Jon Glidden - Delta Airlines Pension Fund Turnaround (EP.417)

Jon Glidden is the CIO of Delta Air Lines, where he oversees the company's $16 billion pension fund. Jon joined Delta in 2011, when the plan had $7.5 billion in assets, a $13 billion underfunded liability, and the highest actuarial expected rate of return (9%) of any company in the S&P 500. Despite funded status that threatened the solvency of the company thirteen years ago, investment performance combined with corporate contributions that offset plan payouts have improved Delta's funding status from 42% to 102% today, creating the largest corporate pension turnaround in history. Our conversation discusses Jon's independent thinking and innovative approach that led to his incredible feat. We start with his Naval and investment background and then cover the four forces that drive his investment philosophy - portable alpha, private equity, portfolio construction, and governance - and the implementation of each. Take Capital Allocators Audience Engagement Survey https://www.capitalallocators.com/annual-survey/ Learn More Follow Ted on Twitter at @tseides https://twitter.com/tseides?lang=en or LinkedIn https://www.linkedin.com/in/tedseides/ Subscribe to the mailing list https://capitalallocators.com/ Access Transcript with Premium Membership https://capitalallocators.com/signup

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• 0:01Ted Seides?

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• 0:46Ted Seides?

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• 3:32Ted Seides?

  Hello, I'm Ted Seides and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation. Through conversations with leaders in the money game, we learn how these holders of the keys to the kingdom allocate their time and their capital. You can join our mailing list and access premium content at capitalallocators.com.

• 3:59Speaker 01

  All opinions expressed by Ted and podcast guests are solely their own opinions and do not reflect the opinion of Capital Allocators or their firms. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Capital Allocators or podcast guests may maintain positions in securities discussed on this podcast.

• 4:18Ted Seides?

  My guest on today's show is John Glidden, the Chief Investment Officer of Delta Airlines, where he oversees the company's $16 billion pension fund. John joined Delta in 2011, when the plan had $7.5 billion in assets, a $13 billion underfunded liability, and the highest actuarial expected rate of return, at 9%, of any company in the S and P 500. Despite a funded status that threatened the solvency of the company 13 years ago, investment performance, combined with corporate contributions that offset planned payouts, have improved Delta's funding status from 42% to 102% today,

• 5:01Ted Seides?

  creating the largest corporate pension turnaround in history. Our conversation discusses John's independent thinking and innovative approach that led to this incredible feat. We start with his naval and investment background, and then cover the four forces that drive his investment philosophy: portable alpha, private equity, portfolio construction, and governance, and the implementation of each. Before we get going, we're in the home stretch leading into Capital Allocators University for Investor Relations and Business Development Professionals. It's crunch time. We're almost sold out, and registration closes next Monday, November 25. Our instructors are putting the finishing touches

• 5:46Ted Seides?

  on their presentations, and the content looks amazing. We're excited to share insights about the playing field and success in IR and BD roles from allocators, managers, brand experts, conference providers, and chief investment officers. Last chance to dance, and we hope to see you in New York City on December 3rd and 4th. Hop on our website at capitalallocators.com/university this week to register. Thanks for spreading the word about Capital Allocators University for Investor Relations and Business Development Professionals. Please enjoy my conversation with John Glidden.

• 6:28Ted Seides?

  John, great to be here with you.

• 6:29Speaker 02

  Hey Ted, it's a real honor to be here.

• 6:31Ted Seides?

  Why don't you take me back to your past?

• 6:33Speaker 02

  That ultimately led to this seat at Delta. I grew up in a place called Newport News, Virginia. I grew up in a Navy family. My dad was a submariner. My mom really ran the house. My parents are the first heroes in this story. They didn't make a ton of money, but they always saved. I can recall that for a couple of birthdays, I would get stock certificates for utilities. He was a nuclear submariner, so Detroit Edison, Central Illinois Public Service. The stock certificates, they looked awesome. The dividends were nice, but didn't really pay that much attention to it at the time. That's where things started. When it was time for me to go to college, I was pretty good at math. I was pretty good at science. I ended up taking a Navy ROTC scholarship to go to school and to help out around the house as well.

• 7:17Speaker 02

  So I was a mechanical engineer at Georgia Tech. Thermal Systems really thought that I wanted to do alternative sources of energy. Now, of course, I knew exactly what I was going to do when I left Georgia Tech. I was going to be naval officer. So I took a lot of very challenging mechanical engineering classes. They make you take one business class to graduate. The thrust of the business class that I took was time value of money. I'd never really thought about compounding at all, and the math is really simple, but it really opened my eyes. That was my senior year of college. And then, of course, I go straight in the Navy. I was a surface warfare officer. On my first ship, I was the Tomahawk missile officer on a brand new destroyer.

• 7:59Speaker 02

  And this is crazy. I qualified what they call Officer of the Deck on my 23rd birthday, which meant that I would be operationally in charge of a billion dollar warship that had nuclear capable missiles on it. I also owned half of the launch codes. I'm 23 years old, so that was a lot of responsibility. My second ship was a patrol coastal. I was a weapons and boarding officer. We worked with foreign navies to enforce UN sanctions, and we're also taxicab for the SEALs. So if the SEALs wanted to do insertion or extraction, they'd use us sometimes if the water was a little bit rough. In the Navy, I didn't make much, but I didn't spend hardly anything. My savings rate was about 70%. I talked about this time value of money, and I'm just hooked on investing, but I know that I

• 8:43Speaker 02

  Don't know anything. So my brilliant strategy at the time was about 50% dogs of the Dow and 50% growth stocks. This is 1994 to 1999. This was brilliant, except for the dogs of the Dow piece, the growth stocks that was brilliant. I loved the Navy. I really got hooked on investing while I was in the Navy. I knew that I wanted to retool. I wanted to learn about investing. I wanted to learn everything there was and learn about the industry and what jobs are out there. So I went to Emory University as a full-time MBA student. I gotta tell you, if you want to find somebody happy at a full-time MBA program, find the ex-military guys. It was fantastic. It was a crazy time. I started in 1999.

• 9:25Speaker 02

  It was the peak craziness of the tech bubble and you had stuff like Palm Pilots. That was all the rage among like business school class. When 3Com said that they were going to spin out Palm, there was this enormous gap. You could do merger arbitrage like very obviously. I was an alpha rat, just a real arbitrage junkie. I read as much as I could back in those days. I ran probably the world's smallest and only closed-end fund merger arbitrage strategy when I was going to school. There are a couple of things that really stuck with me from my time at Emory. The first one, it's like day one in a portfolio management class. You've got an efficient frontier. You've got a risk-free rate and you've got your capital market line.

