On November 7, 2024, the CFA Society Chicago hosted their 37th Annual Dinner at the Hyatt Regency Hotel Chicago. The keynote speaker was Ted Seides, CFA. Seides is the creator of the Capital Allocators Podcast, which Forbes named among the top investing podcasts.
Introduction and Opening Comments
The event began with an introduction from Chris Vincent, CFA, CEO of CFA Society Chicago. Vincent noted that 2025 will be the hundredth anniversary since the founding of CFA Society Chicago. Vincent thanked the sponsors of the event and welcomed Jeremy Heer, CFA, CAIA, to the stage. Heer took a moment to recognize the contributions of current and former board members. He also congratulated the newest CFA charter holders and society members.
The Hortense Friedman, CFA, Award for Excellence
This year’s recipient of The Hortense Friedman, CFA, Award for Excellence was T. Bondurant French, CFA. Bondurant has been with Adam Street Partners and predecessor organizations since 1980 and is currently the Chairman of the Board of Directors. He believes that the CFA designation helped him to bring legitimacy to private equity at a time when it was unknown to most people. He expressed his appreciation for receiving the award and shared insights from his career. He also thanked his mentors, Kellogg Business School of Northwestern University, and his family.
Keynote speaker, Ted Seides, CFA
As master of ceremonies, Heer introduced the keynote speaker, Ted Seides, CFA and joined him for a fireside chat. The chat began with an overview of Seides career.
Seides professional career began in 1992 when he worked for David Swensen at the Yale University Investments Office. Yale’s long-duration liabilities allowed for private equity and other alternative investments. This fostered a culture of thinking for the long term. He also learned the value of seeking diversification, identifying inefficiencies and aligning incentives.
After 5 years, Seides left the Yale endowment. Initially, he worked at a long-short hedge fund. In 2002, after realizing that he preferred selecting investment strategies over analyzing stocks, he co-founded Protégé Partners LLC, a fund of funds. The concept added an extra layer of fees but allowed for sharing the economics of nascent businesses.
In 2008, while still at Protégé, Seides made a wager with Warren Buffett. Buffett publicly contended that the S&P 500 Index would consistently outperform most hedge funds net of fees. Further, he extended a bet to the hedge fund industry. Seides contacted Buffett to accept the offer. They agreed on a $1 million charitable wager spanning from 2008 to 2018. The bet pitted the S&P 500 index against a group of hedge funds selected by Seides. For the first 14-15 months, the hedge funds outperformed. Soon afterwards, the S&P recovered and retained the lead through the end of the bet. Although Seides lost, he argues that the bet still made sense. At the start of the period, the S&P was overvalued and trading at historical highs. One would have generally expected the ensuing return series to disappoint. Meanwhile, returns of hedge funds would be uncorrelated and have the potential to outperform. Seides gained many lessons from the experience. He grew to appreciate Buffett not only as an investor, but also as a great public relations professional.
In 2015, Seides left Protégé due to a combination of internal and external factors. His experience running a fund of funds gave him the unique perspective of seeing multiple fund launches. Many people approached Seides for advice on starting their own hedge funds and he found himself answering the same questions repeatedly. From this, he decided to write his first book, “So You Want to Start a Hedge Fund”. After the book became successful, he launched Capital Allocators LLC.
The path to the Capital Allocators launch was not linear. Seides’ family was academically focused. So, when considering the next project, education and information sharing was a natural fit. Early podcasts were typically interviews of industry colleagues walking through their career path. This body of knowledge led to a second book, “Capital Allocators: How the World’s Elite Money Managers Lead and Invest”. The book covers topics including decision making, interview techniques, negotiations, leadership and management.
Eventually, the podcast grew to more than 400 episodes covering investment lessons and investment driven techniques. While advertising keeps the lights on for the podcast, additional revenue comes from other lines of business. Capital Allocator University began with eight courses and continues to expand with new experts and modules. Meanwhile, Capital Allocators Summits offers the opportunity for industry experts to converse in smaller targeted groups. This challenges the buyer/seller dynamic typical of many other investment conferences.
When asked if he ever considers moving back to a more direct investment role, Seides explained that managing his own capital is enough to keep him engaged. His long-term industry relationships provide access to interesting investment managers and strategies. In his newest book, “Private Equity”, he consolidated a variety of deals covered in Capital Allocator podcasts into a subset of representative case studies. The intent is to cover the subject broadly and potentially educate the public on some of the misconceptions surrounding private equity.
Heer asked Seides for his outlook on private equity moving forward. Heer also raised specific questions around the historical small cap equity premium and democratization of private equity investing. In the foreseeable future, Seides expects private equity returns to come from operational improvement rather than multiple expansion or leverage. While it is hard to predict how returns will compare to public markets, private equity will retain its place in the investing ecosystem. Seides acknowledges that private equity investment may have had an impact on the small cap premium, but it would be difficult to measure or verify conclusively. He expects the democratization of private equity investing to continue. However, he believes that the industry has yet to address liquidity and estate planning challenges unique to individual investors.
In parting, Seides extended advice to those just starting out. He emphasized that you must find what you love before you can do what you love. To this end, he recommended staying open-minded when considering their next opportunities. He also reminded the audience that they have agency over their career and should not feel restricted to any one path.
Closing Remarks
Vincent closed the evening with a video presentation. In the video, CFA Society Chicago members shared their professional success stories and emphasized the value of the CFA designation.