December 23, 2017
Carlson Capital's Double Black Diamond fund added 3.09% net of fees in the second quarter of 2021. Following this performance, the fund delivered a profit of 5.3% net of fees for the first half. Q2 2021 hedge fund letters, conferences and more According to a copy of the fund's half-year update, which ValueWalk has been Read More
I’m writing to tell you about my new business, Kase Learning, and a seminar I’ve created that I think is totally unique: a three-day bootcamp called Lessons from the Trenches: Value Investing, Hedge Fund Entrepreneurship and Life.
The bootcamp is described below, and I will also be hosting six one-hour information sessions in midtown on January 10th and 30th. For additional details and to RSVP, click here.
I can’t remember when I’ve been as fired up about something – my mind is churning so fast that I can barely sleep as I try to put everything I’ve learned over nearly two decades in this business down on paper to teach to others. It feels great to have my entrepreneurial juices flowing again, and I’m excited to share my plans with you.
When I closed my funds a few months ago and contemplated what I wanted to do with the second half of my life, I realized fairly quickly that I wanted to focus on teaching and mentoring up-and-coming investors, which is something I have done throughout my career and love doing. I have 18 years of wide-ranging experience to share, with incredible highs and, especially in recent years, tough lows, and I am looking forward to using that experience to help others boost their careers in a meaningful way and avoid some of the pitfalls that I encountered.
Earlier this month, I hosted a pilot bootcamp with a dozen students and it was a fantastic experience for all of us. (For a full description, see Appendix A.) The feedback I received afterwards was both flattering and humbling:
- “It was a wonderful, almost life-changing experience…it felt like an intensive infusion of wisdom and practical advice.”
- “What is taught in this seminar is pure gold. It’s not taught anywhere else and there aren’t that many people in the world who really understand what it takes to raise a billion-dollar fund.”
- “I’m lost in words while expressing my appreciation. It was the mother of all seminars. Really. It was invaluable: so many wise teachings, thoughts and reflections, and opportunities for personal growth.”
- “At the beginning of Whitney’s course, I didn’t know what to expect and had little idea of how to set up and market my business, but after only a few days it’s not an understatement that the course will make me millions of dollars and save me a great deal of trouble.”
To read my students’ testimonials in full, see Appendix B
When I initially conceived of the seminar, I planned to teach my students tools to help them become better investors: how to identify and invest in great stocks, detect and steer clear of value traps, manage the portfolio better, etc. We of course covered these topics, but it ended up only being about 40% of our time together.
Another 40% focused on hedge fund entrepreneurship. I’ve come to realize that while there are plenty of ways in which my students (and many, many others like them) can learn to become better investors, there is nowhere else where they can learn how to build a successful hedge fund business (unless they have the good fortune of working for one). Having bootstrapped my own fund into existence and then run it for 18 years, I am in a unique position to teach this.
I did so many things right as I built my firm from $1 million under management when I launched it out of my bedroom in 1999 to nearly $200 million a decade later, also creating during the same time mutual funds, the Value Investing Congress, and Value Investor Insight. And then I screwed it up and pretty much lost it all. This experience taught me a lot – the hard way!
For hedge fund managers who hit it big, there’s no better business in the world. But for those who, like me, end up among the 99% of managers who don’t hit it big, it’s a tough business, subject to all sorts of exogenous factors, so one really needs to execute superbly. I didn’t – and paid the price. I want to help others stand on my shoulders and achieve great success – and then avoid the many mistakes I made!
How we spent the final 20% of our time, however, was what really surprised us. I can best summarize it as “Whitney’s worldly wisdom, as taught to me by Warren Buffett and Charlie Munger.” Discussing life lessons might appear to be an odd fit for an investing bootcamp, but it ended up being a critical part of the course that my students found invaluable and I loved teaching.
