Matthew Granade joins Ted Seides’ “Capital Allocators” podcast

Matthew Granade, Chief Market Intelligence Officer at Point72 and Managing Partner of Point72 Ventures, joined Capital Allocators podcast host Ted Seides to talk about blending the power of discretionary and systematic investing, how we’re investing in model-driven businesses, the future of public and private investing, and the new habits he’s picked up during the pandemic.

Here are a few highlights:

Ted: Point72 and its predecessor weren’t a new organization when you joined. So as you were coming in, what did you initially do?

Matthew: “One of the things that makes Steve really remarkable at what he does in this industry is the restlessness and the dissatisfaction with everything that is and this emphasis on what needs to be. I still remember the very first time I met him, my first question to him was, “You have built a more enduring hedge fund than almost anyone else. There’s only five or six people like that, why do you think that is?” He said, “Because I burned it to the ground three times before and I’m getting ready to do it again.” What he meant was that what is profitable today is not what’s going to be profitable tomorrow; you have to constantly be changing the business. He has that restlessness deep inside of him.”

 

Ted: What’s your perspective on this notion of how computers are fitting in to the investing landscape of the public market?

Matthew: “One of our major theses right now is that the world of discretionary investing and the world of systematic investing has been kept too far apart. Discretionary investing has gone on for a very long time, and then quant investing rose up, but it took its own path. Each of them has different things to offer the other. A lot of what we’re trying to figure out is how to bring those two worlds together. I think where that starts is really the question of what people are good at versus what machines are good at.”

 

Ted: How have you blended that core of the hedge fund side of the organization, with its flexibility and willingness to change your mind, with venture capital, which is notoriously very long duration?

Matthew: “I think in both worlds, you do the work to get to conviction on the duration that you’re investing in. On the hedge fund side, we’re often investing for the earnings print and so we do the work to get to the conviction on the earnings print. On the venture side, the investment is probably seven to 12 years in duration. So as what I just said might suggest, we do the work to make sure that we have that conviction.
A lot of it starts with how we think the world is changing, what do we think the really big important trends are? As an example, like in AI machine learning. We think it’s about the creation of what we call model-driven businesses. We think that is a massive, enduring trend that’s going to affect almost every industry out there.”

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