Subscribe
Share
Share
Embed
Host Stacy Havener brings you the storytelling tips, sales strategies, behavioral secrets, and inspirational stories that help YOU turn your words into dollars. Learn from sales and marketing experts. Meet finance and investment leaders, founders and fund managers who have made it, and the ones on the rise. Because there are people behind the portfolios. Their stories matter. So does yours.
@stacyhavener // www.billiondollarbackstory.com/
[00:00:00] Alfonso Peccatiello: With a simple experiment, a mentor is able to show you what he learned over decades, which is, look, this is a game where you're going to be wrong 40 percent of the times, 50 percent of the times, you're going to be right 50 percent of the times. So your conviction really doesn't matter too much. What matters is to follow the process and have a very strong framework for risk management and just be non emotional about what goes on.
[00:00:24] And I think I was lucky finding a mentor like that.
[00:00:28] Stacy Havener: Hey, my name is Stacy Havener. I'm obsessed with startups, stories, and sales. Storytelling has fueled my success as a female founder in the toughest boys club, Wall Street. I've raised over 8 billion that has led to 30 billion in follow on assets for investment boutiques.
[00:00:46] You could say against the odds. Yeah. Understatement. I share stories of the people behind the portfolios, while teaching you how to use story to shape outcomes. It's real talk here. [00:01:00] Money. Authenticity. Growth. Setbacks. Sales and marketing are all topics we discuss. Think of this as the capital raising class you wish you had in college, mixed with happy hour.
[00:01:13] Pull up a seat, grab your notebook, and get ready to be inspired and challenged while you learn. This is the Billion Dollar Backstory Podcast.
[00:01:25] Most interviews with my next guest focus on big macro ideas. His thoughts on this or that top down phenomena or unpacking his insightful and refreshingly accessible research. If you know Alfonso Peccatiello, macro elf, you know what I mean. And if that's what you're after, you've come to the wrong place.
[00:01:47] I believe it's the people behind the portfolios who matter most. Alf is the founder of the Macro Compass, an institutional macro research platform. He's got 500, 000 social media [00:02:00] followers, some of the biggest names in the investment and hedge fund biz, and he's launching a new macro hedge fund. He's the real deal.
[00:02:09] Today's conversation is a chance to meet Alf, the real. person. If you are wowed by what he does and how he thinks, just wait till you get a sense of who he is and the why that motivates him. Normally I say grab your popcorn. Today I'm saying grab your pizza and make it Napolitano. Meet my friend, Napolitano.
[00:02:33] Alf, Alf, thank you so much for being here. This is a joy for me because we are new friends. And so I feel like all the listeners of the podcast get to be a fly on the wall of two new friends having a conversation. I'm psyched for that.
[00:02:48] Alfonso Peccatiello: Well, thanks for having me, Stacey. This is a new friendship, but it's an old time listenership for me.
[00:02:54] I listen to basically every episode of yours. So. Quite interesting to be on the other side of the seat.
[00:02:59] Stacy Havener: [00:03:00] Oh, what an honor. Okay. So then, you know, we always start with my favorite thing, which is the backstory. So my question is, you grew up in Italy. Did you grow up from a long line of Italian macro economic researchers?
[00:03:16] What was the journey?
[00:03:21] Alfonso Peccatiello: Okay. So in the place where I was born, let me take a step back. So When you say Italy, it's not a gigantic countries, but the reality is that people feel very different between the North and the South.
[00:03:33] Stacy Havener: Yes. So
[00:03:34] Alfonso Peccatiello: I was born in the South of Italy, close to the Amalfi coast or Naples to give people some reference yet, not on the fancy part of the Amalfi coast, but more in the inside part and.
[00:03:45] This place is the farthest thing away you can think of to a hedge fund industry or a financial industry. To give you some facts, the closest hedge fund or the closest large bank is about a thousand kilometers away. So like [00:04:00] 600 miles or so, I guess, in American terms. So it's quite far. So it's definitely not a financial center, definitely not the family of macroeconomist or something.
[00:04:09] In the place where I come from, most people work still either in tourism or services or even in agriculture. It's a very cultural based place. A lot of tomatoes and mozzarella and so on and so forth. Long story short, I decided that I had a knack and curiosity about finance because the problem was always that.
[00:04:28] You see these ads in television and you read some books and some friends are in finance and it seems to be quite a puzzle. I mean, especially macro, which is not a small problem. It's a gigantic puzzle and you're trying to assemble the pieces and connecting the dots. And my brain was always attracted to this idea.
[00:04:45] You know, there is this puzzle, apparently almost no one can solve it. Macro is very hard to, you know, I challenge people to always go and find macro hedge funds that have like a 20 year track record. You won't find many basically because they don't survive. It's a very, very hard thing to pull [00:05:00] off. And so for me, this is naturally attractive.
[00:05:03] I thought, you know, let's go into it. Let's see if I can add some value to this. Puzzle solving issue. And then I decided to go to university and study it. And I soon realized the Italian financial industry wasn't going to be the place where this, this ecosystem could help me, you know, solve the problem or, or in the journey to solve it.
[00:05:21] I studied in English, which is something that sounds normal, but in Italy, it's not really the case. It's one of the places in the world where I think there is the least amount of people able to speak fluent English still today, which is a handicap. Italians are smart, but. Not speaking English doesn't help.
[00:05:36] And so I then moved abroad, studied in Germany and started working. My basically started my career in a Northern European bank. It's a Dutch based bank. So it's a bank based in the Netherlands, but it has offices around all around Europe, even in the U S it's a global bank. So that's where I got started in finance back in 2014.
[00:05:56] I think right now I'm, uh, Well, 10 years I would say in the industry. [00:06:00] I'm, uh, 33 years old. People can't see me. I'm bald. I look older, but still 33.
[00:06:06] Stacy Havener: So that's amazing. So let's stay with this for a second. So you get this job at this dutch bank And are you doing macro research? Like what specifically or did it evolve?
