# FamilyOffice10x - From $40 Billion PE CIO to Deploying Family Capital - Jean-Baptiste Wautier, Wautier Family Office

An episode of [VC10X - Investing, Venture Capital, Asset Management, Family Office, Wealth Management](https://invisiblenetwork.ai/podcast/1632806986), 19 May 2026, 46 min.

Audio: https://anchor.fm/s/a453ddd4/podcast/play/120217823/https%3A%2F%2Fd3ctxlq1ktw2nl.cloudfront.net%2Fstaging%2F2026-4-19%2F424457221-44100-2-600f5fc4d33b4.mp3

Jean-Baptiste Wautier spent nearly thirty years in private equity, including over two decades as Partner and CIO at BC Partners, one of Europe's leading buyout firms, where he helped manage approximately forty billion euros in institutional capital. Today he runs a consumer-focused family office and sits on the boards of Pershing Square Holdings and Howard Hughes Holdings. In this episode, JB breaks down what the best deals have in common before anyone knows they are great, why he believes diversification is insurance for investors who don't understand what they own, and how moving from institutional capital to family capital fundamentally changes your relationship to time, risk, and opportunity. We also get into the Iran war, volatile markets, and the S&P rallying twenty percent in a single month. JB makes a convincing bear case and an equally convincing bull case — and then tells you exactly what he is doing with his own capital right now. ⭐ Sponsored by Podcast10x - Podcasting agency for VCs - https://podcast10x.com Key topics discussed: - From institutional PE to family capital: how removing mandate constraints and preset timelines changes the way you invest - The three ingredients every great deal has in common: moat, management, and optionality - Why diversification is insurance for investors who don't understand what they own, and why concentration is how alpha gets generated - The Iran war, volatile markets, and why you can never time the market — including JB's case for and against deploying right now - Buy well, own well, and the ancient Greek concept of Kairos as the art of knowing when to exit Links: Wautier Family Office - https://wautier.co.uk/ Connect with Jean-Baptiste Wautier - https://www.linkedin.com/in/jean-baptiste-wautier/ Connect with Prashant: https://linkedin.com/in/choubeysahab Subscribe to VC10X newsletter - https://vc10x.beehiiv.com Subscribe on YouTube - https://youtube.com/@VC10X Subscribe on Apple Podcasts - https://podcasts.apple.com/us/podcast/vc10x-investing-venture-capital-asset-management-private/id1632806986 Subscribe on Spotify - https://open.spotify.com/show/7F7KEhXNhTx1bKTBFgzv3k?si=WgQ4ozMiQJ-6nowj6wBgqQ VC10X website - https://vc10x.com Timestamps: (00:00) - Preview (03:06) - Introduction to the guest, Jean-Baptiste Wautier (JB), and episode overview. (04:53) - The biggest change in private equity over the last 20 years. (06:56) - The three common traits of the best investment deals. (09:38) - Where private equity genuinely adds operational value. (12:42) - How investing family capital changes your relationship to time and risk. (16:50) - Are constraints helpful or harmful to an investor's performance? (20:48) - The biggest mistake investors make with consumer companies. (22:45) - Lessons for PE investors from Bill Ackman's public market style. (26:44) - The governance approach for a high-conviction, concentrated fund. (28:13) - Why the Berkshire Hathaway holding company model is so difficult to replicate. (31:04) - What an effective board does that shareholders never see. (32:49) - Early warning signs that a board is becoming ceremonial. (34:13) - A deep dive into the current investing environment and geopolitical risks. (37:30) - The detailed case against deploying capital now. (39:20) - The detailed case for deploying capital now. (42:19) - Is investment success from buying well, owning well, or behaving well? #PrivateEquity #FamilyOffice #VentureCapital #VC10X #Investing

## Transcript

[0:00] When you manage big pool of institutional capital, you have
[0:03] a mandate, you know you're supposed to invest in that
[0:07] bucket, in those geographies that size, that governance,
[0:11] etcetera, etcetera. But you know, you're going to
[0:14] come across things which are don't fall within the mandate
[0:17] that you're going to pass on and where you're going to be like,
[0:20] oh wow, I wish, you know, I wish we'd been able to do this, but
[0:24] it's too small or it's a minority stake or it's blah,
[0:26] blah, blah. When you manage your own
[0:29] capital, family's capital, you know, that's what I was
[0:32] referring to earlier about strategic drift.
[0:35] You can drift as much as you want.
[0:37] So, so yes, inevitably when you have the freedom I have now, you
[0:43] can really pick your spots and be much more opportunistic in
[0:47] the noble sense. And by doing that, I think you
[0:50] you probably do optimize the risk adjusted return of the
[0:53] total capital. A lot of.
[0:55] People who are waiting on the sidelines for the war that OK,
[0:58] let this end and then I'm going to deploy.
[1:00] But they probably missed out on a massive rally.
[1:02] How are you looking at this and how are you deploying or not
[1:06] deploying? I could make the case for and
[1:09] the case against in a very convincing way.
[1:12] The case against is what you partially said, which is we have
[1:16] a big crisis in the Gulf right now.
[1:20] It's it doesn't look like it's going to be an easy out, Like no
[1:24] one is really bending at the moment.
[1:27] Every day that passes by means more inflation down the road,
[1:31] more problems down the road. Because even if we have a
[1:35] resolution tomorrow, it's going to take six months, you know,
[1:38] look at all the statements by all majors and international
[1:42] agencies and stuff be telling you until 26, the end of 26,
[1:46] we're going to have supply issues, we're going to have
[1:49] inflation issues, we're going to have all price issues.
