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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Appearances
So that's all the conversation that's happening before we actually begin to put an order in. So that's sort of the upward flow of ideas and research and structure of how we do things. The other thing that happens on Mondays is, and this is all day Monday, is that Dave and I have sector meetings with all of the teams on an every other week basis.
That meeting is everything from what are you working on, what are you trying to figure out, what resources are we deploying to help figure out those questions, to its earnings, who's reporting this week, what are we expecting to hear, what would make us sell, what would make us add, what could surprise the market, either way kind of thing. So that's on Mondays.
That's sort of the structure of how we work as a team. And the portfolio is,
helped, I think, by something additionally new, which is we have a risk function now that we didn't have going back, you know, five or seven years ago, which is somebody who used to run our fund of funds, which we had back in the day and shut down a number of years ago, who has built an incredible expertise and knowledge base around studying managers.
And so when we shut down our fund of funds, we said to him, Frank, why don't you come study us?
and help us get better and so he's gone back using a lot of the new tools that we referenced earlier to think about you know where do we get ourselves in trouble where have we made a lot of money helping us understand the mistakes we make what are the patterns around those mistakes what are the patterns around the huge successes how do we trade do we add value by trading I mean all these things that are sort of portfolio analytics and then also he's sort of our external lens on
factors and you know all the things that we have to talk about now that were never a thing in the parlance of running a fund 10 or 15 years ago but that you know are again never prescriptive but another set of tools in the kit and he is sort of the where that resides and so we meet with him and the risk team periodically and are getting reports sort of constantly to make sure we're thinking about gee there's a bunch of unearned alpha and these three names
you know, the multiple has just gone from 15 to 25 times, like, do we still love it here? Should we be trimming it, right? So again, never prescriptively, but just another set of prompts and tools to think about, you know, balance in the book and where returns are coming from and how the composition is evolving.
Sure. I mean, I don't think we have a guiding principle around it. I would say the way that we discuss it internally is how much exposure do we want to this theme? And I think what's challenging about this one is it cuts across a number of different things, right?
There are companies that are not leaning into this technology, that are not benefiting from the proliferation of this technology today, who will, and who are probably uniquely positioned. There are others who are in the AI is a problem for their business category, right? There's several industries that would fall into that camp.
I think we keep having the conversation of how much exposure do we want because there's a recognition like we saw in the valuation bubble bursting of late 21, 22, that there are nuanced bets here that are distinct, but that if there's a problem in AI, so to speak, and we can define what that may look like, these are all gonna trade like one stock.
And so what is the drawdown we are willing to sustain or endure if and when that happens? And so that's, I think, the risk framework on top of this is the most exciting dynamic thing and we can all talk for hours and hours and days about all the opportunities it's going to create. And then I think nothing is a straight line.
And so I think this is the benefit of having done this for a long time is that there's two steps forward, one step back. And so The deep seek thing last week was interesting, right? In terms of being like, oh, whoa, what is this? What does this mean? And what does this mean for LLMs? Did they have access to GPUs? Like, what do we know? What do we not know, right?
And I think we're still trying to answer those questions. And I think there was a knee-jerk reaction from the market. We will have more of these, right? That is just part of this. And so... That's not a reason to not be involved, but it does make you think about sizing. And we always want some measure of balance in our portfolio.
And we want several things that we're excited about that have idiosyncratic drivers that some of which may be tied to AI, some of many of which are not. And there are many thematics in our portfolio that we're super excited about.
And our job is to be thoughtful about portfolio construction and make sure that all of our eggs are in one basket or things that we believe are discrete bets then ultimately trade like one. And so that's part of our challenge.
It's a really good question. somewhere in the middle. And I think we want ultimately the flexibility to pivot, right? I think that's what we've learned and experienced over doing this for a long time is that there are certain market backdrops that are conducive to certain styles of investing where you want to be more concentrated.
There are certain, you know, backdrops where you want to be less concentrated. There are times to go big on a bet when we feel like it's really underappreciated. There's times to recognize that a lot of what we're excited about, the world's excited about. And so we probably shouldn't be as big as we were. And so the...
I would say the flexibility to recognize when we're in a very short-term oriented market or when there's duration, right? And part of that, and I think one of the things that's changed is, if I rewind the clock to 10 or 15 years ago, sitting in our research room and around internal meetings, we didn't talk about macro at all. It was just like, we're fundamental investors.
We are focused on what's happening inside of sectors, who's winning, who's losing, who are the best teams, who's executing. And to do that in 2025 and ignore macro, it's not possible. I want to be clear, macro is not prescriptive in terms of what we do, but it is a tool in the kit and something that has to be considered.
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