[00:06:18] Alfonso Peccatiello: Yeah. So I started as a macro analyst, they were in a situation where regulation had imposed on them and all other banks actually to have very large bond portfolios. This was the by product of the 2008, 2009 crisis where many banks were found themselves having too little liquid assets on their balance sheet.
[00:06:36] And a lot of people were coming out to get their money out. So they had a lot of deposit outflows, but they didn't really have liquid assets enough. To quickly service this deposit outflows. And so the regulator said, got to fix that. And now we fix that is we basically force banks to own more liquid assets and liquid assets for the regulator meant mostly government bonds or liquid bonds.
[00:06:59] And so [00:07:00] banks all of a sudden had to build this huge bond portfolios and they needed some macro framework to do so. Right. So they need like. Top down and bottom up analysis. And so they hired me as one of the macroanalysts in the team there. And then the year after I was running money as well as a portfolio manager.
[00:07:16] So then the job became, while you are the macroanalyst of reference, but you're also running money as a portfolio manager in a group of portfolio managers. And that's when you start meeting your mentors, which are incredibly important. I would say in the development of a career of any. Risk taker or portfolio manager, because when you start taking risks, who sits close to you, who's going to basically have control over your risk parameters and how much risk you take is also the person who's going to influence you the most on your framework, on your line of thinking and how you manage risks and How do you see the world and which lenses do you use?
[00:07:48] And it's really important to find the right mentor. And also it's a matter of luck, frankly, but it's very important.
[00:07:53] Stacy Havener: Yeah. So talk about your mentor, because I agree with you. And also, by the way, [00:08:00] one of the hacks that I use to get people to talk about their backstory, because not everybody's super comfortable, especially in this business to do that.
[00:08:09] But when you ask someone about their mentor, their entire, like, even their face, everything changes for them. Because if you have a good mentor, to your point, it's a relationship that is just like above and beyond. And it's a great way to kind of get somebody talking. So talk about your mentor and kind of how that person inspired you, even on some of the more entrepreneurial.
[00:08:34] Parts of your journey.
[00:08:35] Alfonso Peccatiello: So my mentor was somebody who took risks and traded for a prop desk in a Dutch bank in the 90s. And that's a different setup than today because that's before Volcker's rules basically. So effectively banks could take prop risk and it was like trading at a hedge fund pretty much, but within a bank.
[00:08:54] Stacy Havener: So
[00:08:54] Alfonso Peccatiello: this is a person who has taken risk and has been paid And also risk to be fired if his risk [00:09:00] taking wasn't correct. So a proper trader. And so his mindset was extremely framework process and risk management based because he knew that he was basically raised knowing that if he would not follow his process, he would be fired.
[00:09:14] Stacy Havener: And
[00:09:15] Alfonso Peccatiello: so this is the type of mentorship that gets you very much to be process driven, framework driven, and risk management driven. I still remember the first day, I think the first week when I was there, And he said, so what's your top idea? And I said, okay, so I think we should go along this and short that.
[00:09:32] It's like, okay, it's cool. So how much conviction do you have? I said, a lot of conviction on a scale of one to five, five said, okay. Now let's play a game. He said this year you will mark down your conviction levels from one to five on every single trade you're going to be putting. Right. And so you tell me you size it one, five, whatever.
[00:09:50] And then at the end of the year, we will have a look at what that meant, because I'm not going to allow you to take more risk or less risk based on your conviction. I'm not going to allow that because you [00:10:00] just started and you shouldn't. So we're going to use a standardized sizing system for each trade.
[00:10:05] Like each trade is going to be standardized the same way, but please mark down laterally your conviction levels. And at the end of the year, we're going to check what happened. So we took my P& L at the end of the year, and then he said, okay, let's see what would have happened if you would have sized your trades higher when you were more convinced or lower when you were less convinced.
[00:10:24] Stacy Havener: And
[00:10:25] Alfonso Peccatiello: there were two observations there. The first is that my scale of conviction always went between three and five. So you realize that you're very biased, right? You're never unconvinced about an idea of yours, which is already quite weird. And then the second thing you realize is that if you sized according to conviction levels, my PNL in a risk adjusted sense had changed by zero, literally zero.
[00:10:47] So conviction was going to add or remove nothing from my PNL. And this was a great lesson because with a simple experiment, A mentor is able to show you what he learned over decades, which is look, this is a game where [00:11:00] you're going to be wrong 40 percent of the times, 50 percent of the times you're going to be right 50 percent of the times.
[00:11:05] So your conviction really doesn't matter too much. What matters is to follow the process and have a very strong framework for risk management and just be non emotional about what goes on. And I think I was lucky finding a mentor like that.
[00:11:19] Stacy Havener: Yeah. And I want to come back to that when we talk about sort of your new venture.
[00:11:23] But before we move on, I'm curious. So I think that part of our sauce or part of what makes us special is the exact thing that makes us maybe different and maybe a little bit like, oh, you know, embarrassed, let's say, or I don't know the exact right word for it. So when you think about that statement, And you think about that you came from Italy, from an area where finance is not the thing.
[00:11:53] Is that the thing that made you also kind of have a different perspective? Or, or what was that for [00:12:00] you? Because I imagine you were thinking differently than some of your peers at the bank.
[00:12:07] Alfonso Peccatiello: Yeah, I would say one of the interesting things is that I didn't have an education, which was the typical one that leads you to have a job in Wall Street or in London, for example.
[00:12:18] So nowadays you tend to get hired much more easily if you have started at an Ivy League place or at London School of Economics, and I didn't have any of that. So it also, I think, brings a different perspective on, you know, what was your framework, where you studied and where did you grow up? Where did you grow up is very, very important, I think this is a very underestimated angle.
[00:12:38] So now at the fund that we are launching so far, we have three people and it might be a coincidence or not, but we joked about our GDP per capita in the place where we were born and raised.