[1:52] So and these things take time to filter down South inflation,
[1:56] inflation down the road. And as you rightly said, a lot
[1:58] of people are just saying I'm going to wait because there's
[2:00] going to be a correction and that's when I'm going to come
[2:02] in. Now look at where the Max 7 are
[2:06] trading, you know, people, people like to say there's a
[2:09] bubble in the eye and it's probably a bubble in parts of
[2:12] AI. You know, open AI might be a big
[2:14] bubble, for example. We, we shall see, but but let's
[2:18] focus on real companies, public companies.
[2:22] The Max 7 are companies which on average are growing at 1520% per
[2:28] annum, which is huge. They just delivered fantastic
[2:32] quarter. They continue to they, they
[2:34] continue to confirm the guidance.
[2:36] So beat the guidance and the average PE is 20 something
[2:41] 222325, which is pretty much where the average of the S&P is.
[2:47] I mean in my books a company that grows at 15% plus
[2:52] convincingly as a quasi monopoly as a 4 trillion market gap
[2:58] should trade at least at 30 if not 35.
[3:01] It's JB versus JB here. And no, I didn't feel exactly
[3:05] with JB wins here, right? Hey everyone.
[3:10] This is Prashant and I'll be host for the VC10X Podcast.
[3:13] And today we have Jean Baptiste Wattier with us, also known as
[3:17] JBJB, was previously partnered and Chief Investment Officer at
[3:21] BC Partners where he spent over 20 years managing approximately
[3:25] €40 billion in buyout capital. After nearly 3 decades in
[3:29] institutional PE, he now runs his own consumer focused family
[3:33] office and sits on the boards of Pershing Square Holdings and
[3:36] Howard Hoax Holdings. In today's conversation we get
[3:39] into what the best deals have in common before anyone knows they
[3:42] are great. Why?
[3:44] JB thinks diversification is insurance for people who don't
[3:47] understand investing enough and how family capital completely
[3:51] changes your relationship to time and risk.
[3:53] We also get into the current environment, the Iran War, World
[3:56] time markets, the SNP rallying 20% in a month and JB makes a
[4:00] convincing case for and against deploying in the markets.
[4:03] Right now it's JB versus JB and you get to decide who wins.
[4:08] So without wasting any time, let's get straight in this
[4:10] episode. Is brought to you by.
[4:12] Podcast Enix. My podcasting.
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[4:44] description below. Now enjoy the episode.
[4:47] Hey JV, so good to have you on the BC10X podcast.
[4:49] How are you doing? I'm good, thanks.
[4:51] Thanks for having me Prashant. Yeah, it's a pleasure having
[4:54] John. Just start things off.
[4:56] Let's talk about how you spent 20 years at BC Partners and what
[4:59] the CIO for the decade. When you look back, what was the
[5:03] single biggest change in private equity investing from a world of
[5:07] leverage and multiple expansion to today's environment?
[5:11] That's, that's a great question And, and many things have
[5:13] changed over the, over those 20 years.
[5:15] I would say probably the biggest, the biggest 1 is how
[5:21] we, we moved from a very entrepreneurial, you know, fast
[5:27] growing, but quite immature industry to a very
[5:32] institutionalized 1. And we've entered really a phase
[5:37] of maturity where, you know, scale definitely matters.
[5:41] Whereas the 20 years I was, I was in the industry, I was
[5:44] nearly 30 years. But the 20 years at BC, which
[5:47] was sort of the golden years probably of, of buyouts in
[5:52] addition to what you said, which is a very benign macro
[5:57] environment, you know, not just interest rates, but also asset
[6:01] prices, availability of capital. You know, we had everything,
[6:06] everything going for the industry.
[6:08] We were sort of evolving, but it was still an industry of
[6:12] investors. So individuals with sort of
[6:18] chosen that industry and, and we're really trying to develop
[6:23] the skills, but, but, but it was still very entrepreneurial.
[6:26] So it was really a collection of investors getting together and
[6:29] trying to build something. And and my generation really
[6:34] builds on on what The Pioneers had initiated.
[6:38] But I guess today we've entered into a much different phase,
[6:41] which is a phase where the leader in the industry is A1
[6:44] trillion asset under management behemoth.
[6:47] I'm talking about Blackstone obviously.
[6:49] And and it's become much more institutional and much more
[6:52] firms as opposed to a band of band of entrepreneurs.
[6:57] Yeah, absolutely. That's quite interesting.
[6:59] And at BC Partners you helped manage around €40 billion and
[7:04] LED major investments. What did the best deals have in
[7:07] common before anyone knew they were great deals?
[7:11] This is this is the question and one on which you, you know, you
[7:16] try and reflect as an investor every time you get it right and
[7:19] every time you get it wrong, which where where you, you learn
[7:22] even more. I would say this probably three
[7:26] things that are always there in a in a, in a strong investment.
[7:31] One, it's not the guarantee of a strong investment, but these are
[7:34] must haves. 1 is a Moat as Warren Buffett would call it, a
[7:40] real sustainable competitive advantage, something that you
[7:44] know definitely as far as to intrigue gives you pricing power
[7:48] etcetera, etcetera. So that's the fundamental of of
[7:51] the business. But I, I guess without that very
[7:54] hard, the second one is a strong management team, strong CEO.
[8:00] But you know, I would say more broadly a strong management
[8:03] team. Again, it's, it's, it's an
[8:06] absolute critical ingredient. You can have the best business.
[8:09] If you don't have the right management to deliver, it's very
[8:13] likely you, you, you'll get the, the best out of it.