The Kase Learning Bootcamp
The insights I gained from the pilot seminar helped shape the curriculum for the Kase Learning Bootcamp. During this intensive, three-day (36-hour) program, I will share everything I’ve learned over the years I’ve been in this business. In addition, students will have the chance to absorb wisdom from a handful of veteran investors I invite as guest speakers to share their knowledge, experience and advice (earlier this month, my students spent time with nine great investors, including Bill Ackman, Joel Greenblatt and Tom Russo). It’s going to be equal doses of learning, self-improvement and fun!
Each day will focus on a different area (though there will be plenty of overlap):
Day 1: How to become a better investor:
- Learn from my successes and failures
- Achieve superior performance
- Uncover great investment opportunities (case studies: Netflix and McDonald’s)
- Avoid value traps (case study: Valeant; here is a link to my slides on VRX)
- Become a better short seller
- Effectively manage your portfolio
To facilitate networking, the resumes/bios of all students will be shared among the group (with permission), and there will be a cocktail reception at the end of Day 1.
Day 2: How to become a better entrepreneur:
- Launch and grow a fund
- Hire the right people at the right time
- Raise big money
- Develop great slide presentations
- Make killer stock pitches
- Become a stronger writer
- Write a compelling investor letter
Day 3: The mental game & life lessons:
- Follow-up from the first two days
- Understand and exploit behavioral finance/investor irrationality
- Avoid the five calamities that can destroy your life
- Learn how to deal with mistakes, apologize and eat humble pie
- Cultivate mentors, make friends, and develop deep, lasting relationships
I will teach a bootcamp every month or two, depending on demand, only in NYC initially, but over time elsewhere I expect. It will typically be three consecutive weekdays, either Monday-Wednesday or Tuesday-Thursday. If there’s sufficient demand, there may also be weekend (Friday-Sunday) and evening options (seven weeknight sessions from 5-10pm).
The first three bootcamps will be:
- February 6-8
- February 26-28
- April 30-May 2 (the week before the Berkshire Hathaway annual meeting)
The tuition is $5,000. (Those who cannot attend all three days are welcome to attend at a daily rate of $2,000.)
This may strike some as a lot of money, but my experience leads me to believe that for some people it will prove to be the greatest bargain of their lives. If I give one of my students the tools to identify and invest in one great stock idea or avoid one awful value trap, that could be worth millions. Likewise, if one of my students converts a few more potential investors into LPs, or makes a few valuable business or personal relationships, or avoids the five calamities that destroy successful lives, that too is likely worth millions.
I can tell you that during the recent bootcamp, over and over again, I got a knot in my stomach as the opportunities I’d missed and mistakes I’d made became clear to me. For example, two of the guest speakers, Sahm Adrangi and Enrique Abeyta, described how they’d started funds with under $1 million, put up good numbers, made names for themselves, and then took full advantage by developing and executing on fundraising plans that quickly took their AUM to $500 million and $1.3 billion, respectively.
It kills me to know now that, in my first 10 years when my funds’ returns were excellent and I became very well known in the investment world, I too could have done this: I should have gotten to $1 billion, not $200 million, a mistake that cost me tens of millions of dollars. I thought I was doing things right, but I wasn’t – I just didn’t know any better.
Based on what I learned from Sahm, Enrique, Bill Ackman and others, as well as my own experience, I’ve created an in-depth 31-slide presentation that I will teach at every bootcamp entitled How to Raise $1 Billion (or Not).
Glenn Tongue Has Joined Kase Learning
I’m delighted to share the news that Glenn Tongue, my former partner from 2004-2012, has rejoined me to help teach the bootcamp and build the business. We decided to stop managing money together in 2012, but have remained close friends. We were a great teaching team, and I’m looking forward to sharing our experience with the next generation of investors! Here’s an old picture of us:
I wish something like the Kase Learning Bootcamp had been available when I was in the early stages of my investing career. I – like so many other investors then and now – didn’t have the luxury of gaining experience in this experienced-based-business the best way, which is by working for many years for people like Julian Robertson, Leon Cooperman, Seth Klarman, etc. Instead, I had to improvise, reading everything I could get my hands on, sitting in the back of the room in Joel Greenblatt’s value investing class at Columbia Business School, going to Berkshire and Wesco meetings, etc.