[00:12:52] Stacy Havener: Love that.
[00:12:53] Alfonso Peccatiello: So we had a look at it and it's a guy from Iran who's my partner. And he's a guy from Sicily. So even [00:13:00] deeper in the South of Italy than I'm from.
[00:13:01] And then a guy from the South of Italy. So we took a look and the average GDP per capita amongst us is something like 17, 000 a year, one seven. That means that if you want to compare it to an average wage, they're probably making like one and a half to 2000 gross a month before taxes. So try to think about that.
[00:13:20] Okay. Now that's the place where we grew up on average. And I think that gives you a different perspective. Yes, it does. And it's not because you were poor or something, but it's because the context you grew up in had a completely different set of opportunities and any small opportunity you found, you had to fight 110 percent to try and get that.
[00:13:42] And so I always think like, I don't have kids right now, but if I would have a kid, I would always think like. Do I want them to grow up with the best possible set of opportunities at hand? Like everything is available, or do I want them to grow up in a place where they have to grind a bit to get something out?
[00:13:58] And so when you also join the finance [00:14:00] industry, on average, you have people that are very hard and they fight hard and they're very motivated, but they maybe haven't necessarily gone through that. Set of opportunities being so limited when they grew up that they have that inner grinding mentality. And now I'm not going to say we never will hire somebody who grew up in Sweden, because I mean, poor guy, what did he do wrong, just grew up in Sweden.
[00:14:22] But it's that we find this interesting commonality so far, which seems to be a bit of a diverse standpoint.
[00:14:30] Stacy Havener: So first of all, amazing. I loved your answer and I agree with so much of it. The kid thing, super real, super real. I think a lot of self made or non traditional path successful people struggle with that exact, exact challenge.
[00:14:49] And it's interesting. And now I'm feeling bad for the Swedish guy that you're going to hire someday because I was going to say that I actually love [00:15:00] this. As a differentiator for you. I love this as a differentiator for you because when you ask people about differentiators of their firm, the founder will often say, Oh, it's our people.
[00:15:13] And that can really easily tip into truism. Like, of course, everybody says that. Yeah. Okay. But like, show me, what do you mean? And you actually can show them
[00:15:26] Alfonso Peccatiello: Yes, so far, uh, if the gas in Sweden gets higher, then it's huge median. Then
[00:15:30] Stacy Havener: you just got to change your differentiators, you'll evolve them, you'll evolve them.
[00:15:34] It's fair
[00:15:34] Alfonso Peccatiello: enough, but it's more about really the mindset. And
[00:15:37] Stacy Havener: that's right.
[00:15:38] Alfonso Peccatiello: I think the other thing that, this is a question I get a lot from allocators. Like when they have to invest, especially as day one in a new fund, man, you need to give them a reason to do so. I mean, it's, you have to think the other side as some sort of career risk attached to it.
[00:15:52] Not necessarily, if you blow up, they're going to get fired, but. You know, they're taking a risk on you, so they need to be paid for that risk. And being paid [00:16:00] when you start a new fund, it's very hard to show somebody that it's your long term track record, because of course, maybe your bank doesn't want to disclose it, or it wasn't in the same setup as the hedge fund you're starting.
[00:16:11] You don't own the track record or whatever is the problem. So you really need to give them qualitative risk premium, as I say. So somebody is doing due diligence on you. You're a day one fund. It's very hard to give them quantitative risk premium. So like a long term track record, you should give them strong, qualitative reasons why it should be you.
[00:16:31] And so you got a lot of questions, of course, like, what's your differentiator? I don't think that Millennium gets questions about what's differentiating Millennium, but I get them. Okay. So I need to find an answer. Fact that we have people that. are coming from this background tends to work. The other interesting thing is the approach that we have to this business, which is a little bit, uh, I would say out of consensus, a few reasons.
[00:16:52] So first of all, we're spinning this away from a research company that I built, which is called the macro compass. So I've [00:17:00] done research for the last two and a half years, shared it LinkedIn, et cetera. So we have used a lot of social network to actually put up our framework and analysis. And now we have thousands of paying clients and the biggest hedge funds in the world are clients.
[00:17:14] It's all nice. And, you know, some of them decided to invest in the fund. Right. But why am I mentioning the research is because I see a lot of my peers when I go to conferences, which, and I understand them, which are struggling with the fact that they need to raise assets now. Like it's an urgency, it must be done.
[00:17:33] You have a target for day one and you cannot raise less than that, or it's going to look bad or whatever. Our approach is a little bit different, which is we want to grow the business over time with research, which means with providing value to our distribution list and to people who have shown interest in the fund.
[00:17:50] The idea is that these people need reasons to keep engaged with you. And sending them some sort of monthly factory saying my fund is up [00:18:00] that my fund is down that I'm not sure how much interesting that is sending them some good added value piece of research, which is, by the way, what we do anyway for the research company, I think it's a much better way to build the relationship over the long run.
[00:18:14] And so this is a bit of a different approach that doesn't necessarily require squeezing. All the AUM possible from day one, but it's a much more patient long term approach based on providing value. So people really like that research angle, even if they don't allocate now, they might allocate in two years and we are okay with that.
[00:18:32] And then the other thing that I do very often, which my, not always my partner is happy about it, but that's okay. When we chat with someone. We always try to provide them reasons why they should not invest in us. So what I always say is, for example, if you think that I should have an office in London or in New York, then I will not, this is not a reason why you should invest in us.
[00:18:54] We are in the Netherlands, in Amsterdam, we have an office over here. It's close to a beach [00:19:00] because we like taking creative walks. And that's who we are. And if you want me to wear a suit and a tie and have an office in London, then you should invest in someone else. And sometimes people tell me, you know, this is very unprofessional.
[00:19:12] If this is your definition of professional, then that's fine. We disagree there. I'm aware that this might be detrimental from the short term perspective of running a fund and raising AUM. But what we're looking for is long term relationships. And that means that, you know, it's a bit of a, of a longer game, but we're trying to do it a little bit different, I guess, than the average fund.