[8:17] And the third one may, maybe will, will sound less obvious to
[8:23] people who follow investing, which is optionality, what I
[8:27] call optionality. And what I mean by that is two
[8:31] ways. One is there's many levels of
[8:35] value creation with the business.
[8:37] In other words, it's not just one engine of value creation.
[8:41] And if you're unlucky or if it fails or the macro goes against
[8:44] you, then suddenly you stuck. You have many things you can do
[8:48] with the business in terms of growing it, in terms of making
[8:51] it more profitable, in terms of making it more strategically
[8:55] valued. So that's one Ave. multiple
[8:59] value creation level. And the other aspect of
[9:01] optionality is really when it comes to exit, IE it's not just
[9:07] one exit scenario. And if this is not available,
[9:12] again, you stuck until it reopens.
[9:15] You know, look at how many companies just have IPO as an
[9:19] exit scenario. And if the IPO markets are not
[9:21] there, then you stuck. So when you have an asset that
[9:24] can IPO but can also have strategic value, can also go for
[9:27] another round of private equity, that's what I called exit
[9:32] optionality. So for me that would be the
[9:34] third ingredient that you have optionality around by recreation
[9:37] and exits. Absolutely, it's quite
[9:40] insightful and probably with the investors are often they call
[9:45] themselves operators, but many are really just financial
[9:48] engineers, right. In your experience, where does
[9:51] PE genuinely add operational value and where does it fool
[9:54] itself? Yeah, it's, it's another great
[9:58] question. I think you know, starting with
[10:00] the obvious, there's been a lot of debates and it still is
[10:05] around, you know operating partners and and how much can
[10:10] outside when I say outside, you know people who are not part of
[10:14] the management team but have operational experience, how much
[10:18] they can really bring to portfolio companies.
[10:20] I think I would say probably apart from one or two
[10:23] exceptions, one for example being CDNR or, but there's very
[10:28] few great examples where key professionals, operators and can
[10:33] really bring values. I think this is and there
[10:39] continues to be a debate. And I think apart from some very
[10:42] specific things like procurement or or, you know, working
[10:47] capital, supply chain, so very isolated topics, I think it's
[10:51] very hard to bring expertise to an already very good management
[10:56] team. Where I do think you bring value
[10:59] though, is usually a management team as managerial experience.
[11:04] As an investor, you have a different set of experience and
[11:06] you have a different set of data and information.
[11:10] You know, when it comes to thinking in terms of strategy,
[11:16] thinking in terms of positioning, repositioning a
[11:18] company, preparing it for an exit, getting, getting it the
[11:23] right capital structure, I think a good PE professional would
[11:27] really adds to, to even an experienced management team.
[11:33] That's an obvious one. But I think, and that may fall
[11:35] into what you call, you know, financial engineering in the
[11:38] broader sense, but I think there's more to it.
[11:40] I think the, the, you know, the kind of benchmarking, the kind
[11:44] of experience you you accumulate as an investor is really
[11:48] additive to what's a management team can really have how how you
[11:54] increase the strategic value of a company, how you reposition a
[11:57] company, how you expand. It's time, things like that.
[12:02] I really think you've done if you've worked on many deals, you
[12:05] can really add. And last but not least, where I
[12:09] think P can also bring quasi operational expertise.
[12:14] Is, is a sector expertise. And you know, if you've seen
[12:20] gazillion of companies in in a sector or even in a sub sector,
[12:24] you really got to bring again, experience, benchmarking
[12:28] network, ability to find talent that the company itself might
[12:34] not necessarily have. And that again is, you know, a
[12:37] combination of, I would say strategic, operational and and
[12:41] financial expertise. Absolutely.
[12:43] Quite interesting and. You have.
[12:46] Had sort of a shift in role, you know, manage a Consumer Focus
[12:50] portfolio to your family office. How different is investing your
[12:54] own family capital versus institutional LP capital?
[12:58] Does it make you more patient, more concentrated, or more
[13:01] emotionally exposed? All of the above maybe.
[13:06] I think, I think there's many similarities in terms of, you
[13:12] know, the way you're going to analyse your business, You know
[13:15] what we were saying earlier, the, the Moat, the management
[13:17] team, the optionalities, the exit, etcetera.
[13:20] These are going to be exactly the same.
[13:22] Well, I think there's a big difference and that maybe what
[13:25] you, you know, what you alluded to in terms of, you know,
[13:28] comparing with it's, it's not so much patience, but it's in
[13:34] absolute term your relationship to time.
[13:37] In other words, sometimes you might be more patient it, it
[13:42] might result in being more patient, but it's not even it,
[13:45] it's just that your time horizon is not preset.
[13:48] You have the luxury of just saying, you know what, I'm going
[13:53] to invest. I'm going to put a place in
[13:56] governance that protects me. But then if the time isn't right
[14:00] for an exit after 4-5 years, you know, I don't have to exit.
[14:05] Or if the time is right for an exit in two years and I align
[14:10] with the founder and with the CEO that it's the right time,
[14:13] let's let's go for it. And I'm not going to worry
[14:15] about, Oh my God, you know, the, my capital hasn't, hasn't
[14:19] compounded for long enough. And yes, the ROI is going to be
[14:22] good, but the Moi is not going to be great.
[14:24] So it's it's all this this, you know, this preset timeline that
[14:30] you inevitably have when you manage institution capital for
[14:34] the deployment of your capital, for the return of your capital
[14:37] for each and every investment that sometimes, you know, forces
[14:42] you to make a decision that maybe is not the right decision
[14:45] for the company or is wrong in terms of maximizing the long
[14:49] term capital gain. So that that is huge.
