Misc

Miscellaneous is often where the gems are.

Misc

Why Should Anyone be Led by you?

  • Recommended by Quintin Price, head of Alpha Strategies at Blackrock (the $1trn active arm that is making a comeback against the firm’s passive dominance) on this excellent podcast, is an intriguing essay – “Why Should Anyone be Led by you?“
  • The authors, two business school professors, find that there are four qualities that make a great leader.
  • First, leaders must expose vulnerabilities, revealing their approachability. This builds trust, a collaborative atmosphere, and solidarity. Never reveal a weakness that can be seen as a fatal flaw, jeopardising central aspects of one’s professional role.
  • Second, good leaders must be great situation sensors. They can sense unexpressed feelings. This requires a fine balance as it needs to be validated i.e. observations must be grounded in reality and not just projections.
  • Third, leaders should care, intensely, about the work employees do, something that is hard to fake. This can’t be soft but requires tough empathy – a respectful “grow or go” mentality.
  • Finally, and most importantly, leaders must be different and show that difference. This takes time to discover and can’t be over done.
  • Although these sound like rules to follow it is incredibly hard to fake and authenticity is key as the article concludes – ““Be yourselves—more—with skill.” There can be no advice more difficult to follow than that.“
Misc

Probabilistic View of Private Equity

  • The probability that a mature private equity fund will deliver 2x on investment fell in the 1990s and has since held steady at 30-35%.
  • In other words the probability of NOT achieving 2x is 65-70%.
  • For >2.5x the probability of NOT achieving is nearly 90%.
  • The data uses North America and EU strategies, >$100m, across buyout, growth and turnaround. 2011 vintage year is used to eliminate non-mature funds. This filter led to 1,200 funds.
  • Source.
Misc

Science Funding

  • Altos Labs has come out of stealth and announced record breaking funding ($3bn) from Bezos and Milner and poached CSO from GSK – Hal Barron.
  • This was a great article from the Atlantic surveying the rise of various new science funding approaches and labs, backed by Silicon Valley $.
  • The US has a long history of the wealthy backing science. (h/t The Diff)
  • Web 3.0 is also getting in the game with for example VitaDAO.
Misc

Obesity Paradigm

  • What if I told you that the idea that “People get fat because they take in more calories than they expend” is wrong?
  • That is exactly what this post does (in the Snippet tradition of contrarian ideas like here and here).
  • “Consider using the identical logic to describe, say, why people get wealthy. Economists would (I hope) be embarrassed by a money-balance theory of wealth: People get rich because they take in more money than they spend. Clearly wealthy people did. We know that because they’re wealthy. The increase in wealth is the positive money balance. But this says nothing about how or why they accumulate such wealth. In obesity research, this tautological logic — saying the same thing in two different ways but offering no explanation for either — was allowed to become the central dogmatic truth.“
  • Then what does cause obesity? “People don’t get fat because they eat too much, consuming more calories than they expend, but because the carbohydrates in their diets — both the quantity of carbohydrates and their quality — establish a hormonal milieu that fosters the accumulation of excess fat.“
Misc

Trained by AI

  • You probably know, AlphaGo, the 2016 AI program that dominated the game of Go.
  • Soon after, a software implementation called Leela was made available, to train human Go players.
  • Data from 750k Go moves from 1,200+ players between 2015-2019 shows a significant improvement in move quality – especially among younger players (see chart) who are likely more open to learn from Leela.
  • Source: State of AI report (an excellent slide deck!).
Misc

Russian Military Logistics

  • Fascinating and important read about Russian military logistics and what it means for various strategies in Europe.
  • “No other European nation uses railroads to the extent that the Russian army does.“
  • “The rub is that Russian railroads are a wider gauge than the rest of Europe. Only former Soviet nations and Finland still use the Russian standard — this includes the Baltic states.“
  • Interesting side note – Russia can thank the US for this standard, namely George Washington Whistler (father of the famous painter!). The US was looking out for its European allies all the way back in the 1840s.
  • In summary – “they are not capable of a sustained ground offensive far beyond Russian railroads without a major logistical halt or a massive mobilization of reserves.“
Misc

UPS

  • A fascinating read about Jim Casey – the man who built UPS.
  • “On August 28, 1907, nineteen-year-old James Emmett “Jim” Casey and his friend Claude Ryan borrowed $100 and founded the American Messenger Company in a six-foot by seven-foot basement office below a Seattle saloon.”
  • From this grew one of the largest transportation companies – delivering 6.3bn packages globally in 2020.
  • As with all histories there are some fascinating anecdotes
  • “Merchants Parcel [an earlier name] considered painting their cars and vans bright yellow to attract attention, or even painting them different colors to make people think the company was larger than it was. But Charlie warned that they should not try to show up their retail customers, who were proud of their brightly decorated delivery vehicles. He had studied the more subtle Pullman brown, the color used on railroad sleeping cars to minimize signs of dust and dirt. Thus the partners decided to go with brown—only slightly modified in today’s UPS brown.“
Misc

Chinese AI

  • From only being founded in 1949 to having no AI publication in 1980, the Chinese Academy of Sciences now firmly has the top spot in quality AI research.
  • Truly remarkable catch up, also by the Chinese universities, now publishing on par with Western leaders.
  • Source: State of AI Report 2021 (must read report, just overflowing with interesting insights)
Misc

Hedge Fund Correlation

  • Hedge fund returns have become gradually more correlated to the S&P 500*.
  • This is bad for diversification and when combined with falling alpha, as described in this post, is worrying.
  • *This chart shows the 10-year trailing correlation of hedge fund returns (measured by a 50/50 weighted after fee return of Barclay Hedge Fund and HFRI Fund Weighted Composite Indices) vs. S&P 500.
Misc

Dan Loeb

  • A belated snippet of this outstanding profile of legendary investor Dan Loeb (I posted his letters several times) – founder of Third Point Capital, a $20bn hedge fund, that compounded over +15% pa for 25 years and pioneered activist investing.
  • Third point is named after his favourite surf break in Malibu.
  • In the early days of the fund – Loeb posted on forums as “Mr Pink”. Interesting to see further confirmation of media-first investors.
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