model that you run, answer all in the discussions before they can even be at, or at least half of the answer available, easily for the allocations to be able to get to. Because the goal from the GP's perspective is to get an end up. And the goal from the allocator is constructive is to find. find and great investment for their institutions.

Everyone's on the same page. We're trying to help their beneficial, but the keys in time that miscommunication or, you know, delay unnecessarily because the process by which we're communicating with each other are different. Now, we're speaking French, they're speaking Italian. Yeah, they're roughly, they don't have the same basis.

They'll probably be the same language, so therefore we're not on the family of the fire. So trying to anticipate, that. Get ahead of glazed eyes, get ahead of the data requests, get ahead of the analytic not even just the law of data,

but here are the analytics that you might run. And here are the questions you might have added, and here are how we shorn wrap these type of questions. For example, well, out of the outside of factors, that's loo. Our beta to this benchmark, and how the appropriate benchmark, because they show you clearly what we're in that thing.

that kind of stuff you know that allows the relationship to happen you know said another way you want to be able to explain the different layers of the thesis I love the Einstein quote

everything should be made as simple as possible but not simpler so explain it to a simple possible most possible way without oversimplifying it ask and answer questions very both very literally and that if I'm asking for last month's report, send me last month's report, but also try to get behind the interest of that question.

Why are they trying to do that? Well, maybe they're trying to figure out our track record. Maybe it would make sense to give them a three year versus the one year that they asked. Just make it simple to interact with you, make it simple for them to gauge the relative performance that you have versus the benchmark. So really realize that a lot of GPs inadvertently think that, well, maybe they'll get to a diligence, process without asking about these points, almost like they're hiding diligence information one way or another. If you could do the opposite, which is lead with that and disqualify the LP before they

disqualify yourself, you're also saving both parties more time. Yeah, you said it exactly. It's anticipate the larger question of what they're looking for. Try to give them, you know, maybe not too much, but a little bit more than they were asking. that they can come to the true and the penalty that you have, which is that you are providing up a fair-fine

and you'd like that look at FI as soon. You didn't even have a chance to go down JPMorgan, Cleveland Clinic, your time at Aberdeen, so we're going to have to run this back. But before we end, tell me a little bit of an allocator training institute and who should be double-click on

allocator training institute and who would be the best fit as a potential customer. Yeah, absolutely. So the Allentita Training Institute has created the first training program for younger allocators, naturally. So the three-level program, really geared for those folks who are working in or work to an alatheavalator and what to learn topics. I'll give me an example five-ed-assive dashboard-based models. You know, how to create a fac-mobile model, how to evaluate more investment in force.

How to run key or me analysis to evaluate whether we find that money growth in a lot. by law and the public market and climate. So all of these topics and many more are not taught in undergraduate business school, the graduate business school. I know because I don't know it to both. So we have created as a program that these young wall, it is from yet to see if I really learn what he didn't talk publicly about how to work, at an alibi and how to evaluate it and that's the whole world.

We buried the program a few year ago. It's going really well. and the audience so far seems to love it because it's the one and only type where you can learn all the qualitative and qualitative pools on how to be out of you. And who would this best be used for somebody that just starting out and allocating somebody

with a couple years of experience? Is there any value for senior allocators and who could benefit the most? People that find it most valuable have the between, we say, negative one 10 years of experience. negative one meaning still an undergrad

like a finance student like a swing year walked to work at the Allent theater either had a summer internship and they want to go back but they're trying to get the skills

so they can hit the ground running and we'll often 10 years of experience and really small especially for the quantitative tool but we're featuring a place that we found

most valuable there are some interesting advanced for construction methods and game study that we teach so far example, what happened that the public will employing iron up in the system on Pennsylvania?

What happened at Calpherty's? What happened that? Podak, actually, friend, what happened at guiding them how a lot of the public area? These advanced case studies, we teach them in the program, but for a lot of young analysts, not necessarily

found useful for their career yet, something for their backpocket. So for the senior folks, Learning about these case studies, what happened to the senior leaders at these institutions and be critical. When people ask me why I'm so interested in investing, the best way I explain it is the infinite game of investing. And there's a specific thought experiment.

So if me and you, Alex, had a million hours to go today and diligence to every single asset in the world from country-specific natural resources to small caps in other hemispheres to quant and hedge fund strategies even if we had perfect knowledge of every single asset class in the world tomorrow it would be stale tomorrow there's a new administration that comes into a country new competitor set that comes in it's literally this skill that you cannot master even if you had a million hours a day it's constantly evolving it's one of the things that makes it so fascinating why there's this infinite amount of knowledge that you could gain not not to keep people from starting to learn or from kind of

having this analysis paralysis, but it is this kind of cool thing where you know that you could keep playing this game, you know, for the rest of your life and keep on improving yourself. Well, what I did, I think that's incredibly well said. And one of the things I heard other people say that's never and I'm about to be,

but the more I learn, the less I know. And I thought, and this wasn't the last part, back in the 90s which I'd only dating my thought when I started my investment for Lila, I remember thinking

I knew how to invest I knew how to fix stuff and I thought I was very fit that obviously I knew nothing about death in the early peak how I thought I about startups and then after Warden Creek I had such a great experience there

I thought I knew the appropriate and only way to invest for institutional them even for families on the foundation and then

it took a couple of career cloned like to reprimed well how much I have learned but how little I know

and I think your point well even if we could spend infinite time you know a million hours studying

every Atsy Club everything you know things change tomorrow we're here and coming to plays with the FOMC

of how they think about and if how they think about and so there all we have to update and into our food work with you. Who could have bought you know

I'll never forget you know what cell phones for spoon out and I remember seeing a camera on a cell phone in 1997

and thinking oh that'll never about a big phone on that is the immigrants and then Bitcoin when that's him all

I remember thinking Bitcoin crypto blockchain all that stuff. Well, in year after year, all this will never get anymore. And Alex, also almost be that this. So I keep being humbled by how little I know

and how much I have half the long. On that note, Alex, thanks so much for jumping on. Look forward to continuing this conversation live. Awesome. Thank you much for your time. Thank you. Thanks for listening to my conversation. If you enjoyed this episode, please share with a friend. This helps us grow.

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