Episode summary
Farallon Capital's Nicolas Giauque on Investing for the Long Term
Exchanges (Goldman Sachs)
· · 22 min · Guests: Nicolas Giauque
Summary
Nicolas Giauque says Farallon Capital has spent 40 years pursuing one mission: extraordinary risk-adjusted returns with capital preservation. He argues the firm’s edge comes from deep experience in corporate events, a willingness to provide liquidity when it is scarce, and a long-term investment horizon, especially in long-short equities and event-driven opportunities. Farallon has also expanded globally, and Giauque says its culture of excellence, integrity, humility, and strong risk infrastructure helped it adapt as the firm grew.
He describes Farallon as a concentrated, multi-strategy platform run with a one-P&L mentality, where capital can be reallocated quickly across merger arbitrage, risk arbitrage, credit, long-short equities, and real estate. He says the firm’s framework is probabilistic: every thesis must be able to be proven wrong, and the team focuses on identifying how an investment can lose money before sizing it.
On today’s opportunity set, Giauque is most constructive on Japan, biotech in the long-short book, and larger merger arbitrage deals, which he says offer attractive risk-rewards amid easier regulatory approval and a short window for transformative transactions. He is more cautious on private credit in the near term, expecting more defaults and refinancing opportunities in '27 and beyond, while seeing AI as the most important force reshaping markets and business models.
Key takeaways
- Giauque says Farallon’s core advantage is concentrating on idiosyncratic, event-driven risk while preserving capital through lower leverage and tight risk control.
- He sees Japan as especially attractive because corporate governance change has opened a wider set of shareholder-value opportunities.
- He says large merger arbitrage deals look more compelling now because regulatory approvals are easier and strategic deal windows are shorter.
- He expects private credit opportunities to improve meaningfully in '27 and beyond, as defaults and refinancings emerge.
- He says AI will affect credit, long-short investing, and even Farallon’s own organization, making it the most exciting development right now.
Notable quotes
“Our focus has been 40 years now with just one mission, just extraordinary risk-adjusted returns”
“An investment thesis is not a religion. It should be provable wrong”
“If you haven't figured out how you can lose money then you haven't thought long enough”
“We are very excited about our, in long-short book, in our event-driven investing in biotech stocks in particular”
“I think the most exciting thing is this AI revolution that's coming upon us”
How the episode opens
Our initial strategies of merger arbitrage that I mentioned has really seen a new light of day, effectively, in the recent years with a much easier regulatory path to approval of deals and probably a very short window for corporations to do strategically transformative deals. Welcome to another episode of Goldman Sachs Exchanges Great Investors. I'm Tony Pasquariello, global head of Hedge Fund Coverage in our Global Banking and Markets division.
Today, I'm excited to be sitting down with Nicolas Giauque, the managing partner and chief investment officer of Farallon Capital. Farallon is a multi-strategy firm with a 40-year track record and 44 billion in capital under management. Nicolas actually spent four years here at Goldman Sachs before joining Farallon in 1998.
He became the sole CIO and managing partner within the last two years. I'm excited to talk to him about his career, the opportunity set he sees today, and of course his view of this chaotic market environment. Nicolas, welcome to Great Investors.
Thank you, Tony. It's a pleasure to be here. Farallon has an incredible track record.
I think you've had only one down year since the firm was founded in 1986, which is remarkable. Tell us about the overall approach, and how do you avoid serious drawdowns? Our focus has been 40 years now with just one mission, just extraordinary risk-adjusted returns.
So I think this intense focus on just this one simple mission is what has gotten us through all those 40 years with the performance that we've had. We certainly are very focused on generating performance but also focused on capital preservation. We know the role that we fit in our investors' portfolio.
And so I think that mission, a strong culture which is based on excellence, integrity, and humility, has also allowed us to achieve this with multiple CIOs.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- long term investing
- market environment
- multi strategy investing
- current investing opportunities
Companies and tickers mentioned
- Farallon Capital
- Goldman Sachs
Watch the episode
Watch “Farallon Capital's Nicolas Giauque on Investing for the Long Term” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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