• 10:09Speaker 02

  Well, the capital market line keeps going up and the efficient frontier curves. I'm like, well, it looks like you should stay on that capital market line. That looks like a good deal. Well, how do you do that? Well, if you can borrow at the risk-free rate, you can just lever your tangent portfolio. You can make more money per unit of risk. Well, can you do that? Can you borrow at the risk-free rate? Some people can. You can do it through the use of derivatives and it's a new concept for me. So that one stuck in my mind. Something else that stuck in my mind was a case study we did on PIMCO Stocks Plus. And this is the idea that it's really hard to beat equity indices by picking stocks in a constrained manner. But what PIMCO did, they pair an S and P 500 derivative on top of a bond portfolio.

• 10:54Speaker 02

  So then they get some alpha, some duration, some credit, and they beat the index that way and they did it. Now, how did they do it? They use derivatives, they use leverage. There's that word again, these concepts again. Another thing from my time at Emory, I did an internship with Lazard with their private real estate group. So now we moved into 2000 at this point. The bubble had just burst. They owned a lot of assisted living facilities and assisted living facilities were tremendously out of favor at that time because they weren't growth, they weren't new economy, they were boring, stodgy old companies. I actually lived in an atria up on West 86th Street. My job for that summer was to go around the Northeast, to go throughout the Midwest and go from atria to atria and

• 11:38Speaker 02

  interview management and take pictures and look at financials and build models. And it was really interesting. That's really where I started to get private markets a little bit, the ability to buy under managed assets, bring in thoughtful ownership and management and squeeze some real returns out of it. 2001 is when I graduated from Emory. It was a pretty lousy time to graduate from business school. I wasn't super thrilled about the job offers I had at the time. So I extended school a year. I went to University of Chicago for financial math. I wanted to learn everything I could about derivatives. And what better place to go than University of Chicago, hang out around the Merc a little

• 12:20Speaker 02

  bit and find out how that worked. The other thing going back to school did for me, it gave me an opportunity for a second internship. So Emory was heavily concentrated in Coca-Cola stock and they were getting ready to diversify the portfolio. So I was able to get an internship with Emory with the endowment before I went to University of Chicago. I ended up going back to Emory full time after I finished at Chicago. You don't end up doing a podcast with you Ted unless you've been impacted by a lot of really amazing people. And this is one of the first ones. A guy named Matt Wright, he was hired by Mary Cahill. Mary and Matt were part of the Myra Drucker tree at the Xerox pension once upon a time. Mary

• 13:04Speaker 02

  came down to be the chief investment officer at Emory. Matt was a quant at B of A after Xerox and Mary brought him in to run public markets and he's a great investor and he's an even better person. So he's quant, he's the one who introduced me to the idea of portable alpha. I knew that's what stocks plus was. It was a great time for me. Every time I journaled portfolio management came in, I could read it from cover to cover. Emery even back in those days was 6 billion. We sold $3 billion worth of Coca-Cola stock in the pretty early days. And since I was on the public side with Matt, it was like, hey, here's a billion dollars. Go build a hedge fund portfolio. We worked with two fund of funds and Ted, maybe you remember this.

• 13:48Speaker 02

  We gave 50 million to one fund of fund, 50 million to another fund of fund and we invested the other 900 million directly. We diligence protege to potentially participate in that a long time ago. It worked. We beat benchmarks by 200 basis points on this portable alpha portfolio we had. It also allowed the private team with Mary and with Julie Volenwider and Elena Kaprevitz to write bigger checks and write more checks on the private side. So I start getting all these ideas in my mind. I grew up in the physical sciences from an educational perspective, but I work in the dismal science. I know that. For years, I'm thinking about these four forces. Is there a better way out there?

• 14:31Speaker 02

  So you've got a private markets force, this ability to buy under managed assets potentially at a discount. Of course, there's been a tremendous tailwind for those strategies with a wave of money coming in. Sometimes financial engineering is a plus, sometimes it'll be a minus, but you've got this private market force. You've got this portable alpha force, the ability to work with unconstrained market neutral managers to beat a borrowing cost. Then you've got the portfolio construction force. It's better to be on the capital market line than it is to be on the efficient frontier. That's how you can unlock some of that power through the use of derivatives and leverage. Then there's a governance force as well. How different can you look from your peers?

• 15:15Speaker 02

  How much leverage can you really use? How can you tell this story to keep people on side and not give up on the strategy when times get tough? And then Ted, the recruiter calls talking about the delta position.

• 15:29Ted Seides?

  Where were you sitting at the time?

• 15:31Speaker 02

  I had joined Wilmington Trust. I left Emory in 07. Matt had gone to go be the Chief Investment Officer for Vanderbilt University. I ran manager selection for Wilmington Trust. I had my own 10 to 12 person team and I had my own P and L. That's really what I wanted. I wanted decision-making authority. I was at Wilmington Trust from 2007 to 2011. In the first call, and I got really lucky here Ted, because on that first call, they're like, "The job at Delta is open. What do you think?" And I'm like, "It's an airline. They're just coming out of bankruptcy. That sounds awful. I want to go back to the E and F world. That sounds terrible. Thanks for calling. I appreciate you thinking about me. Keep my name on file, but I'm not interested. No, thank you." Wilmington Trust ended up getting taken under several years after the

• 16:15Speaker 02

  end of the financial crisis by M and T Bank out of Baltimore. So I worked in Atlanta, Wilmington Trust in Delaware, M and T Bank is in Baltimore. They were like, "Congratulations, John. We want you to run manager selection for the combined entity." I've got a little family at home. My wife is amazing. We had two little kids at home and I was working out of Baltimore two days a week and trying to hold everything together. And I was like, "I'm just not having fun. Squeezing banks together is not a lot of fun." So I called back the recruiter. "Is that Delta thing still going on?" And thankfully, it was. Probably four to six months had passed. I talked to the recruiter. That goes pretty well. The

• 16:56Speaker 02

  truest hero in this story that we're about to talk about is Paul Jacobson. He was the treasurer of Delta at the time. He went on to be the CFO of Delta. He's now the CFO at General Motors. So I sit down just to have drinks with Paul Jacobson. And it's a job I don't necessarily want, which is not a bad way to interview, probably. And I've got these four forces on my mind. I'm sitting down with Paul and I'm like, "Paul, I think we need to do three things. I think we need to strive for a more balanced portfolio. I think we achieve that more balanced portfolio by leveraging a portfolio and using derivatives. And I think we need to aggressively pursue alpha." So I used all the bad words I could

• 17:41Speaker 02

  think about. "We need to use leverage. We need to use derivatives. We need to run a high expense ratio implementation. What do you think?"