[14:52] So it's patience, but it's not only patience, it's more
[14:55] freedom, you know, with your timeline, I would say
[14:59] emotionally, I wouldn't say this, I'm trying to keep
[15:04] emotions out of the equation at all times that, you know, that's
[15:08] having learned that you need to fight or be conscious of your
[15:12] biases. So I, I don't, I think if
[15:15] anything, your bit, if you, if you don't have a problem with
[15:21] risk reward and taking risky decision, I think if anything,
[15:25] you might take more risk at times because you just the way I
[15:29] manage it is a major pool of capital where liquidity is not a
[15:33] problem. I never want liquidity to put
[15:36] pressure on, on this capital. It goes into private companies.
[15:40] And so at the end of the day, when you do that and you're very
[15:43] cognizant of the fact that each and every line can go to 0, just
[15:47] by definition, this is an equity investment.
[15:50] Sometimes you, you ready to take a bit more risk or you ready to
[15:54] take a bit of a strategic drift compared to what you've done.
[15:58] You know, I've, I've started doing investments in startups,
[16:00] which is something I'd never done and thought I would never
[16:03] do because different, different skills, different risk profile.
[16:09] And, and that's again, you can't when you have a fixed mandate
[16:12] and a very strict mandate. So I wouldn't say emotionally
[16:15] it's different, but I would say in terms of the type of risk you
[16:18] ready to take, maybe you you I'm a bit more risk taker, which is
[16:24] as it should be when it's my own money versus managing someone
[16:28] else's money. Yeah, absolutely.
[16:30] I think that point needs to be stressed more.
[16:32] And I think family offices wanting to invest in the venture
[16:36] capitalist class, the PE asset class need to be mindful that
[16:40] they say they invest in a particular style and they have
[16:43] their own boundaries. And you have to gauge if that
[16:48] suits you or not, right? Because like you said, that can
[16:52] at times compromise returns. At times.
[16:54] They might, if they want to just generate DPI to show they're
[16:58] raising the next one, let's say, right?
[16:59] And they want to show that, OK, their previous fund has, has
[17:03] some DPI has exited some companies, then they go to exit
[17:07] some companies that they might have held longer if there was no
[17:10] constraint of time of if they were not raising another fund.
[17:13] So the incentives are different here and families need to
[17:17] understand that. And you've mentioned how there
[17:20] is more freedom and so many other things.
[17:24] When you look back, you think you are a better investor with
[17:28] family capital or with with these boundaries that are not
[17:31] there now and you produce better returns now versus do you think
[17:35] the constraints in that PE world or that VC world actually help
[17:39] you be more disciplined about investing and produce more
[17:43] consistent returns maybe maybe not those higher blowout returns
[17:48] or higher returns maybe. So what's your view on that?
[17:50] Do you think you're a better investor now or were you a
[17:52] better investor then? It's a great question.
[17:56] I think, I think every year that passes by, I'm a better
[17:59] investor. So, you know, whether you wear
[18:02] an institutional hat or a family hat, I think you know, you, you
[18:05] build, you build skills with, it's like good wine.
[18:09] You know, every year that passes by, you become, you become
[18:13] better and, and, and unfortunately, you become even
[18:17] better when you make a mistake. Because if you, if you haven't
[18:20] made a mistake and everything is, is gone to plan, you've
[18:23] learned nothing. You make a mistake, you will
[18:25] learn something from your mistake.
[18:27] But back to the heart of your question, I think I think it's
[18:33] easier to maximize the risk adjusted return when you solving
[18:40] for just one pool of capital with no timeline associated with
[18:45] it. Absolutely.
[18:46] I think that's that makes that makes your life easier.
[18:48] Now the problem is when you raise, you know, billions, which
[18:55] which is what we were, we were doing from anywhere between 150
[19:00] to 200 institutional investors who themselves you know have
[19:04] have very different agenda, very different liquidity issues, very
[19:08] different time horizon. They have, you know, teams that
[19:11] change and and objectives that change.
[19:14] You have to have a common denominator, which is how
[19:18] private equity got structured. You have to align all investors
[19:21] on, OK, we're going to invest over that period, we're going to
[19:25] divest over that period. We're going to try and solve
[19:28] that type of return and that type of of hurdle rate.
[19:33] But inevitably you're right by doing that because you're
[19:37] solving for, you're trying to find a common eliminator.
[19:40] You're going to leave, you know you're going to leave some
[19:43] either some attractive realization, but also you know,
[19:48] it's not just the time, it's also more often than not we
[19:53] would see opportunities when you manage big pool of institutional
[19:56] capital, you have a mandate, you know you're supposed to invest
[20:00] in that bucket. In those geographies that size,
[20:04] that governance, etcetera, etcetera.
[20:07] But you know, you're going to come across things which are
[20:10] don't fall within the mandate that you're going to pass on and
[20:13] where you're going to be like, oh wow, I wish, you know, I wish
[20:16] we'd been able to do this, but it's too small or it's a
[20:19] minority stake or it's blah, blah, blah.
[20:21] When you manage your own capital, family's capital, you
[20:26] know, that's what I was referring to earlier about
[20:28] strategic drift. You can drift as much as you
[20:30] want. So, so yes, inevitably when you
[20:33] have the freedom I have now, you can really pick your spots and
[20:38] be much more opportunistic in the noble sense.
[20:42] And by doing that, I think indeed you, you, you probably do
[20:45] optimize the risk adjusted return of the total capital.
[20:49] Yeah, absolutely. Quite interesting.
