Episode summary
CIO Greatest Hits: Hedge Funds - Dan Fagan, Adam Blitz, and Craig Bergstrom
Capital Allocators with Ted Seides
· · Hosts: Ted Seides · Guests: Craig Bergstrom, Adam Blitz, Dan Fagan
Summary
Three hedge fund allocators compare how they build portfolios, emphasizing bottom-up manager selection over top-down macro calls. The panel argues that there are still very few truly exceptional hedge funds, so the job is to find skilled managers early, understand their edge, and avoid styles or businesses that do not justify their fees and risks. They repeatedly stress that liquidity, leverage, and footprint matter as much as raw returns, especially in a market where higher rates and crowded positioning can make forced selling more dangerous.
A major theme is that the higher-rate environment changes both expected returns and portfolio construction. The panel says short rates now support hedge fund economics, especially in long short equity, credit, and macro, but also make fee structures more contentious because investors can earn meaningful returns in cash. They discuss hurdles, preferred returns, and how managers and LPs may need to revisit old economics rather than assume the old 2 and 20 structure still fits.
They also debate platforms versus more traditional single-manager and emerging-manager setups. Platforms can deliver strong historical returns, but the panel warns that leverage, similarity of risk models, and hidden correlations can create contagion risk across markets. By contrast, smaller, focused managers can be easier to underwrite, though they still require careful evaluation of portfolio construction, liquidity terms, and the ability to survive stress without becoming forced sellers.
Key takeaways
- The panel sees hedge fund investing as a manager-selection exercise, not a strategy-allocation exercise, because truly compelling opportunities are rare.
- Higher short rates improve expected hedge fund returns, but they also strengthen the case for hurdles and better fee alignment.
- The biggest hedge fund risks remain leverage, illiquidity, and crowded exposures that can trigger forced selling and contagion.
- The guest panelists are most constructive on long short equity, especially sector specialists with enough exposure to make stock-picking alpha matter.
- Macro can work as a diversifier, but the panel prefers managers with repeatable trade structuring and tactical flexibility rather than one-off big calls.
Notable quotes
“we simply don't think there are that many opportunities out there that are truly exceptional and truly compelling”
“If you're comfortable with leverage, you are doing something wrong”
“We believe that there are way too many hedge funds. I don't think that hard to identify a lot of firms that have no reason to exist”
How the episode opens
Hello, I'm Ted Sides and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation through conversations with the 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. 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 forformational 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. With eight years and over 500 podcasts under my belt, I'm often asked to recommend my favorite episode. But I can't really answer that question.
I feel like I have 500 children and don't think I've disowned a single one. So when asked, I usually offer up a great recent episode to get a listener started. Finding the best episodes in a big library of content isn't easy.
So we thought we'd help. Each summer going forward, we're going to share our best. Over 7 weeks, we'll replay conversations curated from our favorites and yours, excluding those from the last 12 months.
Our 2025 summer series focuses on CIOS. We're blessed to have an incredible library of long shelf life content, and we just couldn't pick seven. Instead, we'll share a dozen gems canvasing every type of institutional asset owner.
This week's summer series is an asset class twofer covering hedge funds and private equity. The first is a hedge fund panel comprised of Dan Fagan from GIC of Singapore, Craig Bergstrom from Corbin Capital Partners, and Adam Blitz from Evston Capital.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- hedge fund strategies
- higher interest rates
- liquidity management
- platform hedge funds
- fees and opportunities
Companies and tickers mentioned
- Corbin Capital Partners
- Evanston Capital Management
- GIC
Watch the episode
Watch “CIO Greatest Hits: Hedge Funds - Dan Fagan, Adam Blitz, and Craig Bergstrom” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Capital Allocators with Ted Seides, this episode and its artwork belong to Ted Seides – Allocator and Asset Management Expert. Octagon is not affiliated with the show; this page is an independent summary.