• 17:50Speaker 02

  Some backstory on this is Delta had some really unique needs. The pension today is 16 billion. Back in those days, the pension was more like 7 billion and it was 14 billion underfunded on a company with a market cap of $7 billion. Funded status was hovering in the upper 30s, low 40s. So it was the worst funded major pension plan in America. Delta used to have a large, proud, very good internal pension management team. They were early adopters of venture capital, early adopters of private equity. They did club deals. The corporate pension world's a little bit unusual. The CIOs are as collaborative as they are.

• 18:33Speaker 02

  Delta was 115% funded in 1999. Then there was the bursting of the tech bubble. That was tough for Delta. Then there was 9/11, very difficult, obviously for New York City, difficult for Delta, the airline industry as well. That put Delta on a course towards bankruptcy. So comp wasn't great, job security wasn't great. Delta ends up going into bankruptcy. The team goes from like 25 to 7. They come out of bankruptcy in 07. What do we want to do? Rebuild a pension team? Try something else. Delta at that time in 07 had a 17-year window from the government to try to make everything right. So Delta at that time was like, you know what? Our needs aren't that great. We need a simple, low-cost solution.

• 19:15Speaker 02

  60-40 with a little bit of alpha probably gets us there. That was the thought process in 07 and you could say it was a pretty rational thought process. They completely outsourced the plans from 2007 until I joined in 2011. And they wanted a simple, low-cost solution. That's what Delta wanted. That's what Delta got. They ran into the financial crisis, which they didn't see coming. A lot of people didn't see coming. If your plan's down 26 and maybe the spending rate was only 12% back then, 14% back then.

• 19:49Speaker 02

  That's a massive loss of assets. And even though Delta had this legislative 17 year window called airline relief to make things right, that's when the mandatory contributions really started to become material at the enterprise level for Delta. And that's when Delta was like, you know what? This simple solution is not going to work for us anymore. We need somebody internally to really sweat this stuff. And they had a pretty high expected return target as well, which was 9%. This is part of the reason why I said no the first time around. But I was like, some of these thoughts that I've got in my head about how to do things a little bit differently, it actually could be a good fit. Paul was like, what do you think about the 9%? I'm like, I think we can do it. And I don't think anyone had said that to him before. So he's like, well, come on, let's see.

• 20:34Speaker 02

  I don't really understand everything you're talking about, but walk me through it and let's see if we can bring this to life.

• 20:41Ted Seides?

  So you have this big hole to climb out of. You've got these four forces you think are driving returns. How did you think about how to tackle this problem using the forces that you had in mind?

• 20:52Speaker 02

  I'd love to give you an elegant top down story, but I'm going to give you a bottom up story instead. I think probably with a public equity oriented portfolio, if markets are accommodating, I think maybe we can get eight. If markets aren't accommodating, we needed hedging. So I need two points of alpha. I guess alphas all hope to some degree, but we need a real, real chance of two points of alpha per year. And that's not an easy thing to do. I mean, it's a pretty high target. What does the solution look like? I need two points of alpha. How am I going to get two points of alpha? Well, I'm going to go 30% privates. So I figure if we can go 30% privates, we can outperform publics by four points on that.

• 21:36Speaker 02

  That's 120 basis points at the overall plan level. That's part of it. In my mind, we saw this huge spending rate. If Delta does poorly, we've got a real challenge because of our spending rate. So that's about as illiquid as I thought we could be. Then portable alpha, second force, let's go 40% market neutral hedge.

• 21:58Speaker 02

  Funds. If my 40% market neutral hedge funds can outperform my borrowing cost by 3%, that's another 120 basis points. So if I can get 120 basis points out of the privates, if I can get 120 basis points out of the hedge funds, that's going to give me 240 basis points. So that's 30% privates. That's 40% hedge funds. We've got 10% cash. The other 20% of our capital has gone to a variety of things through time. There's always been an allocation to pretty spicy risk parity in there. We also have an emerging manager program that's been in place for quite some time. Hedging, we allocate some assets for hedging.

• 22:40Speaker 02

  If you think about it, I've spent all of my dollars now, so that's going to add up to 100% of dollars. But there's that one thing, that third force, that portfolio construction force. How do we go out on that capital market line? How do we prudently use leverage to increase the expected return of the portfolio, to get us to that 10% growth that we need to get to? So let's borrow 50% of plan assets using derivatives. Let's put a 50% beta overlay on top of the portfolio that I've walked you through. At the beginning, we needed pretty substantial beta returns in these early days. It was significantly equity centric. We go back to July of 2014, and that's the portfolio.

• 23:25Speaker 02

  30% privates, 40% hedge funds, 10% cash. Borrow 50%. You've got this other 20% funded stuff in case you've got a liquidity event, if you really need it. That's what the portfolio looked like back in 2014.

• 23:39Ted Seides?

  Let's dive through each of those component pieces. Maybe start with the 10% cash. How did you think about cash in light of these needs for such high return objectives?

• 23:49Speaker 02

  Truthfully, the cash was a little bit higher back in those days and the alpha projection was a little bit lower back in those days. The way we thought about it is, what does our beta overlay look like? Let's look at that beta overlay in isolation. We've got a pretty substantial hedge fund portfolio. We really paid a lot of attention to our 90-day VAR. So what does a two-standard deviation 90-day VAR look like? What does a three-standard deviation 90-day VAR look like? What's two-standard deviation look like if all correlations go to one? I want to see three months of benefit payments. Benefit payments are not immaterial. So we pay out over $100 million a month. That's a high, high, high spending rate.