[20:51] And you mentioned about consumer businesses.
[20:54] Consumer businesses look simple from the outside but are crude
[20:57] and underneath right brand distribution, margins, taste,
[21:01] culture, found a psychology and so on.
[21:04] What do most financial investors misunderstand about consumer
[21:08] companies? But I think I think the answer
[21:12] is in your question. I think they, they think it's
[21:16] simple when it's not. And and that's, you know, I was
[21:20] joking for many years with some of my competitors were also
[21:25] consumer investors. And we were, we were, we were
[21:28] joking about the same thing, which is why is it that
[21:31] consumers, the only sector where non experts think they are
[21:36] equally experts as people who've had, you know, 20 years of
[21:38] experience in consumer. And just because, you know, they
[21:42] happen to buy the product or their wife or their, or their
[21:46] children happen to buy the product, doesn't mean they are
[21:49] an expert in the sector. And and why is it that consumer?
[21:53] So consumer is, is, you know, you have this sort of false
[21:57] impression that, you know, it doesn't take it's a bit like
[22:01] investing, You know, people who really don't know much about
[22:05] investing get the impression that investing, you know, anyone
[22:09] can be an investor. I can be an investor tomorrow.
[22:12] I can be an economist tomorrow. But in in consumer, it's a bit,
[22:15] it's a bit like that. So no one would ever question,
[22:19] you know, a healthcare expert or a tech expert, Everyone would be
[22:24] like, OK, so you've seen hundreds of companies, you've
[22:27] seen successes, you've seen mistakes.
[22:29] What do you think? But in consumer, because
[22:32] tomorrow you can go and buy the product in the store.
[22:35] You probably, you probably did you think you understand because
[22:38] you yourself are a consumer. I think that's the biggest.
[22:41] It's usually the the most common, the most common mistake
[22:44] in the space. Yeah, absolutely.
[22:45] I completely agree. And you serve on the board of
[22:49] Pershing Square Holdings, one of the most watched concentrated
[22:53] investment vehicles globally. What can private equity
[22:57] investors learn from Bill Ackman's public market style and
[23:01] what should they not copy? So I think there's, first of
[23:05] all, there's a lot of what Bill applies, which is common to
[23:11] private investors. And again, you know, whether
[23:13] it's private or public, the things we talked about, you
[23:17] know, a competitive advantage, strong management, optionality,
[23:23] cash regeneration, things like that.
[23:26] And you look at you look at the way Pershing has been investing
[23:29] the last few years, you know, you will find no exception to
[23:34] that, to that rule. Like it's Billy calls them
[23:37] royalties, but they the, you know, which is his, his way of,
[23:40] of labelling moats or very strong Moat in a sector.
[23:44] So, so I think that, you know, you would be well inspired to
[23:49] look at the way he's using criteria to define what is a
[23:53] good business, because these are very similar to what you should
[23:56] apply in, in, in the private space.
[23:59] Similarly, his approach is very comparable to what you would do
[24:08] in the large in the large buyout space.
[24:10] And what I was doing in my, in my previous shop, which is you
[24:14] will run a concentrated portfolio.
[24:16] This is not AVC approach. This is not an ETF.
[24:19] This is not. So we're going to go for 10 to
[24:22] 15 positions and there's going to be a high conviction bets.
[24:26] And and again in the private space, you know, you're going to
[24:30] have investors who will always talk about your portfolio
[24:35] hedging and, and the sector representation and stuff like
[24:40] that. I think I mean, you should look
[24:42] into it. But by and large, again, I would
[24:45] refer to Buffett who said it all.
[24:47] But diversification of portfolio strategy is, is an insurance for
[24:52] people who don't understand anything about investing.
[24:55] If you are an investor, you should have high conviction bets
[24:59] because that's how you're going to generate alpha.
[25:01] So again, I think that's something to be, to be inspired
[25:04] by. Now the, the, the one thing that
[25:09] is never applicable is of course, there's never any
[25:12] consideration for, for, for the exit, the repositioning of a
[25:17] company, the, the exit strategy, the optionality at exit,
[25:21] etcetera. Because by definition, Pershing
[25:24] is trying to look for positions where we are small and liquid
[25:29] and, and there's no issue if if we need to exit the position,
[25:33] there's no issue in exiting a position, you know, keep selling
[25:36] the whole block and be done in a few hours or maximum a few days
[25:39] and won't move the the stock price.
[25:42] And that's why you know, most of the most of the portfolio is
[25:45] into very large mega caps. That's the absolute opposite to
[25:52] a private investor and a private investor should always obsess
[25:57] over again, exit optionality, strategic positioning, exit
[26:02] strategy and should think about exit day one.
[26:05] This is something that in the case of pushing, you don't have
[26:08] to do. It's the opposite.
[26:09] You, you, you enter a position making sure that you can exit
[26:13] whenever, however, without impacting the share price in
[26:17] the, in the private. Well, it's the polar opposite.
[26:19] So I would say this is probably the the biggest and and the most
[26:23] important difference. Yeah, absolutely.
[26:25] And I completely agree. You know informed investors,
[26:28] high quality investors making high conviction concentrated
[26:32] bets is actually what produces those amazing returns.
[26:36] But for sure that's not general advice by everyone.
[26:39] That's for the expert who are who have been doing this for
[26:42] years. Absolutely.
[26:44] And you mentioned how pushing follows the high conviction
[26:47] concentrated investing approach. As a board member, how do you
[26:50] think about the governance of a vehicle where conviction is a
[26:53] feature but also concentration is the core risk?
