AMA: I'm the President of a $1bn Global Long Short Fund

kweiner's picture
Rank: Senior Monkey | 68

Feel free to ask me anything. I will be on starting at 1pm to answer questions for a couple hours, then will check the post periodically over the next week for new questions. Thanks, -Keith.

Bio: Keith R. Weiner is the President of Suvretta Capital Management, a $1bn global long short fund. Prior to joining Suvretta, Mr. Weiner was an Executive Director, Senior Investment Officer, and Investment Specialist at UBS Alternative Investment Solutions for ten years where he served on the Global Investment Committee. Alternative Investment Solutions is the primary fund of hedge funds provider within UBS that manages assets for institutional clients such as public and corporate pension funds, sovereign wealth funds, banks, insurance companies and family offices and is among the largest investors in hedge funds globally. During Mr. Weiner's tenure at UBS, AUM grew from $1 billion to $30 billion. Mr. Weiner's role over the years involved hedge fund selection, monitoring, and portfolio construction with a primary focus on Equity Strategies as well as sourcing, acquiring, and managing new clients.

Comments (50)

Aug 22, 2014

I sent you a PM with more specific information, thanks for taking the time to answer questions!

Aug 22, 2014

fyi he may not be checking pm's, you may want to post a more general question on the thread

WSO's COO (Chief Operating Orangutan) | My Linkedin

Aug 22, 2014

What are you views on the Kirkuk-Ceyhan Oil Pipeline and the ISIL or ISIS mess. Do you feel that this whole thing might be a big distraction to prevent new pipelines that are funded by the Chinese and Russians from being built.

Very specific question and likely not in your wheelhouse at all. So feel free to ignore if you don't know anything about it.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Aug 22, 2014

No view on that, sorry. We focus on US Shale

Aug 22, 2014

What important factors of a companies management team do you look at before taking L/S position? Thanks for doing this.

Aug 22, 2014

When looking at management, it would be their past track records (we are mainly large and mega cap so the management is generally more sophisticated), and how aligned their interests are with growth. Are they invested in the company or what are their goal posts to achieve for their own wealth creation.

Aug 22, 2014

While I would love to pour myself a spot of tea and engage in a highbrow debate on the Kirkuk-Ceyhan Oil Pipline and other geopolitical issues, I'll be the first to admit that most guys on here are young, stupid, and mainly concerned about their careers (and money) going forward.

On that note: You run a long/short fund; everyone's dream job. Given your FoF background, do you recommend that route to all the monkeys who want to do what you do some day? There is a lot of hesitation on here about that career path, for obvious reasons - it's not direct investing.

Aug 22, 2014

If you want to invest I would NOT recommend my career path. A FoF is a great place to retire after being an investor. Not the other way around.

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Aug 22, 2014

Thank you for the taking the time to do this. It's always nice to get some wisdom from senior-level people on the street.

1) How do you see the fund of funds space changing over the next 30 years? From my own personal research, I've noticed less and less of the FoF's that just connect hedge funds to wealthy contacts (which were so prevalent in the 80's/90's) and a trend towards being more analytics-driven (sometimes even getting trade level detail from funds they are invested in). What impact do you think those changes will have on the industry, the ability of professionals to stand out in their field, and compensation going forward?

2) Similar to bortz911's question above - Would you recommend a career in the fund of funds space over the next 30 years or would you recommend working in a traditional HF doing direct investing/trading (whether it is long/short, global macro, etc.)?

3) How did you decide to focus specifically on Equity Strategies (or was that choice made for you)? Did you ever want to try other spaces in the FoF world (Credit, tactical trading, quant, etc.)?

4) How do junior professionals and senior professionals add value in the fund of funds world?

5) What does being "president" of a hedge fund entail?

