00:00This is the story that just keeps on giving, right?
00:02I mean, not everybody can be Warren Buffett and Charlie Munger, right?
00:05You can have duos that don't get along.
00:07It doesn't mean they don't perform.
00:08Precisely.
00:08And this is a really interesting example of that.
00:11The two billionaires feuding for decades, for many years.
00:15But investors don't seem terribly fussed about it.
00:18You are seeing them raise these funds.
00:20They're giving money to this firm.
00:23The performance hasn't been impacted really that much.
00:25And so investors in hedge funds, they really care when it impacts their returns.
00:30And we haven't quite seen that yet.
00:32This is also a quant fund.
00:34And so the mechanisms of this type of firm is different from, say, a long-chain equity stock picker.
00:39Right.
00:40So I'm curious, you know, are they bringing in behavioral therapists to sort this out?
00:44Or are they just counting on stars that are just great traders in there?
00:47So when we look at a quant fund like this, the machines in some way run themselves.
00:52Because the firm is quite large, it is kind of a machine in and of itself.
00:56You have engineers.
00:57You have data scientists.
00:59You have the infrastructure that's set up to invest in a machine, computerized way.
01:06When you look at traditional stock pickers, a lot more relies on the PM at the very top or the founder,
01:13where any drama or complications that might arise at that level can trickle down in a more meaningful way.
01:21This firm, you know, when there was difficulty, it impacted the layer sort of underneath the founders.
01:28But as you look lower down at the firm, it didn't have quite as much of a detrimental impact on how the firm functions.
01:35So to some extent, you know, I don't love talking about the people involved, because who really cares, right, if they're performing?
01:41But I guess give us some insight into this rivalry and how it's spilling over, if at all, into the workplace.
01:47So it had been a long, many, many years of feuds between the two.
01:53They both stepped down, the two founders, David Siegel and John Overdeck.
01:59And then because basically they neither one of them wanted to step down individually without the other one also doing that.
02:06But then we did see two new CEOs they brought in.
02:09They had some rotation of staff.
02:12They let go some portion of the talent.
02:14And one of the billionaire founders, John Overdeck, did come back.
02:18So now he is a little bit more active in the firm.
02:22Things do seem to be a little bit more calmer now.
02:25Now, how this plays out, we'll sort of be watching this over the next year or two to see sort of what the long-term trajectory is.
02:32But it is a really interesting case example.
02:35Yeah, I mean, the other comparison is sports teams, right?
02:37You see this all the time.
02:38A manager is completely out of favor because his style isn't working and, you know, he's about to be relegated or fired, but then suddenly he comes back.
02:44And, you know, there are ways that people can work around these things.
02:48Just final word on this, you know, 1,700 employees, what kinds of returns are we looking at through the various funds?
02:54Yeah, so their biggest fund is up about 13% so far this year.
02:57Solid return.
02:58They haven't had any really negative down years since this drama has been going on.
03:04They're launching three new funds right now.
03:06A multi-strategy fund, an equity market mutual, and a new strategy, a tax-aware fund.
03:11So, in total, they've raised over a billion dollars for that.
03:14Their AUM has grown from $60 billion to $70 billion.
03:18They're now at the peak assets they've ever had.
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