I sat down with Robert Natzler - Investment Manager and member of the Investment Committee for Baillie Gifford’s Private Companies team. This is the crew that have invested inSpaceX, Anthropic, Anduril, Stripe, Alibaba, Spotify, Palantir, Airbnb (the list keeps going)…all while they were private. Robert and the team spend their time travelling the world, looking for exceptional growth companies to invest in.

Robert shared anecdotes on portfolio companies ByteDance, Anduril, Clear Street, Revolut, Vinted and Wayve. We talked about portfolio construction, sourcing ideas, innovation clusters globally, what makes a founder “visionary” and what it means to be a Power Law investor.

All that was awesome. But why did I want to get Robert on the show?

Equity markets have changed. Companies can raise huge amounts of capital away from listed stock exchanges and are therefore staying private for longer. When they do finallyenter public markets, they are doing so at a scale we haven’t seen before. SpaceX just IPO’d with a market cap of around USD 1.75TR – instantly catapulting it in the top 10 largest public companies in the world.

This means a huge amount of value creation has moved from public markets into private markets. A good chunk of the alpha opportunity has also moved too. Many investors haven’t yet adapted to this change. Going forwards, can you really be an equity investor without understanding and having an allocation to private markets…? Robert and the Baillie Gifford team find themselves right at the centre of this dynamic andare helping shape its future direction.

Enjoy!

00:00 – Intro.

01:53 – What is a private company?

03:46 – How have equity capital markets changed?

09:50 – Baillie Gifford’s unique access

13:30 – ByteDance, Anduril, Clear Street

18:49 – Revolut, Vinted, Wayve

24:12 – Portfolio construction – bottom-up or top-down?

33:00 – Underwriting new investments

36:59 – Power Law – swinging the bat and shooting your shot

40:52 – Exceptional founders

47:12 – Edinburgh as a hub?

50:21 – What do investors have wrong about the world?

Disclaimer: The content of this podcast is provided for informational and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. Nothingdiscussed should be construed as a recommendation or offer to buy, sell, or hold any financial instrument or security. Any references to specific investments or strategies are for illustrative purposes only. The views expressed are those of the individuals and do not reflect the views of any affiliated entities. Presenters and contributors may hold positions in theassets or themes discussed. No regulated activity is carried out through this podcast. Investing involves risk, including the potential loss of capital. The value of investments can go down as well as up, and you may get back less than you invested. Past performance is not indicative of future results. Listeners should conduct their own research and consider seeking advice from a regulated financial advisor before making any investment decisions.

There was only one person to get in for this episode…

To do a tour of Private Markets, we needed someone that understands Macro, can connect the dots with Public Markets and understands Private Assets deeply. Thankfully David Stubbs, Chief Investment Strategist at AlphaCore Wealth Advisory, was over from San Diego. It was a super interesting conversation – David made the case that a global investment portfolio cannot be truly diversified today without Private Markets exposure. He also pushed back on a lot of the current media attention on the space. We touched on PrivateEquity, Private Credit, “Growth Venture”, Evergreen/”Conditional Liquidity” vehicle structures and Private Infrastructure.

You can catch more of David’s work at Upside Capture.

00:00 – Intro.

01:55 – US vs Europe Differences: client types, risk appetite and philosophy.

07:51 – Current Market Context: from TINA to TARA? View on Public Markets.

18:18 – Private Equity: bad vintages, rates and changing the world from a garage.

32:37 – Evergreen Vehicles: innovation or landmine?

44:20 – Private Credit: “no, it’s not a scandal”.

52:27 – Real Estate: there is distress, real market risk, manager dispersion.

56:50 – Marginal Dollar: Private Infrastructure!

1:03:16 – Close: “What do you think most investors have wrong about the world?”

…all that and more, in this month’s episode of Tracking Error.

Enjoy!

Disclaimer: The content of this podcast is provided for informational and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. Nothingdiscussed should be construed as a recommendation or offer to buy, sell, or hold any financial instrument or security. Any references to specific investments or strategies are for illustrative purposes only. The views expressed are those of the individuals and do not reflect the views of any affiliated entities. Presenters and contributors may hold positions in theassets or themes discussed. No regulated activity is carried out through this podcast. Investing involves risk, including the potential loss of capital. The value of investments can go down as well as up, and you may get back less than you invested. Past performance is not indicative of future results. Listenersshould conduct their own research and consider seeking advice from a regulated financial advisor before making any investment decisions.

Bubbles & Black Holes – A Conversation with Alex Dryden

A wide-ranging discussion on career paths, asset bubbles, Private Credit and risk-free rates. As an intro, Alex Dryden is a Doctoral Research Fellow at SOAS and the Founder of “Financial Fables” - an awesome weekly newsletter on Economics, Investing and Finance. Alex brings technical topics to life through storytelling. You really should be subscribed ⁠here.⁠

00:00 - Intro.

02:26 - PhD: Alex’s return to academia from banking.

07:57 - Bubbles: how are they form, why they burst and are we currently in one?

22:49 - Black Holes: what is happening in Private Credit?

36:52 - Risk-Free Rates: implications if government curves aren't risk-free?

54:54 - Closing.

…all that and more, in this month’s episode of Tracking Error.

A summary of the episode can be found in the Tracking Error newsletter, on Substack and on LinkedIn.

Enjoy!

Disclaimer: The content of this podcast is provided for informational and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. Nothing discussed should be construed as a recommendation or offer to buy, sell, or hold any financial instrument or security. Any references to specific investments or strategies are for illustrative purposes only. The views expressed are those of the individuals and do not reflect the views of any affiliated entities. Presenters and contributors may hold positions in the assets or themes discussed. No regulated activity is carried out through this podcast. Investing involves risk, including the potential loss of capital. The value of investments can go down as well as up, and you may get back less than you invested. Past performance is not indicative of future results. Listeners should conduct their own research and consider seeking advice from a regulated financial advisor before making any investment decisions.