Joel Tillinghast: At the start of my career, when the pink sheets were literally pink sheets--they were pink lists of bids and offers on very illiquid stocks--a couple of times, I had to call the company after an earnings release and request that they read me the line items in their earnings press release, because there was incremental value in those details, and everybody else wouldn't get them for another two or three days.
Dana Emery: Just the sheer volume of data and the speed and accessibility of data that has led to short-termism, and I think it's really been important to keep our eye on the long term, keep our eye on where we see value over the coming three to five years, and take in that data but also keep a long-term mindset.
Sonali Pier: From a data perspective, we have an increased amount of transparency, as well as data that we can analyze. Secondly, from the electronification on the trading side, the ability to put a larger amount of capital to work more quickly. However, there's also areas where technology hasn't shifted the fundamentals, which means we still need to be doing the credit research down to the individual security level, we still need to be meeting with issuers and understanding their needs, such that maybe we can look to extract new issue premium through reverse inquiry and continue to source the best ideas for our clients.
Tillinghast: When I started in the business, there was a giant book of savings and loans that was probably 700 pages put out by S&L securities, and I would flip through this as sort of a shopping or, "Wow, there is a financially good-looking savings and loan." Now you can have a computer screen that tells you who are the most consistently profitable savings and loans in a minute, so it revolutionized that.
Emery: One really important thing is having active open-mindedness, taking in new information, new valuations, and just retesting yourself. I think related to that would be continuous learning. I think reading broadly, being an active listener, thinking in probabilistic ranges, asking yourself questions like, "Where can I be wrong? Where can I know more? Where am I maybe missing opportunities? Maybe I'm being too pessimistic," and then I would point out that I think it's important to think about being solutions mindset. So many times, when you're earlier in your career, you're often able to see issues in maybe ways things are done or the way data comes in, and you can be part of the solution as well, so both identify the issues and be part of the solution. I think leaning in and being willing to advocate ideas is so crucial, and I think your managers will appreciate it.
Tillinghast: The younger me should've appreciated that it takes time to accomplish results. It helps to think about what you believe. It helps to understand, "Am I comparing price to value? Am I trying to go for the best three- to five-year earnings growth? Am I trying to invest in companies that are improving now?" The younger me didn't think enough about what I was trying to do and just did it.
Emery: I think our key competitive advantage is our tremendous focus investing with one overarching investment philosophy. Having integrated teams across equity, fixed income, macro, and quantitative input are very crucial to helping us make long-term decisions and build conviction. I would say our independence allowing us--so we're independently owned by active employees only, and we think that that allows us to stay very focused on clients, stay very aligned with them, and also attract and retain top talent.
Pier: Our platform is large and integrated, meaning we are able to scan the globe for the best risk-adjusted ideas, whether that's integrating a number of products, a number of geographies, and as a result, our research is also set up to take advantage of both the full capital structure as well as the full quality spectrum, meaning our analysts are industry specialists as opposed to product specialists.
Tillinghast: The biggest learning of the pandemic is I'm an idiot. I know nothing. Anything can happen in this world because nobody that I know, except for Bill Gates, predicted that we would have a pandemic of the scale of what we had. Of the people who did predict it, nobody predicted that the U.S. government and many other governments were going to drop trillions of dollars of money printing and government spending on the economy and that we would blast off to new speculative highs shortly after the pandemic.
Emery: We still did things as teams throughout the period. We were just using virtual tools. We still think we're better off together, and I think the future is really some sort of hybrid structure where some days in the office, some days working remotely. There's also the benefit of having alone time and being able to think deeply and research and read and build models. So there's a benefit of a hybrid approach, and I would say, yes, that is a change from our thinking prior to the crisis.
Pier: Investors had to consider a new market participant, the Fed. The Fed had not previously stepped into corporate credit markets and was now essentially a backstop. Additionally with COVID, we learned that it was so important to be creative, to reach out to those issuers that needed an abundant amount of capital and help them with the structure and with covenants, such that our clients could take advantage of the reopening on the upside but also have downside protection as well.
Tillinghast: The recurring challenge--and well, it's not over--is what do you do when your style is not in style? How do you tell whether you're doing the right thing, when the current feedback is telling you you're doing the wrong thing?
Emery: Long-term periods of underperformance of value versus growth like we just experienced post the great financial crisis. And during these periods, we try to keep leaning into value, re-underwrite our holdings, and try to maintain our conviction. So bringing in new information but also being open and re-underwriting and thinking about probabilistic ranges of returns. So really, really doubling down on our investment approach during these prolonged periods, so I'd say that is one challenge.
The other I would mention is there's the new economy, really, with the rise of tech companies, mega-cap companies. Many times also making a significant amount of R&D investments that have often, as they're expensed, lead to losses early on. We need to innovate and look at how we're determining value for these types of companies, and so, we've made a lot of efforts in that area.