Marc is the Chairman, CEO, and Co-founder of Avenue Capital Group, a global investment firm focused on distressed debt that he founded in 1995 with his sister, Sonia Gardner. Almost thirty years later, Avenue manages $12 billion in assets. Our conversation covers Marc’s background and path to investing, the early days in distressed, inflection points in Avenue’s history, including the decision to return half the capital in 2011 and to sell a minority stake to Morgan Stanley, and owning a stake in the Milwaukee Bucks NBA franchise over the last decade. We then turn to the investment environment, attractiveness across geographic regions, creating a competitive advantage, and opportunities in distressed lending, sports, and Asia. We close discussing Marc’s involvement in politics and lessons from chess and poker. Show Notes 04:51    Mark’s background 08:21    Launching Avenue Capital 09:08    Inflection points 16:29    GFC 21:14    Selling a stake in Avenue 25:05    Important milestones 29:57    Buying and Exiting the Milwaukee Bucks 32:42    Avenue’s path forward 37:34    Deploying capital in different geographies 41:11    Strengths and weaknesses of private credit 42:06    Finding opportunities 48:15    Valuations in sports investing 50:49    Navigating investing in Asia 51:28    Involvement in US politics 52:09    Chess, poker, and investing 53:10    Closing questions

Tony Yoseloff is the Managing Partner of Davidson Kempner Capital Management, a forty-year-old, $40 billion multi-strategy investment management firm that specializes in opportunistic credit and event-driven investing. Tony joined DK twenty-five years ago out of business school and became its third Managing Partner in 2019. He also sits on the investment committees of Princeton University, Columbia-Presbyterian Hospital, and New York Public Library. Our conversation covers the early days of Davidson Kempner, growth over the last quarter century, team, investment philosophy, investment strategy, risk management, and ownership. We discuss Tony’s experience on investment committees, the role of opportunistic credit in institutional portfolios, and the future of Davidson Kempner over the next forty years. Show Notes: 03:38    Tony's background 09:06    Davidson Kempner's investment DNA 11:43    Milestones and growth of the business 16:55    International expansion 21:01    Medium duration investing 25:53    Evaluating and adopting new strategies 28:38    Structure of team 32:48    Management philosophy 34:51    Idea generation 41:02    Risk management 45:42    Importance of private partnership 47:53    Successful leadership transition 49:59    Experience on investment committees 53:23    Opportunistic credit in institutional portfolios 55:56    Davidson Kempner's next 40 years 59:08    Closing questions

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Dr. Ashby Monk is the Executive & Research Director of the Stanford Research Initiative on Long-Term Investing. Ashby has studied and advised the largest asset owners in the world for more than twenty years with a particular interest in how to improve outcomes for their beneficiaries and the world. Ash also serves as the Head of Research at Addepar, a fintech company that helps investors make smarter decisions. He has twice appeared on the show – as the 29th guest back in 2017 and again two years ago – and those conversations are replayed in the feed.

Our conversation starts with a recent paper Ashby published called Investor Identity: The Ultimate Driver of Returns. We discuss the descriptors of identity and enabling factors that determine each investor’s fingerprint. From there, we dive into technology as an enabler and how technological innovation can improve returns. We then turn to ESG investing and another of Ashby’s recent papers, Submergence = Drawdown + Recovery, that discusses the importance of considering the combined drawdown and recovery period in making investment decisions.

Show Notes:

• 04:37 - Ashby's recent research
• 07:42 - Institutional investor identity
• 10:07 - Best practices
• 11:35 - People, process and information
• 14:44 - Future of governance
• 17:03 - Role of technology in the investment office
• 21:11 - GPS for portfolios and markets
• 26:25 - Impact of culture on technology
• 31:03 - Fueling innovation in investment offices
• 39:43 - Collaboration
• 43:26 - ESG
• 50:53 - Additional research insights
• 59:00 - Closing questions

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Dr. Ashby Monk is the Executive and Research Director of the Stanford University Global Projects Center. He is also a Senior Research Associate at the University of Oxford, a Senior Advisor to the Chief Investment Officer of the University of California, and the co-founder of Long Game. Ashby advises sovereign wealth funds and large pension funds, and is involved with a bunch of fin tech companies, all of which attempt to create innovative solutions to fixing the financial future for individuals, pensions and countries in the years ahead.

Our conversation starts with Ashby’s early work experience and path through academia, and flows into an exploration of next generation, lower cost approaches to active management for large asset owners.  We touch on investing in public equity, private equity, venture capital, and hedge funds using examples from the Canadian and Australian pensions, New Zealand Super Fund, and University of California endowment. Lastly, we discuss Long Game, an innovative company seeking to improve personal savings in the U.S.  Ashby is a passion-driven, creative thinker who rightfully has the ear of some of the most important pools of capital in the world.  His ideas will change the way you think about allocating capital.

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My guest on today’s sponsored insight is Aaron Sack, the head of Morgan Stanley Capital Partners, Morgan Stanley Investment Management’s middle market private equity business. Our conversation covers Aaron’s path to Morgan Stanly sixteen years ago, the strengths and weaknesses of investing under the umbrella of the bank, and his team’s investment principles and approach across sourcing, due diligence, deal making, and operational improvements. We close discussing the current market dynamics, competitive positioning, and Aaron’s favorite investment example. Show Notes: 02:41    Aaron's background 06:44    Path to private equity 08:29    Contrarian career advice 12:20    Middle market private equity 13:10    Working within a global institution 16:27    Core investment principles 18:52    Assessing quality of management teams 20:43    Due diligence for deals 22:48    Current market dynamics 24:13    Pricing and financing markets 36:55    Creating a game plan with operating partners 30:14    Favorite deal examples 33:16    Competitive positioning 35:26    Closing questions

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Listen to Yahoo on Private Equity Deals. 

The fifth episode of Season 2 of Private Equity Deals releases today. We discuss Apollo’s purchase of Yahoo a year and a half ago. You heard that right – Apollo bought Yahoo. Yahoo is comprised of legacy Yahoo and AOL businesses, which peaked at a combined market cap of $350 billion in the dot.com heyday. It still hosts 900 million monthly active users and is the 3rd largest internet property.

So what did Apollo see as the potential in this longstanding, slowly declining business?  Search for Private Equity Deals on your podcast player to find out.

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