[26:59] Yeah. So this is, I mean you, you
[27:02] write that this is not your typical board in terms of, you
[27:06] know, risk matrix and portfolio strategy and all the rest of it.
[27:12] So the, so the way we approach that is just embracing it, IE
[27:16] this is what we do, this is what this, this, this mandates this
[27:21] vehicle, this stock is about, it's about high, high
[27:25] conviction. And we're not going to, we're
[27:27] not going to try and build hedges around that or, or risk
[27:32] management. This is the way it works.
[27:34] This is as you just said, how you, how you going to produce,
[27:38] you know, pushing whichever way you cut it between 1515 or 20
[27:43] years track record has been generating high, high teens, low
[27:49] 20s compounding track return net return net of fees.
[27:55] So you know, this is again, this is about embracing it, accepting
[28:00] that we can have short term volatility.
[28:02] We we may have down years, but we are long term compounders and
[28:06] we can only be long term compounders in the high teens,
[28:09] low 20s by having a very concentrated portfolio of high
[28:13] conviction bets. Yeah, absolutely.
[28:16] And you also joined the board of Howard Hughes Holdings, which
[28:20] Pershing Square has been trying to reposition into a more
[28:23] Berkshire like holding company. What makes that model so hard to
[28:27] replicate in practice? Well, first of all, it's
[28:31] impossible to replicate Warren and, and irrespective of, you
[28:36] know, Greg's quality, I think the, the investors are feeling
[28:40] it and, and warrant this Charlie even harder.
[28:44] So I think, you know, you will never be able there's, there's,
[28:48] there's only one warrant. There's only, there was only 1C
[28:51] and, and I don't think you can replicate that.
[28:54] And their model was incredibly pure in the sense that, you
[29:00] know, you had you just had a couple of guys, incredible
[29:05] allocators and investors of capital, incredibly patient,
[29:08] incredibly visionary, a very simple governance around them
[29:12] aboard. They wouldn't even pay both fees
[29:16] to make sure that people were here just focusing on shelters
[29:20] interests, the way they were incentivizing the portfolio
[29:24] companies, etcetera. So very pure model that I think
[29:28] is, is and, and two amazing individuals.
[29:31] So I don't think it's it's easy to replicate.
[29:34] Now having said all of that, there's a few ingredients in
[29:40] what they have built with Berkshire that you can totally
[29:45] replicate. And if you have a great team of
[29:48] investors with pushing has you have a base which we now have
[29:53] with always use with some, you know, cash generating assets and
[29:59] you give yourself some time. That's a big ingredient.
[30:03] I think you can totally replicate, you know, the, the
[30:05] type of, of track record that they've been able to, to build.
[30:09] I mean, it's, it's, it's always worth remembering that.
[30:14] I can't remember the exact age, but until late 50s or early 60s,
[30:21] Warren was not a billionaire. And then things happened just
[30:26] because they compounded for so long.
[30:29] And they've been incredibly patient, incredibly resilient,
[30:31] picking the right assets and waiting for the, the magic of
[30:35] compounding to happen. And, and that again, is that can
[30:39] be replicated, but you need to be very, very resolute and
[30:44] patient and have people that really embrace your vision and
[30:48] trust you to be able to replicate.
[30:50] But, but I think if you do have that, you do have permanent
[30:54] capital, which is to me the key ingredient, then you buying
[30:58] yourself some time and then, you know, you just need to prove
[31:02] you, you worth. But I think with the passing of
[31:04] time you can get there. Absolutely.
[31:06] I completely agree. And you've sat across private
[31:09] companies, public boards, investment companies and family
[31:12] capital. Now, what does a truly effective
[31:15] board do that shareholders never see?
[31:19] Oh, that's, that's a hard one, I think.
[31:26] I think probably an effective board, an effective IC or
[31:29] whatever. Probably people would be
[31:32] surprised by the, the level of engagement and the, the, the
[31:38] directness of the discussions. Probably, I mean, I wouldn't
[31:43] know for sure 'cause, you know, I've been an insider for too
[31:46] long. But probably people picture, you
[31:48] know, very, very polite discussions.
[31:52] Very high level, very it's actually, I mean a, a, a real
[31:59] productive boards is like a real productive.
[32:01] I see it's very scruffy. It's very engaged.
[32:04] Really get down to the nitty gritty and to the the risk and
[32:09] you know, what can go wrong and blah, blah, blah, and what if
[32:12] and, and all these things and, and you won't, you know, you
[32:16] want people. It's not that you want people to
[32:18] disagree for the sake of disagreeing, but I think you
[32:21] want the variety of viewpoints. That's that's that's what makes
[32:25] and I see you're bored productive is you have different
[32:28] different profile, different different experience, different
[32:31] culture, different risk appetite around the table.
[32:34] And in the end you manage to get to build a consensus, or at
[32:38] least the vast majority of of these people.
[32:41] I think that's what people probably thought in the city
[32:44] expect is the high engage and how direct the well functioning
[32:48] board can can be. Yeah, absolutely, completely
[32:51] agree. And a governance is something
[32:53] that often gets discussed after something goes strong, but one
[32:57] of the early warning signs that a board is becoming ceremonial
[33:01] rather than useful. I think there's a few signs, but
[33:04] it's it's probably the pole opposite of what I just said.