[00:19:34] I'm not saying we do it better. We just try to do it a little bit different.
[00:19:39] Stacy Havener: Are you an investment boutique looking to grow your business and need a little help? If you feel like you're fighting for the spotlight and well, still stuck in the shadows of the bigs, join us in the boutique investment collective, Havener's new membership community dedicated to the specialist in the investment industry in the collective, we'll guide you through the billion dollar blueprint we've used to help boutiques [00:20:00] add over 30 billion in AUM, you'll refine your story.
[00:20:04] Focus on your ideal target market and practice your pitch. You'll rethink your marketing materials, rewrite your emails, and refresh your differentiators. We'll even help you step up your LinkedIn game and give your profile a makeover. You want to grow your biz, we've got your back. Learn more about The Collective, the curriculum, and the amazing coaches who will help you on your journey.
[00:20:25] Visit havenercapital. com slash collective. High five! Hope to see you in a coaching session soon.
[00:20:40] Gosh, like just spike the mic on all of that, because seriously, this is, okay, first of all, differentiator, you are taking a patient approach to raising assets, also not something that you hear a lot in this biz, to your point, and also note to all the people who don't have it, you're going to get it anyway, [00:21:00] whether you like it or not, because it doesn't happen fast for anyone, but going back to your, Your strategy of sort of really owning authentically who you are and what matters to you I love I love it.
[00:21:14] I love saying here are all the reasons why you might not want to invest with us Because it's a massive attraction repel and if they gave you money, by the way And you hadn't set the stage for them of here's what we're about as a people, as a team, as a company, then it's going to come back around and bite you when they start saying, and by the way, like, where is the office in London?
[00:21:40] So you might as well just get it all like out all the cards on the table now. I think it's great. I love it. I would not change a thing. Because you can't really attract your ideal investor if you're not willing to repel the wrong ones.
[00:21:56] Alfonso Peccatiello: So we're starting the process knowing that, let's call it the hit [00:22:00] rate between an initial conversation and an allocation is going to be low.
[00:22:04] I think this is anyway the standard. And the idea is that in our case, it's probably going to be lower because people who end up allocating are going to probably stick with us because we have been as transparent as we can. And we told them, you know, we, if you allocate to us, you should consider that the added value is also the fact that we want to provide research content and access to me.
[00:22:27] or to the team whenever you need it. So if you have, you know, there is macro volatility and the yen is blowing up or whatever is the situation, when you are a new manager, what happens is in the best case scenario, you are getting allocated somewhere like 1 percent of the assets from the allocator, best case scenario.
[00:22:45] If it's an emerging manager dedicated fund who has a mandate for day one or whatever, but in general, it's very small. Okay. Which means that you cannot make a difference for their portfolio. Your role is to prove yourself so that they can scale you up [00:23:00] to the point where maybe you can start making a difference.
[00:23:02] So our idea there is, look, if you start an invest with me, you're going to put like 0. 5 percent to 1 percent of your assets. Can I help you with some information that might also. Help you with the remaining 99 percent of your portfolio. So if you appreciate that, that might be a reason why you want to invest in the fund as well.
[00:23:20] And again, this is not a very typical approach. I always joke by saying that I am trying to do a different modern version of Ray Dalio, not because I am Ray Dalio, wouldn't try to make the comparison there, but because Ray Dalio didn't start with the fund. It started with the research company. So Bridgewater, you was a research company, I think for five years between the early seventies and the mid seventies, where he basically showed his framework and his research process to investors.
[00:23:49] And what happened five years later is that one investor said, wow, I really like this. And here is the, I would say in today's dollar inflation adjusted equivalent, the ticket was 30 million, [00:24:00] 35 million. So that's how Bridgewater started. One client who followed the research of Dalio for five years, gave him about 35 million to manage.
[00:24:07] So the process is that today, If you share good ideas, especially on platforms which are very professional, like LinkedIn, if you share good ideas and you show up consistently, that's how people get to know that you can add value to their process. And it's not only by showing up returns, which are incredibly important, but again, as a day one allocator, that part matters way less.
[00:24:31] I think that people believe in their own set of valuations. allocator, You don't have a range of certainty around the risk reward I can deliver because I'm not live. I'm about to launch. So what we're trying to do is provide a broader value proposition.
[00:24:47] Stacy Havener: You know, it's interesting. I literally had this conversation with an allocator this morning, like before we jumped on this podcast about the sizing and how an initial, you know, sort of toe in the water.
[00:24:59] [00:25:00] position does not have any impact on a portfolio. It has none. And I was asking this allocator, tell me about that. Like how does that work and how do you determine who moves up? And one of the things they said, which was super honest, my point of view was, I think salespeople typically miss this opportunity because to me, the metric that really matters in the building phase of an asset management business or a fund is not the dollars.
[00:25:25] It's the number of investors. So when you get a new investor that first dollar is the toughest dollar to get However, if you execute on your promise, not that you knock the lights out Just you do what they expect you to do or over deliver in some way Doesn't have to be numbers They will increase their allocation and those dollars are easier than the first So the number of investors is a great predictor of total AUM later And so the honest thing that this allocator said to me was, again, people do business with [00:26:00] people.
[00:26:00] But he said, after we meet with a manager, so we meet with our managers every six months, and right after we meet with the manager, we are predisposed to add. If that manager is doing well, and we get to spend face time with them, sort of the recency bias and the positive nature of that bias makes us want to allocate more.
[00:26:23] And I thought, like, How just human nature of us and how many salespeople or founders who are doing sales really think about asking for the business like right after that meeting. It's so true. So I love that you're changing the framework. I love the Ray Dalio sort of model and I have a question though.
