Episode summary
How to Earn Investment Conviction: From Mean Reversion to Manager Selection with Springtide Partners
Dakota Live!
· · Hosts: Robert Morier · Guests: Aaron Dirlam
Summary
Springtide Partners built its investment process around mean reversion, but Aaron Dirlam said the framework only works when it is paired with discipline and humility. He argued that the firm’s edge is not simply finding cheap assets; it is deciding when an asset class, manager, or theme has become compelling enough to justify a change in portfolio construction. He pointed to examples like international value in 2018, large-cap growth in 2022, and small caps more recently as areas where Springtide saw the opportunity set improve after periods of underperformance.
Dirlam said Springtide’s work has expanded from a boutique OCIO and manager research platform into a broader, highly customized partner for RIAs, family offices, banks, and financial institutions. The firm now advises on over $80 billion in client assets and uses a generalist research team to cover liquid and illiquid markets. He emphasized that the business became more client-service intensive after COVID, when institutions wanted faster turnaround, more direct access, and more tactical ideas.
On private markets, Dirlam said Springtide stays opportunistic rather than fully allocated across cycles. The firm favors secondaries when it believes valuations or structures are more attractive, including in private credit, venture, and real estate. He also said hedge funds remain relevant today, but only selectively, and that the strongest mean-reversion opportunities right now include small- and mid-cap biotech and BDCs trading at wide discounts to NAV.
Key takeaways
- Aaron Dirlam said Springtide’s edge is an objective, disciplined, and humble process, not a fixed bias toward active or passive investing.
- Springtide manages a client mix that is roughly two-thirds RIAs, about 17% family offices, and the balance banks and financial institutions.
- Dirlam said the firm advises on more than $80 billion of client assets and keeps its approved manager list intentionally short for accountability.
- He said Springtide sees current opportunity in small- and mid-cap biotech and BDCs, where public valuations have been depressed.
- In private credit, Springtide prefers secondaries over primaries right now because it can buy senior secured loans at a discount to NAV.
- Dirlam said qualitative factors like succession, culture, and humility matter more as managers age and leadership transitions become more important.
Notable quotes
“our investment process to be, which is objective, disciplined, and humble”
“if the qualitative elements are still intact, we think that the performance will mean revert”
“We do not believe in kind of vintage year diversification”
“the most humble managers that we have are ones that usually generate more consistent performance”
How the episode opens
Welcome to the Dakota Live podcast. I'm your host, Robert Morier. The goal of this podcast is to help you better know the people behind investment decisions.
We introduce you to chief investment officers, manager research professionals, and other industry leaders to help you sell in between the lines and better understand the investment sales ecosystem. If you're not familiar with Dakota and our Dakota live content, please check out our website at dakota.com. Before we get started, I need to read a brief disclosure.
This content is provided forformational purposes and should not be relied upon as recommendations or advice about investing in securities. All investments involve risk and may lose money. Dakota does not guarantee the accuracy of any of the information provided by the speaker who is not affiliated with Dakota.
Not a solicitation, testimonial, or an endorsement by Dakota or its affiliates. Nothing herein is intended to indicate approval, support, or recommendation of the investment adviser or its supervised persons by Dakota. Today's episode is brought to you by Dakota Marketplace.
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On this week's episode, we are joined by Aaron Derlham, co-founder and chief investment officer of Springtide Partners. Aaron, welcome to the show. Thank you for having me.
Excited to be here.
I'm excited to see you.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- manager research
- mean reversion investing
- humility in investing
- ocio evolution
- private markets toolkit
Companies and tickers mentioned
- Springtide Partners
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Dakota Live!, this episode and its artwork belong to Robert Morier. Octagon is not affiliated with the show; this page is an independent summary.