• 24:32Speaker 02

  You're thinking about that 90-day point because most of my hedge funds are something like quarterly 90. So if I can withstand 90 days, hopefully we'll have a couple of outs. We're going to have Delta. That's a possible out. Of course, I said we're equity-centric and if something's bad for equities, it's probably bad for Delta too, and we know that going in. We've got the hedging portfolio. That's a possibility. And then we've got our hedge funds. That's another place that we can draw capital from. And so we figured that how much cash do you want to put behind your notional program? And we created our own language around all this. And Amanda Kogar, particularly on my team, was great about clearness of communication, both in a concise, written sense, dashboards and these kinds of things, as well as one-on-one

• 25:16Speaker 02

  meetings with my investment committee. But we figured if you're going to have an equity-centric overlay, you need to set aside 35% to 40% of the notional value in cash. So that's what we did in those early days. We created something that we call the golden rule. So we've got a notional value of our beta overlay. Every notional dollar needs to be backed by either cash or hedge funds. That's the golden rule. And eventually, we relaxed it a little bit and put ranges around it. That's how some of these numbers came to be. And then even within cash, government money market fund, two of the most dangerous words out there, we did do some enhanced cash. I think we were pretty smart about enhanced cash. The rules there are it needs to be liquid.

• 25:59Speaker 02

  I can't take more than a 25-bit, 50-bit haircut on it. So treasury cash and carry, it's been a good strategy. To this day, it's a better strategy than it probably should be. It probably pays you more than you should. Japanese cross currency basis, precious metal cash and carry. More recently, and we wouldn't have done this in the early days, but there's some interesting short-term dealer funding trades that are out there. So that's really the cash portfolio.

• 26:24Ted Seides?

  How did you decide how to populate that hedge fund portfolio to drive that 3% alpha you're shooting for?

• 26:32Speaker 02

  This is portable alpha. We need to be super tight on our beta. I've been doing portable alpha with Matt since 2002, 2003. I've seen a bunch of stuff that can happen. And I understand you can calculate all these parameters and all these metrics, but it's not 100% when you're talking about forward-looking projections. But we wanted to be really tight on the portfolio. If we think about what that hedge fund portfolio looks like, we really kind of wanted to target a beta of around 0.1. So pod shops are well represented in our portfolio, and they have been since the early days. They make me a little bit nervous in terms of derivatives, but I think in terms of the risk management processes that they've got,

• 27:15Speaker 02

  their ability to attract talent, it's been a great investment for us. Relative value and fixed income relative value are points of particular focus for us. We've got a pretty substantial allocation of the multi-strats. We do have equity long short specialists. I know that's a bit of a dying industry, but I do think it's possible to develop deep expertise in pretty narrow parts of the market. I know that's what the pod shops suck at, but there's still some folks out there fighting it on their own. And then we've got quite a few macro traders in there as well. In the early days, we were like, no credit. No credit. Credit's got too much skew. It's got too much kurtosis. It was too bad in '08. Nowadays, we actually do let some credit in there, but the derivative overlay looks a lot different. And then we try not to really constrain it that much.

• 28:00Speaker 02

  The idea here is that unconstrained talented hedge fund managers have a better chance of beating a risk-free rate than highly constrained long-only managers have the probability of beating a benchmark. You are investing in hedge funds because you want the best of the best to beat your borrowing costs by looking for market seams all over the globe. We'll typically have around 40 funds. At any time, maybe we'll have five co-investors or something along those lines. That might sound like a lot to some people. I'm almost 25 years into portable alpha. I've seen a lot of the stuff that can go wrong and there's unknown unknowns out there. I don't know what the next degrossing event is going to be, but I know that it exists. I can tell you what the historic correlation between my managers are, but I can also tell you

• 28:44Speaker 02

  there's going to be environments where they look more correlated than I expect them to look. The only way to get around some of that skew risk, some of that kurtosis risk is to just increase the number of managers that you work with. Some people don't buy into that. I most definitely do.

• 28:58Ted Seides?

  So within those strategy categories that fit your risk parameters and that goal for diversification to prevent the unknown unknowns, how do you go about deciding who, in your words, is the best of the best?

• 29:12Speaker 02

  This is something I've got better at through time is really drilling in on the people's side. We're looking for a profile, beta point one or lower. There's some great 40 beta managers out there. If you're paying 20% incentive on 40 beta, you've got to be damn good at manager selection. Some people can do it, I can't. That eliminates a lot of the universe and we've known a lot of the universe for decades. So a lot of the long established players and then a lot of the spin outs of the long established players. And then you're just looking for interesting stories as well. Who's out there that might be doing something a little bit different? Maybe something that you really haven't heard before. I still have a convert our manager that's been phenomenal. I don't know how they've been so phenomenal for so long, but we still have some.

• 29:56Ted Seides?

  How about turning to the private markets, that 30%? How did you think about how you wanted to invest in that space?

• 30:03Speaker 02

  The private portfolio was very mature in 1999. By the time you get to 2014, it had become immature. And this is all professional credibility because I'm telling people leverage derivatives, alpha, 9%, 10%, we can do this. This is going to work. The last thing I want to do is show a bunch of negative time weighted returns is we're firing up this private market portfolio. So private portfolio, it took a while to build into this. 15% private equity, 9% private credit, 6% private real assets. Within that, for the private equity and the private real assets, 50% primaries, 30%

• 30:46Speaker 02

  secondaries, 20% co-invests. I want to put some wins on the board. I do not want J curve. J curve could derail my entire story.

• 30:57Speaker 02

  That was the blueprint for the private portfolios. And it's actually still where we are today. So it's been a decade and that structure served us well, but it's probably time to rethink some of those allocations.

• 31:09Ted Seides?

  You didn't mention venture capital in that mix. How did you think about venture?

• 31:12Speaker 02

  Want to be very cautious with venture because it is the longest duration asset class. But we targeted in that five to 10% range of the private equity exposure is about what we wanted venture capital to be. We actually probably do a little bit more venture now even than we did back then. And venture was mostly primaries, so let's try to get into the best names. And obviously that was phenomenal in 2021. I mean, private equity was pretty phenomenal in 2021 as well. And we've probably paid the price a little bit since then.

• 31:43Ted Seides?

  On the primaries in private equity, what types of managers did you choose?

• 31:48Speaker 02

  Buyout dominated, especially in those early days. It was very equity centric exposure. So I've got some private diversifiers. So it's pretty much lower middle market, core middle market, upper middle market and some of the big ones. So it was buyout centric, US centric.

• 32:05Ted Seides?

  So this last 20%, there's hedging, risk parity, there's inflation, there's emerging managers. How did you think about what the goal is for that group together?