[00:26:45] Okay, I did not know that that's how Bridgewater started, but I have seen other firms who were research firms. so much. Try to make the leap from research to investments and really struggle [00:27:00] because it's almost like their base knows them for research and the base can't quite figure out how is that research, especially macro, like actually gonna play out into a portfolio.
[00:27:11] So how would you respond to that?
[00:27:14] Alfonso Peccatiello: I think there are two things that work a bit in my favor in this case. One has to do with my background. I was the head of investments for this large Dutch bank. So I ran a 20 billion portfolio. People know that, which means they know that I've taken risks. That's a starting point.
[00:27:31] It's not pure research. It's a former risk taker who has done research and now is taking risks again. So it's a bit of a different situation. And then the second part is we set up the research with the idea to launch a fund out of it, which meant the research was extremely applicable, which meant it was as well, a lot of trade ideas and model portfolios, which were shared transparently with subscribers every day, which meant every time I had a bad idea and I was stopped out, they could see it.
[00:27:59] [00:28:00] So it was fully transparent. The portfolio construction process was in there as well. The sizing, the quantitative risk management, everything was in there for them to see and to judge. You know, this guy's doing this. Do I like it? Don't I like it? Oh, he's getting stopped out. Okay. Fine. He's losing money.
[00:28:14] And this level of accountability. I think transparency with people by sharing with them the framework that we would have used then ultimately to launch the fund and trade in the fund. I think that's helped a lot to get more familiar in the sense of, okay, this person has a process. It's very clear. He's sharing his ideas.
[00:28:31] He's getting stopped about I'm right 53 percent of the times. Okay. So which means I'm basically wrong very often. And by them seeing this, I think it has helped them understand, Oh, the guy knows that he's wrong 50 percent of the times, but he has also built Transcribed A process to try and limit the losses where it's wrong.
[00:28:48] And so the combination of these two factors, I think it has helped a bit. Although there are questions that are still coming from the fact of, Oh, but you have a research business. How are you going to run a research business together with your fund? [00:29:00] Which is also an important question because it comes with Compliance and Chinese walls and how are you going to manage the two things together?
[00:29:06] This is still a very valid question, but this is the answer. I think my pedigree or my experience in taking risks at the Dutch bank, and also this fact that the research was always basically tailored as an idea to be very transparent and very applicable and portfolio based so that people could see basically what was the outcome of the thought process in action and the risk management, it made them a little bit more comfortable.
[00:29:29] Stacy Havener: Well, the risk taker to re I mean, you were always a researcher, but the risk taker to researcher back to risk taker is a great timeline. That's a great timeline. Because even if people maybe have forgotten that part of your backstory or they didn't know you then or they didn't even know that that part was, you're reminding them that this isn't your first rodeo of like actually having a P and L.
[00:29:51] How do you answer the question about what are you going to do with the research business and the investment business?
[00:29:57] Alfonso Peccatiello: So we've put up a couple of Chinese [00:30:00] walls. I mean, the model portfolio, which was shared with research clients for the last one and a half years, obviously that is not compatible anymore with the macro hedge fund.
[00:30:09] So clearly there needs to be a change there. And the other thing is a very simple employee slash involvement when it comes to actual Chinese walls between the two businesses. So people who work for the research do not work for the fund and vice versa to make sure that the information stays siloed, especially from a fund perspective.
[00:30:29] That's quite important from a regulatory standpoint. So we've applied a few Chinese walls, but at the end of the day, the two businesses, in my opinion, are very complimentary. I mean, I always take rich water as an example, just because it's easy to take.
[00:30:40] Stacy Havener: Yeah.
[00:30:40] Alfonso Peccatiello: Still today they do have. I think they call them the daily observations, which is basically their research, pretty much.
[00:30:48] And they do that alongside with running risks. I mean, you can do research, you can provide frameworks, event analysis, and in general macroeconomic analysis for people. And running a hedge fund is a [00:31:00] completely different business. It's all about risk management and people and processes and raising and so on and so forth.
[00:31:06] So those two things can be done together. In my opinion, the research is also complimentary to the fund because it forces you to be more rigorous, to write down your thoughts and poke holes in your ideas. And I think the two things can go along together.
[00:31:19] Stacy Havener: I do too. And in fact, most fund managers are doing it's not a business per se, so it doesn't have revenue attached to it.
[00:31:26] But I mean, how many fund managers put out a monthly commentary or quarterly commentary or write on LinkedIn or just share their thoughts on anything? I mean, thought leadership, if you don't have it, I mean, I don't even know what we're doing. So as to me, it's almost like you've given people the way you described it makes me feel like you've given people a chance to sort of be a fly on the proverbial wall of your investment committee meetings, all the levels, and now you're sort of saying you're still able to be a part of that, but just on The thought leadership part of the investment committee [00:32:00] meeting and sort of the portfolio part is over here now for our actual allocators.
[00:32:05] I think you'll be able to do it. And I wonder too, I mean, you have such a strong social following, but it's also that's also kind of an interesting experiment, isn't it? Because I don't know how many people have built the social following first and then launched the fund. I kind of feel like it typically goes in the other direction.
[00:32:27] So how's that process been?
[00:32:30] Alfonso Peccatiello: I'm not aware, indeed, of somebody who's done it the other way. I mean, normally who's built the following on social media has some sort of newsletter. That's what I mean, yeah. Software as a service product, something they're selling on a subscription basis. And so I don't know if somebody was built a followership first, which has come as a by product of sharing my ideas online, basically.
[00:32:53] I mean, it just bamboozled me that my Twitter account went to almost half a million people. I mean, half a million people, but [00:33:00] apparently the feedback I get there is you share, uh, educational frameworks. Like, Oh, if you want to, for example, there is like, The bond market. So in the bond market is like some sort of ivory tower type of market, which is full of jargon and people get lost.
[00:33:15] And my job there is just demystify, just make it comprehensible. And when you share these things, people actually appreciate it. And you might be surprised, I think, Stacey, by how many high level allocators. are lobbying that simple breakdown because it helps them have frameworks and then understand what's going on.