Aug 22, 2014

ElliotWaveSurfer, regarding 2) "...Would you recommend a career in the fund of funds space over the next 30 years or would you recommend working in a traditional HF doing direct investing/trading (whether it is long/short, global macro, etc.)?", I talked with an HF headhunter recently and asked which kinds of funds would experience consolidation in the future. She said that FoFs will not be too prosperous because it's just more fees on top of already high fees

Aug 22, 2014

My pleasure...
1)30 years is quite a long time, but there are definitely secular changes that are happening. Years ago FoF were great at having scarce capacity at high value funds and a vast amount of knowledge many others didn't. That advantage has been arbitraged away. As well, you are correct, that it was an industry dominated by HNW individuals and now there has been a wall of money that has come into the industry by institutions. With large amounts of capital comes influence and there has been downward pressure on fees. This was exacerbated by consultants who were willing to cover the industry for much lower rates. So now, in order to stay relevant, FoF have to offer advisory services which generally means the need for more people, which leads to more costs, and lower fees. As you would expect, with fee compression comes compensation compression. This is not to say that FoF do not offer value, they do. This also does not mean that it is a bad business. They can be great businesses at certain AUM sizes. The business has evolved. In terms of transparency and analytics, sure some investors like it. The question is what are they going to do with it? And what is the shelf life of that information? Again, some is relevant, some isn't.
2)It all depends on what your skills are and what you like to do. They are very different roles, one is an investor role, and the other is an allocator role.
3)I like fundamental driven strategies, I think they perform best over many cycles.
4)Juniors add fundamental analysis and Senior Analysts add critical thinking and analysis.
5)There is no definition because the role is different at different firms. The title is predominantly given to senior business development people, in my case I am responsible for everything other than the portfolio.

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Aug 22, 2014

What does your current position as "president" of Suvretta Capital Management entail in terms of day-to-day role, responsibilities, etc.? Since Aaron Cowen is your firm's Chief Investment Officer, is the role of "president" more of a Chief Operating Officer-type position?

Aug 22, 2014

It started as COO, you are correct. Again, responsible for everything other than investing.

Aug 22, 2014

Assuming you've done some interviewing at the fund:

What are some questions that you typically ask during the interview process that assist in gauging whether the candidate is a good fit for the fund?

What can a candidate do during the interview process to help convey their passion about investing without repeating the word "passion" a dozen times? Any good past examples?

Thanks!

Aug 22, 2014

I would say passion is a prerequisite, not an edge. Case studies generally make it quite clear on showing someone's passion by seeing the quality of work people are willing to do. In terms of fit, it is important for us to spend time with candidates outside the office at drinks or dinners as well. The passion is something that will be exhibited by how they talk, not by just using the words.

Aug 22, 2014

Thanks for spending your time answering questions. I have two questions:

1. What characteristics/attributes start-up hedge fund without much track record should do to attract attention of funds of funds? What was your experience in term of additional seed capital given to fund managers with USD1m in current asset under management?

2. What characteristics/skills analysts/investment managers at asset management firms need to acquire to make a transition to funds of funds space?

Aug 22, 2014

no problem.
1) If a PM doesn't have a track record, they should have a good pedigree, good team that they have worked with in the past, have a strategy going forward that mimics what they have done in the past. You would be surprised with how many people launch a fund trying to do things they have never done in the past. Having strong references from influential portfolio managers will help. I do not have experience with seeders for funds with $1mm aum. But if they have a good process that is replicable and scalable, then talk to the Blackstones, Reservoirs, Investcorps. The only risk is hearing no, and there is always potential upside.
2)Having a good understanding of a particular strategy is probably all you really need. Seriously.

Aug 22, 2014

Like everyone else, appreciate your time.

Just one question, I currently am involved in economics/industry research and have the opportunity to rotate between four different positions over the coming few years. I aspire to eventually manage a team of analysts in, what I hope to be, a PM or CIO type position.

My question is, with this sort of aspiration and opportunity, would you recommend I try and find an industry specialty and become an expert in say, U.S. healthcare equities, or, pursue a more generalist approach by trying out equity, fixed income, alternatives (current position), etc.?

I feel like more senior positions require a greater breadth of knowledge, but was curious as to whether this should be developed early-career or rather to prove you can truly understand a single asset class before expanding one's experience.