[33:06] When a, when a board, you know, is always agrees on things,
[33:14] never challenges the, the, the CEO, the CEO for the management
[33:18] team, when the board members never disagree on anything, when
[33:23] you stay super high level and you don't, you don't
[33:28] necessarily. There's never really tough
[33:29] questions being asked and it's all, you know, very nice and
[33:32] sweet. I think you should worry not
[33:36] again, not that you should look for disagreement and, and anger
[33:41] and whatever it is. That's not the point, but but
[33:44] you see what I'm saying that that it should be a place where
[33:48] there's really a lot of engagement and disagreement and
[33:53] you know, going down into the into the details of, of key
[33:57] aspects. Because otherwise, when you
[34:00] become too cozy and it's people you know just just enjoying the
[34:06] company of each other and being too cozy to management, that's
[34:10] when the boat starts drifting. Absolutely.
[34:13] And looking at the environment right now from the investment
[34:17] landscape and the global geopolitics aspect, there are
[34:20] wars ongoing, but a ceasefire on off and things are sort of shaky
[34:27] wallet type, right? And markets are going in all
[34:30] directions. But right now, as we are
[34:32] speaking, the market has actually rallied about like 20%
[34:36] SNP 500 in just the past one month, which sounds crazy.
[34:42] A lot of. People are waiting on the
[34:43] sidelines for the war that OK, let this end and then I'm going
[34:46] to deploy. But they probably missed out on
[34:48] a massive rally. How are you looking at this and
[34:52] how are you deploying or not deploying?
[34:54] Are you watching or are you strategically watching deploying
[34:57] something and waiting if they should deploy more or not at the
[35:01] best of your view on that? Yeah.
[35:03] So, so a few things on that. There's one thing I've I've
[35:09] learned from, you know, all of those years of investing is that
[35:13] you can never time the market. And so if you, if you want to be
[35:17] invested, you should deploy, deploy, deploy, you know, and,
[35:23] and it doesn't mean you should be oblivious of where we are in
[35:27] cycle or where we are compared to the market valuations.
[35:30] Of course you should be cognizant of those, but you
[35:32] should never try in time the market because you'll never be
[35:35] able to. And you know, you could have,
[35:37] you could have said, and I've seen it, you know, so many times
[35:40] every cycle, like the run up, you know, the 2001 to 2005 was
[35:48] an amazing vintage, but every year people were saying it's too
[35:52] expensive. And the year after it was more
[35:54] expensive and it was more expensive.
[35:56] And eventually there was 2008, but you had a full cycle that
[36:00] you'd missed. If you'd been thinking for nine
[36:02] years, you know, it's too expensive, it's too expensive.
[36:05] The same happened post GFC where everyone was paralyzed.
[36:10] And you should have invested massively in 2011, 2012, 2013.
[36:14] But people are like, Oh my God, we just had a global recession,
[36:17] you know, nobody's liquid anymore, blah, blah, blah.
[36:19] So again, when what you learn from these things is you can
[36:24] never really call the bottom or the top and you should never try
[36:28] and be completely out or leaning massively.
[36:31] And you should, you should always try and deploy over time,
[36:34] you know, gradually each and every year, again, barring any
[36:38] massive movements that you, that, that you foresee #1 #2
[36:45] geopolitics like 15 or 20 years ago when you were talking about
[36:49] the macro geopolitics, people were like, yeah, but why, why,
[36:55] why is it relevant to my investment in healthcare or
[36:58] consumer, whatever. And, and the macro was sort of
[37:02] a, a footnote. Nowadays it's a, it's a very
[37:07] fundamental driver of your performance.
[37:09] So I try, I've always been keen to understand the macro trends
[37:14] cause they could make or break an investment even if the
[37:17] investment was good, but not even more today.
[37:21] So I think if you're an investor, you should be
[37:24] completely switched on, on what's going on in the world,
[37:27] geopolitics, macro economy, central banks, you know, public
[37:32] deficits and all the rest. Otherwise, you're going to miss
[37:35] half of the half of the equation because the macro, as you, as
[37:38] you rightly said, has become, has become a big driver of, of
[37:42] performance #3 I think. So to answer specifically
[37:48] whether you're doing right now, I mean, it's, it's a very, I
[37:53] could make the case for and the case against in a very
[37:56] convincing way. The case against is what you
[38:00] partially said, which is we have a big crisis in the Gulf right
[38:04] now. It's, it doesn't look like it's
[38:07] going to be an easy out. Like no one is really bending at
[38:12] the moment. Every day that passes by means
[38:17] more inflation down the roads, more problems down the road.
[38:20] Because even if we have a resolution tomorrow, it's going
[38:23] to take six months. You know, look at all the
[38:26] statements by all majors and international agencies and stuff
[38:30] be telling you until 26, the end of 26, we're going to have
[38:35] supply issues, we're going to have inflation issues, we're
[38:37] going to have all price issues. So, and these things take time
[38:41] to filter down South, inflation, inflation down the road.
[38:44] So I could make the case that the worst is yet to come from
[38:49] the macro perspective. And, and, and in addition to
[38:53] that, there's a big question mark on what is really priced in
[38:57] the market by me comes to central banks.
[39:00] You know, until a few months ago, people were pricing it
[39:04] several cuts nights like then it was just one cut nights like
[39:09] maybe they're going to stay fat. But actually, you know, we're
[39:11] going to change Fed president soon and his first decision
[39:15] might be to take rates up. And if you're going to spook the
[39:19] market or is the market insipating that by how much when
[39:24] we don't know that. So on the one hand, there's so
[39:27] many things hanging around that could create a correction of 20
[39:31] or 30% of the markets that I could argue sit on the
[39:35] sidelines, but that could make the equally convincing case that
[39:40] you should, you should lean in now because the, the, the, that
[39:44] is what people are focusing on all of these risks.