• 32:15Speaker 02

  I'll start with the hedging at the beginning because that is vital to the story. And this is surreal because I'm sitting there in 2013, sitting with Paul Jacobson and Ed Bastian in the conference room outside of Ed's office. So again, Ed is still the president at the time and we are building hedging programs together. That gives you an idea of the extent of enterprise risk that continued to come from the pension funds in those days. So we had four or five components to our hedging program. We did some programmatic, high certainty stuff. So we did 90, 75 foot spreads. Depended on what SKU was a little bit, we would tweak some of that. We would tweak the attachment points a little bit. We had, call it a LIBOR floor kind of strategy where we were long call options on, call it the two year part of the LIBOR curve.

• 33:00Speaker 02

  It was a make money strategy, like in an upward sloping yield curve, you can actually make money on that. But then if rates really collapse, you can make. Take three times, four times, five times your money. Less certainty there, but a lot of convexity that you got for getting it. And maybe not quite as much bleed as you would see in a 90, 75 put spread. Third component was long vol. Now, yes, this is wishing for a little bit of magic here. Can we work with volatility oriented managers to say, we don't want this part to bleed that much. I don't want to lose more than 10%, more than 15%, more than 20%. And I understand that's going to impact the convexity that I'm able to squeeze out of the positions. But it's also a funded position. Those first two, those are premium spend strategies.

• 33:45Speaker 02

  With long volatility, you've got capital in there. We also had funded managed futures positions. And this is approximate hedging. And then we actually had some more liquid, less expensive macro managers as well. If something happens, maybe they'll be on the right side of it. Maybe they'll be on the wrong side of it. But you start to staple all of that stuff together. And there's 4%, 6% of all of my capital is invested in those strategies. When something happens, and by the way, in March of 2020, something did happen. Option profitability, that's going to be the first thing I go. But then is there profitability in long vol? Give me that. Is there profitability in managed futures? Give me that.

• 34:27Speaker 02

  And then one of the next places you might go is I'm going to hollow out those exposures all together. Give me my capital back as well. And then as we're thinking about it, we did all of the scenario analysis. What is a bad environment for Delta? When might Delta not be able to stand up to that pledge that they made in those early days? Which is we're going to pay the 5% mandatory. And if you don't hit a 9% expected return, we're going to stand up and make it like you did make a 9% return. When might Delta not be able to honor that? And what do we do in that case? That's the thought process of that other 20%. There's always been risk parity in there. I'm going through my liquidity waterfall.

• 35:09Speaker 02

  If equities really, really tank, where am I going for money? I've got my prime, I've got my govies, I've got my enhanced cash. I've got my hedge portfolio. This other stuff, that's the next place I'm going. Cause I've got those two alpha engines. I've got privates and I got portable alpha and I don't want to touch those.

• 35:28Ted Seides?

  We're going to take a quick break in the action to tell you about Brookfield. Brookfield invests in the thing behind the thing behind the next big thing. Their focus across infrastructure, energy, real estate, private equity and credit is helping to build the backbone of the global economy. Brookfield combines deep operational expertise with disciplined, long-term investing, uncovering value and partnering alongside clients to shape tomorrow's economy today. Invest in the businesses that shape tomorrow. Learn how you can own what's next at Brookfield.com/own.

• 36:05Speaker 03

  This is not an offer to sell or investment advice. Investing involves risk, including the loss of capital.

• 36:11Ted Seides?

  And now, back to the show. There's a lot of relatively complex strategies going on in that bucket. How did you go about implementing it?

• 36:22Speaker 02

  My team's amazing. There's only six of us. I've got my deputy CIO, Amanda Kogar, my chief operating officer, Dmitry Varankov, and my director of investments, Nick Aluff. The four of us have been together on this journey for over the past 10 years. We've been joined a little bit more recently by Mark Fong Wu and by Madison Woolley. We knew that we needed help from the outset. We're very engaged with hedge funds. We're very engaged with privates, but we've got consultants in both of those places because my team is not going to be able to monitor the entire universe, either on the hedge fund side or the private side. So we need help there. Two more names that were pretty instrumental as we went through this process is Jeff Scott and Omer Tureen.

• 37:05Speaker 02

  So Jeff spent some time at Dow and he was the CIO out at Alaska Permanent. Once upon a time, he worked in Microsoft's Treasury Department as well. Omer worked with Jeff in Microsoft's Treasury Department. And they got it. There's not a lot of people that are like, I understand. And even that first concept, I want to walk on the capital market line, not on the official frontier. We need to figure out a way to make that happen. You can try to help me do that, or you can be a believer and you can say, John, you're wrong on this, or you're wrong on that, or did you think about this? So we've always had quite a few consultants. I need other people to argue with me. I need other people to say, you're wrong. Did you think about this? This is your weakest assumption. Your scenario analysis is wrong here. How do you do this?

• 37:50Speaker 02

  So trying to align external resources to help augment what we do on the inside.

• 37:56Ted Seides?

  One of the challenges with going out on the capital markets line to achieve higher return is you also have to accept some amount of extra risk. Curious how you think about risk management in this plan.

• 38:06Speaker 02

  It changed. In the early days, it was don't be a source of a second bankruptcy for Delta. It was that tight, tight, tight integration. How do we try to hit the return targets without really putting Delta in a position that they can't come back from economically? I think our hedge portfolio got up to be as much as 8% of plan assets in those days. It was more of an asset-only consideration back then. I was in it for sharp as funded status started to increase. But that's when we started to think, what's our GAAP funded status volatility and stuff like that? But in those early days through 2017, it was tight integration with Delta. We need to keep this plan alive. We want to avoid a second bankruptcy.

• 38:51Speaker 02

  We want to avoid terminating the plans and having to work with the government and work with PBGC. That is what risk was. So how do we try to get as much return as we can? And it was that hedging program and understanding this pledge of Delta. They've got to make the mandatory, but we're going to be there to augment if you don't hit the 9%. I mean, that was really risk management, keeping the plan alive in as many scenarios as we possibly could.

• 39:17Ted Seides?

  How do you think about some of the common levers of risk?

• 39:21Speaker 02

  It's all related to how much cash are you going to put behind the notional value of your portfolio? What does your derivative overlay look like? What does your net cash position look like? How much of a liquidity waterfall do you have? At some point, you start cutting muscle as you go through that. That's really it. I mean, you've got investment risk and the liquidity risk. And the liquidity risk really is what's your hedge portfolio look like? And where are you going to go for cash if you can't get it from Delta? And you've exhausted everything else. You've got to start looking at your risk parity portfolio, at your inflation hedging portfolio, at your emerging manager portfolio. You've got to start to look at where you're going to draw some of this.