"I am not sure who this 'Anonymous' person is - one thing is for certain, they have been one hell of a prolific writer" - Anonymous

Aug 22, 2014

If you want to be a CIO of a funds of funds you need to be a mile wide and a few inches deep. If you want to run a team of people who are investing, you probably are better off being a few inches wide and a few miles deep. Again, just do what you love doing and the rest will follow.

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Aug 22, 2014

Thanks, appreciate the feedback, have a great weekend

"I am not sure who this 'Anonymous' person is - one thing is for certain, they have been one hell of a prolific writer" - Anonymous

Aug 22, 2014

Can you touch upon fundraising and how you went about it?

Best Response
Aug 22, 2014

Pounding the pavement. We did over 800 meetings with prospect investors before launching that way we could focus on the business when we were up and running. There are only a finite number of hedge fund investors out there, and they are easy to find. Further, it is developing a simple story that talks about who you are, what you do, how you can scale and replicate it and manage risk. You would be shocked how complicated people make this.

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Aug 22, 2014

Keith,

Can you explain a bit about:
1. What a L/S fund is? Who is this fund suitable for?
2. The typical allocation on a L/S fund?
3. Historical performance vs its benchmark?

Thank you.

Aug 22, 2014

Start here...written by an ex-colleague of mine...
http://www.ineichen-rm.com/images/stories/pdf/in%2...

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Aug 22, 2014

Thanks for taking the time.

What sectors do you focus on and what is your investment horizon (weeks, months, years)? What do you look for when hiring analysts?

You mentioned US shale, I assume you look at E&P companies in the permian, bakken, maybe some of the other lesser known shale plays? What about MLPs, refiners, etc? How important is market access (ie pipeline connectivity, crude by rail, etc) for your investment thesis?

Lastly, simply because it always seems to be a topic in the industry, do you have any views on crude exports and Jones Act and how those policies (or potential changes in policy) affect your view on the market and/or companies you invest in?

Thanks again!

Aug 22, 2014

This is much more fund specific, so I would rather take those questions offline.

Aug 22, 2014

What research does your firm use? Bulge bracket, independent/3rd party etc...

WSO Vice President, Data
@JustinDDuBois

Aug 22, 2014

Thanks for taking the time!
What's your view on some well studied style investing strategies, such as momentum and value?

Aug 22, 2014

I think knowing how each one works is great, the problem is two fold. First of all, the market changes over time, so if you are a master of only one strategy you have to hope that is what is in fashion. Two, if you look at multiples ten fifteen years ago, it was easy to differentiate between value garp and growth. It is a lot harder today. Further, look at some on the indices and you may be surprised to see what companies are considered growth and what are considered value. At the end of the day you should be buying stocks for future cash flows and with very low rates you should want some growth component.

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Aug 22, 2014

Thank you for doing this. A few questions:

1. How diversified is your fund's portfolio(s) (e.g. number of assets, weight range per asset, any other asset classes)?

2. How does your team decide how to weight individual assets?

3. How valid is this statement: market neutral long/short pairs eliminate market risk, and if a portfolio has a large number of these pairs (that are not positively correlated with each other) then you can also (nearly) eliminate stock-specific risk, which results in a near-perfectly hedged portfolio (A.K.A. risk-free), assuming the pairs are picked correctly.

4. I'm assuming your fund is long-biased. What's your fund's typical ratio of long weightings to short weightings? (example: 130% long 30% short.)

5. What is the typical distribution of small-cap, mid-cap, large-cap, and mega-cap stocks in your fund?

6. If you were to personally recruit and interview a new portfolio manager for your fund, what are the top 3 skills you would look for? (not soft skills like public speaking, team management, etc, but hard skills like technical analysis, C++, DCF analysis, etc.)

Thank you.

Aug 22, 2014

Hello Mr. Weiner:

Thank you for creating a feed on WallStreetOasis.

I do have one question if you have time to answer. I am a current university student from a non target that holds the highest accreditation for my program. Could you give recommendations as to how I could pursue an entry level position as an analyst coming from a non target university?

Thank you for your time.

Aug 22, 2014

It is all about getting into an investment bank training program...that is the best way to do it, and not everyone in these programs come from the best schools.

