Invest Like the Best with Patrick O'Shaughnessy
Description
My guest today is Paul Enright, managing partner at Krainos Capital, his family office. Before running his own family office, Paul worked on the buy-side at Viking Global for over a decade managing their consumer and technology portfolios and before that at Morgan Stanley on the sell-side.
I thought Paul would be the perfect person to help me demystify the world of high finance – explaining the difference between the buy-side and sell-side, how long/shorts differ from long onlys, and walking through the various jobs in the investing world. In addition to setting that foundation, we also cover the evolution of the buy-side, what makes someone a great researcher verse a great stock picker, and various portfolio construction methodologies. Paul brings such a wealth of knowledge and experience to the table. I think this episode will be enjoyable for investing novices and professionals alike.
Please enjoy my conversation with Paul Enright.
For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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This episode is brought to you by MIT Investment Management Company – also known as MITIMCo, the endowment office of MIT. MITIMCo seeks to find people who are focused on achieving exceptional long-term investment returns, partner with these firms early, and stick around for the very long term. MITIMCo doesn’t care how small, new, or un-institutional your firm is if you have the potential to generate amazing results that support MIT’s pursuit of world-class education, cutting-edge research, and groundbreaking innovation.
Despite their willingness to invest early, they do not ask for GP economics, and they commit their initial capital for ten years.
Visit www.mitimco.org and their new emerging managers page to learn more.
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Show Notes
[00:03:39] - [First question] - His history in both the buy and sell side
[00:05:20] - Different types of roles on the buy side and sell side
[00:06:48] - Interest sets that best align with being a buyer or a seller
[00:07:57] - The emotional experience of being on the buy side and exposed to risk
[00:08:53] - How the nature of buying and portfolio construction has changed
[00:10;15] - What Regulation Fair Disclosure (Reg FD) is
[00:12:46] - Key terminology and definitions of long-only and long-short funds
[00:17:40] - Varying clusters of long-short funds and defining each type
[00:21:48] - Differences in exposure between a platform model versus a traditional long-short stock picking sense
[00:25:16] - Skill sets that are most important to have when navigating this space
[00:29:03] - What is good and what is great when it comes to “digging”
[00:31:20] - Why the quality of one’s analysis matters
[00:33:10] - Having a potential edge when deciding based on someone else’s analysis
[00:35:19] - Foundational building blocks of an effective pitch
[00:37:20] - Finding wrongly identified stocks and reaping the rewards
[00:40:49] - Overview of good portfolio construction and lessons learned over the years
[00:44:06] - Why hedge funds tend to traffic heavily in T.M.T. and consumer sectors
[00:45:53] - Elements that strike him as great in a business
[00:48:05] - A business that once seemed great but has since faded away
[00:49:22] - Why hedge-fund managers seem to always make the most money
[00:53:50] - What a well run firm looks like
[00:56:39] - Characteristics that may make you well suited for a career in fund management
[01:00:23] - Why quality mentors and portfolio managers are so important when deciding where you want to work
[01:01:38] - What interests him mosts in markets today
[01:05:20] - Useful frameworks and formulas used when approaching a new business
[01:08:15] - Interesting features about telecom businesses and what defines them
[01:10:45] - The future of the modern world’s internet infrastructure
[01:14:44] - Abundance vs zero-sum and fixed vs growth mindsets
[01:18:12] - The kindest thing anyone’s ever done for him