[39:48] And as you rightly said, a lot of people are just saying, I'm
[39:50] going to wait because there's going to be a correction.
[39:52] And that's what I'm going to come in Now look at where the
[39:56] Max 7 are trading, you know, people, people like to say.
[40:00] There's a bubble in AI and it's probably a bubble in parts of
[40:03] AI. You know, open AI might be a big
[40:05] bubble, for example. We, we shall see, but but let's
[40:09] focus on real companies, public companies.
[40:13] The Max 7 are companies which on average are growing at 1520% per
[40:19] annum, which is huge. They just delivered fantastic
[40:23] quarter. They continue to they, they
[40:26] continue to confirm the guidance.
[40:27] So beat the guidance and the average PE is 20 something
[40:33] 222325, which is pretty much where the average of the S&P is.
[40:39] I mean, in my books, a company that grows at 15% plus
[40:43] convincingly as a quasi monopoly, as a 4 trillion market
[40:49] gap should trade at least at 30, if not 35 S this.
[40:54] And, and at some point, people will wake up to that.
[40:57] And then we'll just, you know, and I think that's part of the
[41:00] rallies you seeing. And the reason why markets seem
[41:04] to be holding up even though the macro picture is really bad is
[41:09] because if you just focus on what's driving the S&P
[41:13] performance, they're not that crazy expensive today.
[41:17] So, so then, you know, the questions are, OK, So what do
[41:20] you do? And that's why I'm back to my
[41:22] point #1 which is I'm conscious of these two things, and I
[41:27] continue to deploy. I don't go all in because of all
[41:32] of the risks that we referenced. And I'm cognizant of the fact
[41:36] that they could be a market correction at any point
[41:38] triggered by anything. But I'm also cognizant that
[41:42] there's a few stocks out there that are not that crazy
[41:46] expensive compared to the earnings.
[41:48] Earnings are delivering. Earnings continue to grow and AI
[41:52] is such a massive revolution that you know, as long as you
[41:56] back the right companies, I think you should continue to
[42:00] selectively deploy. So I'm not I'm not a sitting on
[42:03] my hand nor putting all my chips in, but I continue to deploy
[42:07] selectively in this environment. Absolutely.
[42:10] Quite amazing. So it's JB versus JB here.
[42:13] And no, I didn't feel that way. JB wins here.
[42:16] Right, exactly right. Now to my last question before
[42:21] we try to close this out. After spending 30 years across
[42:25] BE modes and family capital, are you more convinced that
[42:30] investment success comes from buying well, owning well, or
[42:33] behaving well when things go wrong?
[42:38] All of the above. I mean, it's, it's, you know,
[42:41] it's. Let me try and be a bit more
[42:44] insightful than than that, but I really I really mean it.
[42:48] It's it's really all three. But but you know, if you don't
[42:52] buy well, it's going to be very hard.
[42:54] So so it really starts with that.
[42:57] And you know, countless number of time you've heard people,
[43:02] people in the sector saying, you know, it's it's all about you.
[43:05] You enter multiple. I think it's not true.
[43:09] I think what they mean by that when they say it's all about the
[43:12] buying well is if you don't buy well, you probably toast.
[43:15] It's going to be very hard. Even if you, you, you know, you
[43:19] own well and you exit well. So, so that's an absolute must.
[43:26] But then you will never extract the whole value of an investment
[43:32] as long as you're an active investor.
[43:33] Of course, if you don't do things, you know, if you don't
[43:38] try and grow it, if you don't try and make it more
[43:41] diversified, if you don't try and make it more institutional.
[43:45] And overall, if you don't try and increase the strategic value
[43:47] of the asset that you bought in the 1st place.
[43:50] So I think there's a lot it's not, it's not an absolute must,
[43:56] but you're going to leave a lot of money on the table if you
[43:59] don't have active ownership, if this is your mandate and if
[44:04] these are your skills. And then I would say the exit,
[44:08] the exit. You need to swap the, the, you
[44:11] know, in, in ancient Greek, you have two notions of time.
[44:15] You have Kronos, which is the time, you know what we call
[44:19] time. And you have Kairos, which is
[44:23] this idea that there's moments in time that you need to seize
[44:27] where there's an alignment of planet.
[44:29] And to me, exit that is being, it's some pattern recognition
[44:34] between where your company is in its trajectory, the universe,
[44:39] where the universe of buys are, where the market is, where the
[44:42] valuations are, where the macro is.
[44:44] And, and you need to understand the pattern and you need to see
[44:48] it for what it is and, and just, and then seize the moment.
[44:51] So exiting again, it's a bit like owning.
[44:54] You're not you're not going to kill your investment if you if
[44:58] you bode well, you should be OK irrespective if you both and
[45:05] you've been a good owner in respect to the exit, you'll make
[45:09] a good investment. But the ex the the investment
[45:12] becomes, you know, exceptional and you've extract full, full
[45:15] potential if you were able to see that moment.
[45:18] And sometimes that can make for some of your shortcomings as an
[45:23] owner or, or if you've been unlucky with the macro, you
[45:27] really pick the right exit window.
[45:29] You can get some multiple accretion that's just due to
[45:32] picking the right timing and that will make up for your for
[45:35] your SIN as an owner. Absolutely.
[45:38] That's quite beautifully explained.
[45:39] Amazing. It was great having you on JB
[45:43] and loved all the insights that he shared on multiple fronts.
[45:46] We went all the way from BE family capital to discussing AI
[45:51] and geopolitics as well. So it's been an amazing
[45:54] conversation. Thanks so much for making time
[45:56] and I wish you happy. Thank you.
[45:59] Thank you.

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