[00:33:33] I'm not going to name the name because this allocator asked me not to, but it's a very large sovereign wealth fund who reached out a couple of weeks ago because they follow me on Twitter. I mean, you could never imagine this and they say, Oh, I've read this thread about, you know, how you're analyzing the Chinese situation.
[00:33:49] And. Found it very interesting and informative. I don't agree on this and that, but the framework was quite interesting. And so you see how powerful that is. I'm not trying to be prescriptive and tell people what will happen in China. [00:34:00] Who am I? I don't know, but I'm trying to analyze and break down situations.
[00:34:03] And people love that as long as you share it. To share it, as long as you share it without asking something in exchange straight away, then people love that. And that followership, I think I have to say that Twitter nowadays, it's a way, way worse platform than it was a few months ago. That's a few years ago.
[00:34:21] That's my own subjective opinion here. It has become much more political, much more polarized and much less informational, but LinkedIn, for example, is exploding if you ask me. So the amount of good level inbound leads and interactions you can get from people that are just reading your analysis, appreciating it and reaching out saying, Oh, I see in your bio that hedge fund, you know, you want to talk about it.
[00:34:43] It might surprise people how powerful that is, and still it requires consistency, though. Every day you show up, you post good, valuable things, asking nothing in exchange. And that's the hard truth, unfortunately.
[00:34:57] Stacy Havener: Well, the part that I think people [00:35:00] don't believe is that part you said about the really smart, really successful, very large allocators.
[00:35:08] Are on social
[00:35:10] Alfonso Peccatiello: they are.
[00:35:10] Stacy Havener: I don't know why this is like when you talk to people about linkedin or twitter They're like, yeah, but it's retail and you're like what I don't understand where that came from It's like no those people don't hang out on social media and it's like well, what do you think they do?
[00:35:25] They're human Like what? I mean, why wouldn't they be there? What do you think? They're in the library? I mean It's just this weird bias that they think they're only going to be talking to retail people. So that is a huge demystification in and of itself. And I absolutely believe it. The other thing I really believe is that this idea that in our industry, you can charge more for complexity, right?
[00:35:52] You can charge more for complexity. You seem quote, smarter if what you're talking about is [00:36:00] complicated, when really the opposite is true. Like, you know you're shit when you can explain it to a five year old, not when you can explain it to the CFA, CHIA, PhD, you know, person who never leaves their desk or their Bloomberg.
[00:36:15] And so the simplification piece to me is an art that a lot of people in this industry cannot do.
[00:36:24] Alfonso Peccatiello: So Stacy, there I learned something reading a few books that I would recommend people to take a look at on communication. So one of the other people which was very important in my career and development wasn't my mentor, but was somebody who lacked technical skills, if you ask me, but he was such a great communicator, impressive.
[00:36:44] He could change his pitch from a 10 minutes detailed presentation to a one minute elevator pitch and be as effective in both situations. And so. What he taught me is, dude, I mean, you can be as smart as you want, but if you can't convey your message in a very [00:37:00] concise way to a senior audience, you're going nowhere, and this was a banking thing, okay, so you have to do that with senior people in banks, they don't have time, but guess what?
[00:37:08] Guess what? In today's world, where our attention span is led by social media, not many people have time. Not many people like listening to you blubbering for 20 minutes straight. So I think being concise and effective is still very important, even with allocators. So the books or even podcasts that you can listen to, which are very good about it, that I found very good about it.
[00:37:28] There is this somebody, I think he was born in Italy, but he's probably a US citizen by now. His name is Carmine Gallo.
[00:37:34] Stacy Havener: Yes.
[00:37:35] Alfonso Peccatiello: And Mr. Gallo is excellent. He's a coach, communicator coach to a bunch of CEOs in Fortune 500 companies. And he explains how Steve Jobs and Bezos, which are excellent communicators, both of them actually use several frameworks.
[00:37:50] to try and be more effective when they communicate. And the point, I mean, there are some simple shortcuts that you have to train, I think, and then you'll become better at it. But that [00:38:00] angle of communication is so important, both from the length and the pauses, and there are various techniques you can use to become a better communicator and also tell a better story because Steve Jobs is a great storyteller and Bezos as well.
[00:38:15] And also when you write something. People often don't have time to read very long, long investment letters. Consider that the average time people are spending scrolling on LinkedIn on Twitter on a single post is something like a few seconds. So you really have those few initial seconds to catch someone's attention.
[00:38:33] And it's like opening the present. If the package doesn't look good, you probably lost interest already. And, and this is unfortunately the world we live in, but these are the rules that we have to play by. The
[00:38:47] Stacy Havener: Storyteller's Secret. That's the book I just read by Carmine Gallo. Oh, there you go. Yeah, it was really, really inspiring on so many levels.
[00:38:56] Even as someone who considers themselves really steeped in [00:39:00] story, I learned a ton. I love that recommendation. I also think it applies to emails. I mean, in what? Realm. Do fund managers and salespeople think that anyone has time or inclination to read a four paragraph tome of an email that's all about the person who's sending the email?
[00:39:24] Like what? And you don't even know them. It's like the intro email for most fund houses. Is trash. I mean, it's trash. So as you're working, like, I think you hit the nail on the head in terms of the simplification and the power of storytelling, the art of it, and the need for white space. I mean, the long, whether it's the total length or even just the length of the paragraph, my goodness, like, how do we feel when we receive those things?
[00:39:55] Not great.
[00:39:56] Alfonso Peccatiello: No, so I totally agree. I think also when you [00:40:00] talk about sharing value with people, even if you are sharing value, I mean, Twitter has this embedded where you could not, I think, accept 200 characters, something like this. You have to be concise. Now you can, which is a bit different. But in general, being concise is always good as long as you can be effective.