Aug 22, 2014

Thank you for your time.

1. I am actually looking to do a similar move to you and wanted to hear what your recommendation would be to a more junior person (pre-MBA) looking to move from looking at managers to a direct investing role.

2. It would be great to know why you moved from your old role at UBS to working at a hedge fund, particularly since you know how hard it is to find hedge funds that actually earn their fees.

3. If you could start your career over again, in anything, what area would you go into?

Thank you again for your time

Aug 22, 2014

The fate of FOF depends largely on the broader macro environment. if there is another financial crisis and a down economy, you will see LPs willing to invest thru FOF, who theoretically have deeper due diligence capabilities.. also depends on the sophistication of the LP and how well they understand the underlying asset, for example, HF space.. like most smaller family offices and asset managers, you are better off investing thru FOF to build your portfolio.. again the "fate" of FOF is far from certain..Lastly, it also depends on what type of assets the FOF invests in, for example, in Venture Capital, where there is clear evidence persistence, the top quartile funds usually out deliver the industry, getting access to those funds is tough and some FOF which have a relationship with these funds.. these FOF will always be there!

Aug 22, 2014

Dear Mr. Weiner,

I am 57 yrs. old and have been trading stocks and bonds (and closed-end funds) on a full-time basis for the last 22 years. I only trade my own account and have never had any clients. I am an intermediate term trader (holding for weeks and months, unless stopped out) My question is as follows...

My CAGR for those 22 years is 25.3% using the XIRR function of Excel. As you might know, the XIRR accounts for the cash deposits and cash withdrawls (and the timing of these) from the account. Alternatively, my simple average annual return of those 22 years is approx. 19% using the time weighted capital method. I have heard that this is very good performance. However, I have had two different drawdowns of approx. 40% over that timeframe. I have read that if your drawdowns are approx. double your average annual return, then that is not very good.

What do you think? Thanks in advance for any comments from anyone reading this thread.

Aug 22, 2014

What are your views on the value of CFA, MBA, and even JD? In terms of their contribution to a worker's marketability and actual work performance.

Thanks

Aug 22, 2014

Hello; I am 17 and studying maths, further maths, physics, economics and Spanish for a level. What is the best way forward to a career in finance? All the best, David

Aug 22, 2014

Thank you for replying. I will begin to extensively research networking opportunities, alumni relations and other possible channels.

Aug 22, 2014

how r u gonna turn your fund around?

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Aug 29, 2014

?

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Aug 22, 2014

Thanks Keith for taking the time to do this.

How much time/resources is spent figuring out what strategies will fall in and out of favor and how does that mesh with your underlying strategy of finding companies strong future cash flows? How far out are you looking when you consider this - e.g. the next 1 year, 5 years, 10 years?

Let n be a fixed positive integer greater than 1...

Aug 22, 2014

Thank you for doing the AMA, Keith. This is great.

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Aug 22, 2014

1) Who is John Galt?

2) If you had to hire someone off the street..as in going on a street corner and taking interviews, what would you look for?

3) I read something Bruce kovner/Andrew Law?? I think his name is, of Caxton Assosciates and they mentioned that the world goes through cycles such as commodity super cycles, equity cycles, etc ... what cycle are we in now?

alpha currency trader wanna-be

Aug 22, 2014

Thanks for doing this AMA.

I'm curious to hear your thoughts on who is to blame for the liquidity crisis of 2008? I won't color your opinion with mine, just don't click on the link in my signature, because that will probably give away my thoughts.

Thanks again and I'm looking forward to your response.

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Aug 23, 2014

Thanks for taking the time to do this.
I am currently training with the big 4 towards my chartered accountancy qualifications.
Is a transition into investment banking/hedge fund possible/realistic?
What's your opinion on a big 4 background?

Thanks

Aug 24, 2014

What are your thoughts on getting in a hedge fund out of undergrad, if it's what you know you want to do and have relevant internship experience (i.e. internship at BlackRock/Fidelity)

Aug 26, 2014

hate it

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Aug 27, 2014
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Oct 3, 2014

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