• 40:04Ted Seides?

  Somewhere along the way, you've hit bumps in the roads. You could think of 2011 was a tricky year for some of the hedge fund strategies, certainly in the early time period during COVID, March 2020. What happened in those interim periods when things probably weren't working along the smooth trajectory of generating returns?

• 40:21Speaker 02

  Yeah, so I joined in October of 11, so I missed the worst of the Euro crisis that was going on back then. 2015 was not a great year, so in terms of total return and alpha generation, and Paul was there and Delta was there, all the hard work of the Delta employees and the thoughtful corporate capital allocation process, Delta did make it whole. And then 2018 was difficult, the fourth quarter was difficult, and we still had a little bit of smart beta, which did not work. It was great, it was phenomenal for a long time, and then it wasn't. But it wasn't really a challenge. All of the risk management systems that we had in place worked fine. So it never really got that uncomfortable. 2020 is a different story.

• 41:04Ted Seides?

  So why don't you go through 2020?

• 41:06Speaker 02

  2019 is a phenomenal year. So funded status organically is probably 75% or so. We've reduced the notional value of equity in our hedge overlay, but we still have quite a lot. We think we're in pretty good shape. The COVID was tough, because COVID was equities down 35% in five weeks. 35% isn't necessarily a problem. You combine that with the five weeks, and that's a real challenge. So we had to go through all of the steps. The first thing we did, yield on the 10-year got down to like 50 or 60 basis points pretty early in that process. Look, there's no juice left in that trade. Give me all of that. I'm completely

• 41:47Speaker 02

  unwinding that LIBOR floor strategy. Here's $450 million. Okay, that's good profits. Now equity's gone below our 70% attachment point on our put spreads. What's the point of keeping those around? Let's monetize everything. Now, of course, as I'm doing this, the beta of the portfolio is starting to increase because you're unwinding some of the hedge behind this. How's Longval doing? Can take those profits, and that's early, that's like middle March. We had $3 billion in net margin calls around the worst of the COVID timeframe. So we went into COVID reserving about $3 billion in cash behind our derivative portfolio. You've got the one prime directive

• 42:31Speaker 02

  Portable alpha, do not let the markets push you out of your beta position. Do not let the markets push you out of your alpha positions. That's why that extra 20% is there and the hedges there. But we got to the point, okay, now, March 19th, 20th. I need the long volatility capital, not just the profits, I need the capital. Managed futures guys actually did a pretty good job. Give me the profits, that's easy. Give me part of the capital. Which of our macro managers are doing a pretty good job of our separate account? I've got to unwind some of that. Definitely draws on capital, but I was able to pull a billion dollars of profits from the option strategies and from the long ball strategy. So that's 3 billion in cash, 3 billion margin call.

• 43:13Speaker 02

  I pulled a billion in profits and then talking about 8% was kind of the value of my hedging portfolio. I had to unwind 750 million dollars of that or so. And then we get to March 23rd, 2020, Delta's revenues are down 97%. I can't go to Delta for liquidity. Look, this has been tough. All the hedging has worked way better than we possibly thought it could. We're taking off hedges, which is what we agreed that we would do. When the world goes on sale, we actually want to increase our beta. So we've got that going on. We are in our red zone and this is intra day. We're going to take the rest of our capital back from our managed futures managers, from our separate account macro managers.

• 43:56Speaker 02

  We're probably going to liquidate the bond portfolios of our diverse and emerging manager program. And I'm going to violate the prime directive. I'm going to submit a $1 billion redemption request for my portable alpha engine, for my hedge funds. So I'm typing this and that was the day that Powell comes out and gives his whatever it takes moment. That was fortunate. So 35% in five weeks was a challenge. If it would have been 50% in nine or 10 weeks, it would have been a real challenge. We start with the fat, with the profits, you got to start cutting a little bit of muscle. And then there's deeper cuts as you go along.

• 44:36Speaker 02

  It took our funded status. So we were probably at 75 before COVID got down to 63 at the trough of COVID. We went from 63 to 85 organically in 16 or 18 months with what the markets gave us in 2020 and in 2021. Portable Alpha was phenomenal and we were able to actually rescind all of the redemption requests we submitted. As we get into 2021, Delta put out 20 billion in debt. Nine billion of that was backed by the crown jewel, which is the SkyMiles program. They lost their investment grade credit rating, but even by the middle 2021, Delta was okay from a cash perspective and you're starting to see some light at the end of the tunnel on the COVID thing and what corporate cash

• 45:21Speaker 02

  flow might look like. They're like, take this billion five, let's get up to 92% funded. It's an ambitious goal to get the two points of Alpha. It's an ambitious goal to get the 10%. In terms of performance, we did. From 2011 to 2021, when we got that infusion, Portable Alpha was perfect. It was almost on top of my numbers. That added over 120 basis points per year at the overall plan level. I was probably too ambitious and maybe a little too risk averse on what we did on the private side. So I wanted the privates to give us 120. It actually gave us 60, some of which was because I had to rebuild the portfolio and it took some time to get money in the ground. The plan largely worked.

• 46:03Speaker 02

  So we compounded it over 10% from 2011 to 2021. We didn't quite get our 200 basis points of Alpha, but we were really close. 180, 190 basis points of Alpha. And then we've really been able to ratchet down the risk from that point. We've gone from 38 to 102. That's where we are today. I'm blown away with the role that Delta plays in this whole story. They've been incredible. It's been such a team effort to get to where we're going and y'all be curious to see what comes next.

• 46:34Ted Seides?

  So anytime you have a hedging program that works, because the market sells off and as you said, you then tap that liquidity, you have to think about how do you reset it at some point in time? So you get through COVID, your portfolio looks totally different than it did three months ago. How did you think about recalibrating the program to where you started with this balance between the privates and the liquidity bucket and the hedge funds?

• 47:01Speaker 02

  The idea was, from the outset, the 30% privates never changes, the 40% hedge funds never change. The only thing that changes is the nature of the derivative overlay, what we do with that other 20%. So we just reran all of the same calculations and it's like, you know what? We don't need to reserve as much cash anymore. We don't really need equity hedges anymore. Our hedge ratio, 60%, 70%, something like that. So some exposure to a collapse in rates is still a good exposure for us. So we've been able to change some of what's in that other 20%. But that's it. It was designed that way from the outset. The derivative, the beta overlay, let that change, let the hedge portfolio change. We

• 47:45Speaker 02

  don't do managed futures anymore. We don't do separate account macro, low cost, highly liquid stuff. We don't do that anymore. We just don't need to. We think we can get to a better overall risk adjusted return, liquidity adjusted return from there.