[00:40:16] We try to strive for pieces of research, which are about 700 to 800 words. Okay. And a couple of charts. So that takes you normally about five minutes to read. And we consider this to be on the high side. Okay. If it takes you longer than five minutes to read and digest, it's generally too long. And the other test you can do, which is excellent.
[00:40:34] And Jeff Bezos had this test for the memos that people were writing at Amazon. So he bound the PowerPoint at Amazon, which is also amazing if you ask me, so nobody can run a PowerPoint. They actually have to write down a memo where they have to elaborate their thought process and be concise, et cetera.
[00:40:49] So he actually had a test, I think, run, if I remember correctly, where he put these memos on their software that was analyzing what type of grade [00:41:00] level people riding. Like if some sort of like a 10 year old kid can understand what you're riding, that's a good memo. If you need an IQ of 200 to understand what you're riding, then that's not a good memo.
[00:41:13] And so these are. I think Rose, and we're here talking about the hedge fund industry. So why the hell are we talking about that? We're talking about that because the industry doesn't matter. The people listening to you are still people. So they still have a limited time span. They still want to read easy things to read and digest.
[00:41:29] And this is very important. And I think quite underappreciated when it comes to, I would say in general, Raising money, but because raising money is about establishing a relationship, and if you cannot be effective in communication, you're not going to establish a relationship.
[00:41:42] Stacy Havener: No, and I think that's exactly right, because especially in a business that has a very high intellectual component to it.
[00:41:51] Like ours, we think that we're actually selling to the person's intellect. Like we're aiming the pitch at their [00:42:00] brain and we're like, we're going to make the case where there's no way they can possibly think that there's like, we're going to be the best option for them. We're going to make that case to their brain.
[00:42:10] And actually all the studies tell us that the brain is not what buys first. 95 percent of decision making. is subconscious. The heart is like the gatekeeper. I like this thing. Brain, why don't you do the due diligence on it? The brain isn't not even involved yet. And that switch is like a massive reframe on raising money, especially in this business.
[00:42:36] So I think it's, it's a skill set we all need, but more people in our industry need it for sure. I have one more question on social, or I guess it's bigger than social in some ways. You've already talked about it, but I want to just sort of put a pin in it, which is that there's also sort of this stereotype of what successful looks like in the investment business, why [00:43:00] older white male wearing the right suit with the right time, carrying the right bag and wearing the right watch and in the right city and went to the right school and all of those things and takes a lot of courage as someone who's none of those things.
[00:43:15] To own or be willing or be brave enough or vulnerable enough to not be those things. And I think you've done a good job of that. And I wonder if you can speak to it. Like, do you even think about it or are you just being you and it comes very naturally?
[00:43:33] Alfonso Peccatiello: I think this is the trick here. So. I don't want to be successful if those are the features that define whether I'm successful.
[00:43:42] Frankly, like if it's about wearing a suit or having gone to an expensive school, I really couldn't care less. So as I said before, the point is, is quite about, what are you trying to achieve? I mean, I have something in my history, which maybe helps as well, taking me this decision very [00:44:00] likely. About eight years ago, I was involved in a very hard car accident, which almost cost me my life.
[00:44:06] So, you know, it's been a very hard journey to get back from that and being able to walk again. But look, these things basically teach you that You have one shot at this. It's not like there is a replay. There's a rewind. There's nothing like that. So who do you want to be? Do you want to be somebody that is liked by what industry standard considers to be successful?
[00:44:26] Or do you want to be you? Do you want to enjoy the journey? Do you want to, to savor it? Do you want to work with nice people? Do you want to be yourself? And I just choose the second one. And if it doesn't fit the hedge fund industry by the standards, That's okay. I'll try to make the part of the hedge fund industry suit me if certain allocators like what I'm doing.
[00:44:47] So I have a very smart COO and marketing specialist who helped me on the, on the research side. And when I told him, you know, I'm in my garden with my dog, I'm enjoying a Saturday, I'm thinking about a certain thing I would like to [00:45:00] share with people on LinkedIn. What do you say if I post a picture like that, like with my dog?
[00:45:04] And he said, so what would be the problem about it? Yeah, but it's the hedge fund guys. I mean, they're reading this stuff. It's like, well, they don't have a dog. It's not Saturday for them. What's the deal here? And he's right. So you just post a picture. And I guess people now tend to be They know who I am.
[00:45:22] Okay. So I don't need to pretend I'm someone in due diligence. We had a large investor from Switzerland visiting us a few weeks ago. And we met at a conference in the Netherlands. He was there and he said, Hey Alf, you know, uh, I'm looking into your fund. Can I do the due diligence? I said, sure. Ask me all the questions.
[00:45:37] So, no, no, no. I mean, can I come to the office? And I'm like, okay. Yes, but it's a complete mess, man. I mean, you'll come there, there are like boxes everywhere and we're assembling it. You know, it's a new fun. It's like, yeah, but what's the problem? I mean, what would I expect otherwise? So he was very open to it.
[00:45:52] But these are the things I guess, where in general, I think being yourself, being honest and transparent and showing your vulnerabilities [00:46:00] as well. Just be yourself. You only have one shot at this. Do you want to be somebody that fits certain standards? Or do you want to be yourself and savor the journey? I choose the second.
[00:46:09] Stacy Havener: Me too. And for instance, people like Italian food.
[00:46:15] Alfonso Peccatiello: Yes, they do.
[00:46:16] Stacy Havener: And so I heard, although I couldn't find anything, that at some point in time, in part of your social content, you were maybe giving some advice or had a point of view on, it could have been pizza, but it might've been something else. What was it?
[00:46:33] Alfonso Peccatiello: That's correct. It's pizza. So I come from a place close to Naples and in Napoli, pizza is like sort of a religion, basically. So I grew up trying to learn how to do it the proper way. And so I think it was on LinkedIn or something where I posted a video of me making pizza, telling people, you know, today, we're not going to talk about macro, but you know, another question I have, which is this, and you will not believe it.
