William Andreasyan

While our wonderful president was out playing golf all day, the TSA is falling apart, just like our government! Airports a total disaster!

Final answer: It's the same stock. MSFT/AMZN/V/MA/FICO/SPGI/JPM/BAC/HUM/UNH/TMO/DHR/DPZ/CMG all share nearly identical factor profiles of growth, momentum, quality, capital allocation discipline, institutional shareholder bases, et al.

I consistently get inbounds from undergrads or early career grads looking to move into the industry. Not sure if it’s age/experience/battle wounds or what but I feel like I sound pretty pessimistic about the HF path to younger folks who seem to have a romanticized idea of the job

Peter Thiel is leaving California if we pass a 1% tax on billionaires for 5 years to pay for healthcare for the working class facing steep Medicaid cuts. I echo what FDR said with sarcasm of economic royalists when they threatened to leave, "I will miss them very much."

Venture in Public Markets On card flips, baby businesses, and the mispricing in the middle --------------- Investing in an early-stage business and a public long can be surprisingly similar This seems contradictory at first glance. How is investing in an individual with an idea even remotely similar to investing in a mature public company? One reductive but useful answer is that both entail underwriting meaningful card flips over medium-length milestones. In venture, early stage card flips can range from “can we build the right team” or “can we monetize repeatedly” to even as simple as “can the founder find the right idea” or “can we get five customers who love us”. These card flips often take the form of funding and supporting entrepreneurs for 18-36 months – enough time to hit the next milestone in the business before funding runs out (but in reality, before morale runs out). The goal of every stage of investment and partnership is to figure out a meaningful step-function change to the business and team. Counterintuitively, these card flips also exist in public businesses. It could be betting on a new product line. It could be letting a new set of hires execute. It could be using your distribution to go after a new category. There exist mature companies that are actually baby businesses in new markets or products, and undergo similar step-function card flips to that of early-stage businesses. It really is “always Day 1” for some companies. Robinhood is a great example. It looked like a mature business, even when the market cap dropped to 11B. Their brokerage product was working. However, when viewed as a crypto business in the crypto market, they were still a baby business. Vlad started talking about leaning into crypto publicly a full 18-24 months before anything happened. Like all good things, it took time to actually bake the vision into OKRs and roadmaps, build the right product/partnerships, and then even longer for the market to recognize and give them credit for it. Finding PMF and scaling on new business lines has turned out to be a meaningful driver and product differentiation. One that has led to an excellent, venture-scale 10x outcome for that business and its investors in the last few years. ------- The mispricing in the middle There are a lot of dollars structurally designed to chase companies with a <1 year time horizon (pod shops) or an almost permanent hold (index funds). On one side, there is a clean product for LPs in the form of a hedge fund, where a fund gets to cut carry every year in exchange for providing LPs with better liquidity options. The majority of these dollars are going towards pod shops that are very incentivized and very good at pricing and executing on <1 year horizons. Sure longer redemption schedules, hurdle rates, and high watermarks exist, but structurally hedge funds get good at pricing risk in the short term. And for those that can hold for longer, some end up falling into a version of the 3x myth I’ve talked about before. On the other side are index funds where you patiently park and track a segment of the market, and let things compound over a very long period of time for minimal fees. Neither sources of capital are structurally designed or incentivized to actually pursue medium-turn milestones and card flips. They’re either too short-term or too long-term focused to prosecute companies with the characteristics above. Show me the incentives and I’ll show you the outcome. The mispricing in the middle is expanding – somewhere where you can take 18 month to 4 year bets on meaningful card flips of a public business. And there, the journey actually looks similar to venture. Where one is underwriting step-function changes vs purely a continuous uptake of an existing business line. The journey is not extrapolating the business from where it is today, but instead figuring out what it could be and the milestones to get there and pricing it in the present accordingly. There are buds of folks filling this gap today. Many crypto/biotech venture funds are actually managing both private, venture investments and public, liquid names (either on initial purchase or when a private, yet still baby business, goes public/TGE early). On the other end, predominantly public investors like D1, Coatue, Jump, Tiger now routinely go down to late stage privates. We also see mega venture funds holding post-IPO, and also buying publics from their private vehicles when they see massive mispricings. For example, Carvana was one of the most popular trades by funds like Greenoaks and Thrive. While the tactics may differ, the fundamentals in building and investing in power-law businesses are the same no matter the stage. ------- Nuances in the execution of private vs. public names Now the execution of public opportunities may be different from private ones. In venture you have fixed buying moments to when a founder chooses to fundraise. And you never know how steep the price at the next buying opportunity will be. Or if you will actually be able to participate with enough allocation. Conversely in publics, price mostly moves continuously. And so you can be more patient in getting to a position size and price that is a “fund returner”. Oftentimes, this requires buying on the way down which is hard to do. The illiquidity / liquidity aspect of privates and publics also plays a role in a manager’s psychology. In privates, not being marked-to-market is a feature that (theoretically) allows for long-term thinking. In publics, you have to be Odysseus yourself and avoid the siren calls. On the way down, telling you you’re an idiot OR on the way up, telling you this time it’s different. ------- Conclusion In practice, it’s of course really hard to find and execute on venture-like opportunities in public. It was always hard, and will continue to be hard. But the opportunities are getting more frequent, structural LP dollars are leaving more of an opening, and lessons from decades of venture investing are becoming more cross-applicable – especially the skill of under­writing meaningful card flips before the market notices them. Buffett said it’s far better to buy a wonderful business at a fair price, than a fair business at a wonderful price. I’d cheekily say that today it might be even better to buy a baby business that everyone is pricing like it’s all grown up.