Kelly Granat
speaker
261 appearances
1 recordings
1 series
first heard Mar 2025
last heard Mar 2025
Kelly Granat’s voice in public audio — every appearance, attributed to the second.
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It's interesting. I mean, when I zoom out and think about starting as a summer intern in the summer of 2001 during business school and then returning full time to the public markets in 22, the industry was really different. One, you know, there were a lot more fundamentally oriented, directional, duration-oriented investors who were doing deep research with a three-, four-, five-year time horizon.
There were many fewer levered pods, and certainly passive wasn't a thing yet. And it felt like the marginal dollar of volume on the exchanges was dictated more by what fidelity or capital overthinking or maybe even sometimes a large hedge fund versus what was happening at Citadel or what was happening with Pods or what was happening with Passive.
And so in addition to that, when I think about organizational structure and how we did our jobs, The org structure was, I think most fundamental firms, pretty siloed, right?
You could cover industrials, you covered consumer, you covered financials, and you were doing that with a peer set really of people outside of your firm who you developed a network with over time, who you were sharing meetings with, going to conferences with.
And the level of conversation amongst peers was just not as informed because people were operating in sort of sector silos, right, in terms of knowledge and coverage and expertise and network. In addition to that, the tools with which we used to do our jobs were pretty different. You would meet with companies. You would read filings. You would go to conferences.
You would try to do some proprietary research. But things like credit card data and expert networks and all of these tools that we all now use to supplement our fundamental research or as a part of our fundamental research didn't exist. And so the ways to do the job and the ways to differentiate yourself, I think, were different. The tools were different, certainly, that were available to you.
In addition to that, I would say at the portfolio level, when I look back, and obviously I wasn't managing a portfolio at that point in time, but looking up to my portfolio managers, the tools to think about portfolio construction, risk, portfolio analytics, none of these things really existed.
And so as a fundamental investor, you were really going bottoms up, single stock, building a portfolio that way, and obviously looking at things like what acted best, in concert with one another, correlations, things like that. But it was a different job. So that's sort of like a snapshot of 25 years ago, let's say.
Fast forward to today, and obviously market structure has evolved meaningfully as a function of where the dollars are being traded. And obviously the emergence of passive and pods has been sort of the giant sucking sound in the public markets for a long time. And I feel like the marginal dollar being dictated by
fundamental decisions that are long-term oriented by the capitals, the Fidelity's, the Tito prices of the world is just less meaningful on how stocks actually trade. And the new behavior it feels is more around what we call kind of setup dynamics and that is
a function largely of the dissemination of a lot of this third-party data, creating set-up dynamics around events, quarters, conferences, companies, you know, having speaking investor days, and how those events are being previewed as a function of what third-party data is suggesting or what the sort of litany of sales traders at the banks are sort of prompting buy-side people with in terms of where the whisper numbers are and so forth.
And so that creates just a different trading dynamic in terms of how you execute the job, right?
In addition, obviously, what I mentioned earlier, we do now have, as portfolio managers, a lot of tools to help us think through risk differently, portfolio construction differently, and then how that then manifests itself is how we express sort of the fundamental sauce of what we do, which is the fundamental research, right?
we were saying earlier, we were talking before we started about just our trading volume has clearly gone up over time on a dollar basis, less so on a name basis, because you get these outsized reactions that are often non-fundamental in nature to events, quarters, and so forth. And so all of those, you know, the tools are different, the resources are different,
And then the last piece would be just the collaboration's different. In contrast to what I described earlier of kind of a siloed coverage model inside of a firm, it's not uncommon for us to show up at a company's headquarters for a meeting with four, five, six analysts because there's people covering things that are adjacent to the topic at hand.
and the company at hand and so often there's insights to be gleaned and questions to be asked that have implications for things that are outside of the purview of the conversation of that day and that is super helpful and we meet as a group twice a week as a research team and are sharing information constantly across our organization because obviously five brains is better than one and people have thoughts because they're in the periphery of what we're actually discussing often with their own coverage areas and so the notion even of a coverage area we kind of shy away from at this point because
we have so many people opining on different ideas and themes across the portfolio because they have their own insights from their own work.
Is it a good thing for markets? Hard for me to, you know, be the judge of that. I would say for us, you're right. We sit somewhere in the middle. And I think the onus or the responsibility is, you know, to look across both ways, right? We want to be positioned in a way to capitalize on non-fundamental dislocations and lean into duration, right?
So when those setup dynamics are tricky or complicated and everyone's lined up one way, I want to line up the other way, right? And I have the duration and the capital base to do that. And so that's, I think, we've always said that duration is our single biggest advantage, but it's never felt more prominent and powerful than it is in today's market structure. Having said that,
You know, sometimes there are tricky things in the short term. There's a data point that we feel like the market hasn't fully absorbed. There's a risk factor in the short term or there's an investment cycle coming on something we love on a three or four or five year look. But we might be sized differently going into that event. Doesn't mean we're going to go in and out of positions.
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