[00:46:56] But one allocator from the U. S. reached out saying, you know. [00:47:00] We have to look into your fund. First, you have to give me the recipe of your pizza. And then second, we have to look into your fund. And I said, why is that? I said, well, look, we like people that are very transparent and honest because we invest in people.
[00:47:11] It's a new fund, so we need qualitative assessment. And if somebody is willing to post themselves making pizza online, it means he he's just himself. You know, I know that you will be very honest. Maybe we don't like you anyway at the end of the day, but at least we want to do the process. So it might seem completely off, but actually being yourself It generally helps.
[00:47:30] Stacy Havener: I agree with you. And so what is the takeaway? I mean, you don't have to give us the entire recipe, and none of us are going to have the oven that goes up to the temperature that you need to make a proper.
[00:47:39] Alfonso Peccatiello: I see you're prepared. Correct. Well,
[00:47:41] Stacy Havener: yes. And also, I mean, well, we didn't make pizza, but my grandfather is from Italy.
[00:47:45] And so food is a big thing. But what do we need to know? Like, if there's one thing we need to know about pizza, what is it? And don't say don't put pineapple on it. That should just be like a given.
[00:47:54] Alfonso Peccatiello: Um, that's just a given. So yes, you need an oven that goes to very high [00:48:00] temperatures. I'm going to mention this in Celsius.
[00:48:02] I leave the conversion to Fahrenheit to you guys, but say about 400 Celsius at least, so your standard kitchen oven is never going to produce the Neapolitan pizza, but there are now ovens you can buy for quite cheap in the garden and you know, they get to that temperature. And then the second thing you should not do is torture your dough.
[00:48:21] So your dough, you know, I'm serious. So you make your dough and then you do some flop and folds and then you make it there. You give it some rest. You know, stop harassing this dough. It needs the air inside to ferment it properly. OK, enough with the pizza lessons.
[00:48:38] Stacy Havener: I'm crying. That is so good. Okay. Let's end with a couple things.
[00:48:44] We did pizza, so that kind of covers, and you gave us a book. And maybe we all know the answer to this, but I'm going to ask it anyway. What place inspires you?
[00:48:54] Alfonso Peccatiello: I would say in general, Japan. I've been there last year. My wife is [00:49:00] very fond of Japan. She even speaks Japanese and she's Italian. So she really likes the culture.
[00:49:04] If people haven't been in Japan, they should try once in their life because these guys live in a parallel universe on a different planet. They see life differently. It is so well connected with nature and just truly so it's a different way of living. So it's really inspiring.
[00:49:21] Stacy Havener: Love that. Not what I was expecting.
[00:49:23] So that makes it even better. Okay, how about this one? Well, and we don't even have to pretend because were you to actually have a speech or go on some sort of tour, pretend you're Taylor Swift for a second, you actually would have like stadiums full of fans that would come to see you speak. And so what we need to prepare for, should this eventuality happen, is what is the song that will be played as your walkout anthem when you take the stage.
[00:49:51] Alfonso Peccatiello: I would have to name two, but let's go with one then. It's Californication from Red Hot Chili Peppers.
[00:49:59] Stacy Havener: Why? [00:50:00] You just love that.
[00:50:01] Alfonso Peccatiello: Yeah, I like Red Hot Chili Peppers. These guys are incredible. They're still going for it. We went to watch a concert. I mean, like, they're over 70. They're still rocking it. So they're the best.
[00:50:10] Stacy Havener: I love it. That is so, what was the other one?
[00:50:13] Alfonso Peccatiello: It was going to be Linkin Park in the end.
[00:50:16] Stacy Havener: Oh, okay. Wow. This is fascinating. Okay. What profession other than your own would you like to attempt?
[00:50:24] Alfonso Peccatiello: Oh, one of my dreams is to open a
[00:50:28] Stacy Havener: huge
[00:50:29] Alfonso Peccatiello: animal shelter in the place where I grew up in the south of Italy. There's a big problem with stray dogs and other animals in general.
[00:50:37] So, you know, I would love to help out there and do something and make sure they don't live on the street and try to adopt them. And so something that has to do with the animal charity, basically.
[00:50:47] Stacy Havener: So my husband literally just had this conversation with me this week about how this has to be one of our life goals.
[00:50:53] So, okay, we'll partner with you on that. Okay, what profession would you not like to do?
[00:50:59] Alfonso Peccatiello: Anything [00:51:00] that doesn't involve creativity and it's repetitive, it just kills me. So put me to do some Standard ops or, I don't know what, like some compliance stuff and you're basically killing me. It's the same, like, you just kill me, it's better.
[00:51:14] Stacy Havener: Okay, and last question, and this is a long ways away. What do you want people to say about you after you've retired or left the industry?
[00:51:23] Alfonso Peccatiello: Oh, I know that bald guy, that Italian guy, used to read this stuff. He has this bond market 101 thing, and he taught me how to look at it from a framework perspective, and you know, he wrote this book about macro principles, and I can read it, and my kids can read it, and it's still evergreen, and you know, it's not always correct, but it teaches a way or two to look in frameworks.
[00:51:45] If people can say that when I retire, I made it.
[00:51:47] Stacy Havener: Yes. Here's to Simple and to Frameworks and to bald guys who are living their own life their own way. I am a huge fan of yours, Al. Thank you so much for being here.
[00:51:57] Alfonso Peccatiello: Thanks for having me.
[00:51:58] Stacy Havener: This podcast is for [00:52:00] informational purposes only and should not be relied upon as a basis for investment decisions.
[00:52:04] The information is not an offer, solicitation, or recommendation of any of the funds, services, or products, or to adopt any investment strategy. Investment values may fluctuate and past performance is not a guide to future performance. All opinions expressed by guests on the show are solely their own opinion and do not necessarily reflect those at their firm.
[00:52:24] Manager's appearance on the show does not constitute an endorsement by Stacey Havener or Havener Capital Partners.