• 47:59Ted Seides?

  As you look back on this path, what do you think were the key drivers of your success in taking this from 30s to 102% funded?

• 48:08Speaker 02

  Is Delta. We had a plan. I'd worked with Amanda Wilmington Trust as well. So we'd been building this plan together. We talked a lot about what that plan should look like and how can we make it better? And we held it up to Paul Jacobson, Ken Morj, Ed Bastian, Board of Directors, Jeff Scott, Omar Turens, phenomenal. Delta making $11 billion of contributions into the plan from 2012 to 2021. Now, we paid out $13 billion in benefit payments during that same timeframe, but they offset a majority of the cash outflows of the plan, which allowed the assets to really grow without hardworking Delta employees

• 48:52Speaker 02

  in that disciplined capital allocation. We didn't have dividends in those days. We didn't do a lot of buybacks in those days until we got that investment grade credit rating. Back without Delta's steadfast support in this, it wouldn't have happened. And then I think without really trying to hold this plan up to scrutiny, another thing throughout my whole career. Cliff Asness, what do you think about this? I don't know Ray quite as well, but I know a lot of people at Bridgewater. What do you think about this? I've been influenced by you in making this plan. What do you think about this? Where are the weaknesses? It's an awesome thing about being a CIO. We get to talk to so many brilliant people. It's a tremendous honor and a responsibility to do what we do. I think it's some of it. I mean, it's such an amazing Delta story.

• 49:37Speaker 02

  I'm so proud to have been one part of it.

• 49:40Ted Seides?

  When other folks come to you and look at what's happened and ask you for advice, what are the key things that you tell someone else that's in a similar position to where you were a decade ago?

• 49:52Speaker 02

  You need to have a governance that embraces this from the outset. Delta was willing to look a little bit different on the investment side because their investment needs were different. And Paul understood that. And Paul got promoted to CFO. He was the executive champion. And I met with Ed, of course, on a monthly basis. And Ed's had my back this whole time as well. My 13 years at Delta, Ed's always been there to have my back. And then just meet with your committee members one-on-one. Make sure they understand. You've got to be able to tell the story concisely and simply. You've got to be able to tell the story and you've got to be able to give control to your governance.

• 50:34Speaker 02

  If the governance is not going to accept what you're trying to do, you can't do it. The governance has to buy into what the vision is.

• 50:46Ted Seides?

  How do you reflect back on the original four forces and the investment process that you saw as the potential driver of this?

• 50:54Speaker 02

  It's very much still the way I view the world. I mean, it's why we're still 30% privates. It's why we're still 40% hedge funds. It's why we're still 140% is what our asset allocation adds up to. It doesn't matter what the problem is. Our problem now is we want to continue to grow our GAAP funded status to 105 to 110 to give Delta maximum flexibility. If they want to engage in pension risk transfer, they can do it without any additional cash. If they want to look at ways to use the excess funding in a way that's mutually beneficial to the company and to the company's employees, they'll be in a position to do that as well. There's all kinds of funky nonlinearities of pension management. And one that we're facing now is we're looking at mandatory contributions.

• 51:37Speaker 02

  I'll skip as to why it is, but yeah, we don't want GAAP funded status to go down. We want to grow it gradually and we want to minimize what those mandatory contributions are. If you can start from a place of two points of alpha, everything else is so much easier. And if you can run a more balanced portfolio, if you can run a higher sharp portfolio, it just makes it easier. It almost doesn't matter what the problem is. You start with your alpha, those first two forces, private force, your portable alpha force. You combine a more efficient asset allocation by going out on the capital market line a little bit, it's going to make any investment problem somewhat easier.

• 52:16Ted Seides?

  What have you learned along the way from your original process?

• 52:20Speaker 02

  The biggest one is I thought I was about as pessimistic as I could possibly be, but I wasn't pessimistic enough in terms of we didn't model down 35 in five weeks. I know this lesson. Financial crisis is not a problem for the portfolio that we run today because you get some correlation benefit between stocks and bonds. You got some of that during COVID. You definitely didn't get it in 2022. 2022 was tough.

• 52:45Ted Seides?

  How about on the implementation of the strategies?

• 52:48Speaker 02

  I've known that Delta was going to be headcount constrained on this process. Again, we froze in '06. These are legacy assets. If you want to do this, if you want to have 70 or 75% of your assets in alternatives, you need a large team of well-paid specialists. And it was clear that that just wasn't going to be able to happen. In a different place, that would have been my preference. That is a more aligned, less expensive way to do things. Couldn't do it there. So you really do need to have the right partners. And we've seen good partners and we've seen partners that didn't quite fit. So, I mean, people will say, "Extension of staff," a lot. But I mean it. I want to be able to talk to anyone. Amanda can talk to anyone.

• 53:32Speaker 02

  Dmitry can talk to anyone. Nick can talk to anyone. Why this manager? What's your process? We like them. Do you like them? You need to have the right partner. And that's a tough model. That's not a great scale model. It's not a great margin model. Because I am going to be needy in terms of resources. And I'm going to be sensitive in terms of cost. And sometimes we've seen models like that that work. On our hedge fund side, everything continues to work great. It's harder to do on the private side. We've looked at, is discretionary the right model? Is quasi-discretionary the right model? Do some of the specialty consultants, should they play a role? You've got to find the right partners. And you've got to try to use them in the best way you can. And you've got to insert yourself into the process.

• 54:17Speaker 02

  And then they get bought. Then there's mergers and acquisitions and everything that you've got to try to contend with.

• 54:23Ted Seides?

  What's exciting you for this next stretch?

• 54:26Speaker 02

  I love alpha. I love beating benchmarks. It's what gets me out of bed in the morning. I think we've got a slightly better way. It comes with some moats. Not everybody can do this because not everyone's governance is going to allow them to do this. If you think about this in portable alpha, and you take the alpha units and the cash units, and you report them into those asset class line items, we're in the top percentile bond manager, top percentile credit manager, top decile equity manager. It's all green. We are top decile in everything we do. And that's against any long-only traditional equity manager.

• 55:01Speaker 02

  In the universe. So I want to beat benchmarks. I want to drive alpha and I want to do it in big numbers. That portable alpha, that's over $200 million of net value per year for over a decade, 2.25 billion since the inception of the program. Private markets, it's over a billion excess relative to the respective public markets since then. A lot of people say you can't beat benchmarks. I think we can. And I think we can do it consistently. I love it. I'm as energetic about it as I've ever been. Ted, I love beating benchmarks. It's why I'm here. It's why I get out of bed in the morning along with my beautiful family and everything. But I love it. I love everything about it.

• 55:45Ted Seides?

  All right, John, I want to make sure I ask you a couple of closing questions. What is your favorite hobby or activity outside of work and family?

• 55:52Speaker 02

  I want to just send my prayers and wishes out to the folks in Tennessee and North Carolina that have been impacted by the hurricane that went through because that area is one that's very special to me. So we've got a condo in a place called Transylvania County, which is a little bit south of there. We love it up there. There's something that's called the Western Carolina 100. So this is 100 waterfalls in that area. And then there's also something called the Southern Sixers. So these are mountains that are above 6,000 feet in either North Carolina or Tennessee. I love hiking in the Western Carolina Mountains. And I love it especially because my son will often tag along with me, even at 19

• 56:36Speaker 02

  years old. Now, it doesn't happen as much as it used to. But I'm telling you, ever get a chance to go to Blackbalsam Mountain in North Carolina and you just either take a tent or you take a hammock and a blanket? I mean, the views are spectacular. The sky is spectacular. There's no sign of humankind anywhere. So hiking up in the North Carolina Mountains is really special.

• 56:58Ted Seides?

  What's one fact that most people don't know about you?

• 57:02Speaker 02

  I used to be good at some stuff. I used to be a pretty good runner when I was a kid. I used to be a pretty good swimmer when I was a kid. I found that I've kind of slowed down. And running just hurts. Fifty-two. I know there's plenty of fifty-two-year-olds that are running ultra-marathons and marathon. It just hurts. My knees are a mess. I still mess around with swimming. There's something soothing about just having your head in the water and either looking at the bottom of a pool because I'm not thinking about portable alpha. I'm not thinking about liquidity management. I'm thinking about efficiency of my strokes and trying to find pain and then trying to deal with pain and work through pain.

• 57:37Ted Seides?

  What's your biggest pet peeve?

• 57:39Speaker 02

  I'll give you one on the investment side, and this is highly tied to how we invest. Effectively, I borrow money to invest in hedge funds. That's one way to look at it. I would love to see cash hurdles for hedge fund managers. I would love to see that. I don't know that I'm going to get my wish, especially we've got a pretty impressive roster of managers. There's a supply-demand mismatch. Something else I've learned along the way is anytime I see self before team, that's a bit of a turnoff. But I've been guilty of this, I'm sure. I've always been pretty ambitious. I always think, yeah, 10%, we can do that. 2% alpha, we can do that. But one thing I've learned, diversification matters on portfolio construction, but it matters on the decision-making process as well. So

• 58:23Speaker 02

  anytime there's somebody that's like, I have the right answer, I'm not going to listen to you, that's a big pet peeve.

• 58:32Ted Seides?

  Which two people have had the biggest impact on your professional life?

• 58:35Speaker 02

  Matt Wright, he is my mentor in this business. He is a beautiful, beautiful person. And, you know, he taught me the ropes. He brought the quantitative rigor to show me portable alpha. And then the name that's come up the most is Paul Jacobson. I mean, he is a uniquely talented individual, and without him, we could have the same investment results, and it still wouldn't have worked. Without Paul, it wouldn't have worked. So that's Matt Wright, Paul Jacobson. They're amazing people.

• 59:01Ted Seides?

  What's the best advice you've ever received?

• 59:04Speaker 02

  It's what Paul gave me. He's like, I understand we've got unique needs, and you're bringing us a unique solution. I appreciate that, and I think it's the right fit. But you need to define success at the outset, and do not change the goalposts. So you need to define success and be consistent with it. Have expectations in advance, and then build guardrails around yourself that's going to pull the governance infrastructure into play in sufficient time if there's a real problem. I think that's the best advice I've ever gotten. [0.32-1.12] All right, John, last one.[1.12-4.88] What life lesson have you learned that you wish you knew a lot earlier in life?[5.28-7.36] The power of the team and working with people[7.36-11.68] and being influenced by other people and not having to have the right answer all the time.[12.00-15.68] And to be willing to vote for somebody else's idea if it's better than yours.[15.68-18.55] And as a CIO, it doesn't mean you have the right answers.[18.96-23.04] It means you can set up the processes that you hope will improve the probability[23.04-25.60] of you making the right decision in the future.[25.92-27.68] So you don't always have to be right.[27.68-29.84] This isn't a one-person show.[29.84-35.92] I am not sitting here without all of the myriad of names that we've discussed over the past hour or so.[36.96-39.84] Well, John, thanks so much for sharing this incredible turnaround story.[40.15-41.76] Thanks, Ted. It's been a real honor. Thank you.[43.12-45.04]

• 59:35Ted Seides?

  Thanks for listening to the show.[45.04-49.12] To learn more, hop on our website at capitalallocators.com,[49.12-52.56] where you can join our mailing list, access past shows,[52.56-56.32] learn about our gatherings, and sign up for premium content,[56.32-61.76] including podcast transcripts, my investment portfolio, and a lot more.[61.76-63.84] Have a good one, and see you next time.[63.84-71.84] That you wish you knew a lot earlier in life.

• 59:40Speaker 02

  The power of the team and working with people and being influenced by other people and not having to have the right answer all the time and to be willing to vote for somebody else's idea if it's better than yours. And as a CIO, it doesn't mean you have the right answers. It means you can set up the processes that you hope will improve the probability of you making the right decision in the future. So you don't always have to be right. This isn't a one-person show. I am not sitting here without all of the myriad of names that we've discussed over the past hour or so.

• 1:00:12Ted Seides?

  Well, John, thanks so much for sharing this incredible turnaround story.

• 1:00:15Speaker 02

  Thanks, Ted. It's been a real honor. Thank you.

• 1:00:18Ted Seides?

  Thanks for listening to the show. To learn more, hop on our website at capitalallocators.com where you can join our mailing list, access past shows, learn about our gatherings, and sign up for premium content, including podcast transcripts, my investment portfolio, and a lot more. Have a good one and see you next time.