But, in truth, I mostly gained experience the hard way – by getting scars on my back – and I can say with great confidence that it’s much better to learn tough lessons via observation and being mentored than by stumbling around making costly mistakes!
In a nutshell, this is what my bootcamp is about: imparting my 18 years of hard-earned experience, as well as that of Glenn and the guest speakers, so that the students can stand on our shoulders and achieve even greater success.
If you’d like to learn more, please call (212) 265-4510 or join me at one of the six one-hour information sessions I’ll be hosting in midtown on Wednesday, January 10th and Tuesday, January 30th – both days at noon-1:00, 5:00-6:00pm, and 6:00-7:00pm. For additional details and to RSVP, click here. We will be posting video recordings of every session for those who can’t make it in person.
I hope you and your family have a peaceful and joyous holiday season.
Appendix A: The First Bootcamp
The first bootcamp took place in the first week of December with a dozen investors who are planning to launch their own funds in the near future or are already in the early stages of doing so. They are mostly in their late-20s or early 30s, typically with first jobs in the corporate/banking worlds, followed by work on the buy side.
As noted above, my initial plan was to teach them tools to help them become better investors, but as I started interviewing the candidates, over and over again I heard something along these lines:
“Whitney, I’d like to learn as much as I can about investing from you, but what I’m really interested in having you teach me is how to build a business: How can I get my name out there and differentiate myself? How do I raise money? At what level of AUM should I hire a marketing person and analyst? How do I build a team, select vendors, and communicate with investors? Should I start a fund or just run separately-managed accounts? Should I charge 1 and 20 or 1.5 and 20? Should I offer monthly, quarterly or annual redemption rights?”
So, going into the bootcamp, based on the input from my students, I developed a curriculum in which my guest speakers and I would teach investing 60% of the time, with the balance focused on entrepreneurship. But I deliberately didn’t set a detailed, hour-by-hour schedule because it was the first time I was teaching this and wanted to be flexible enough to react to what was happening in the room.
Thank goodness I did so because instead of the 60/40 I expected and planned for, it ended up being 40/40/20, with the final 20%, as noted above, being “Whitney’s worldly wisdom, as taught to me by Warren Buffett and Charlie Munger.”
Allow me to give you some examples of what I’m talking about. When I introduced myself on the morning of the first day, I showed my students this picture and said that I’d been happily married for more than 24 years and that my daughters were my pride and joy:
Then I moved on and started teaching the investing-related materials I’d prepared, but at some point one of the students (a single guy) referred back to my introduction and asked me: How did I know that Susan was “the one” I wanted to marry, and how have we maintained a strong marriage over so many years?
Now those are two interesting and important questions! (I’d argue, in fact, that nothing is more important in terms of lifelong happiness than getting those two things right.) I’ve done quite a bit of thinking about them, especially the latter, as I’ve reached the age (51) when many of my close friends have been getting divorced in recent years. In every case it’s a total disaster that completely disrupts their lives so, channeling my favorite Munger quote, “All I want to know is where I’m going to die so I never go there”, my wife and I study each divorce closely to learn what went wrong so we can take steps to avoid a similar train wreck happening to us.
I gave a brief answer to my student’s question and tried to move on, but then others had follow-up questions so we probably talked about this for half an hour. Then, when I got home that night, I realized that this was something I might want to teach to future students (not to mention my daughters!), so I stayed up half the night writing up my thoughts in the form of PowerPoint slides, which I then taught the next day. (I’ve expanded my thinking since then and created a 29-slide presentation entitled The five calamities that can destroy your life – and how to avoid them, posted here.)
A bit later in the bootcamp, one of the students asked how I’ve been so successful in cultivating mentors. It’s true – I have many mentors, starting with Buffett and Munger, and it’s made all the difference to me, both in my business, but more importantly in my life. I’d never sat down and thought about how I cultivate mentors – I just do it naturally – so, again, I went home and spent half the night creating a 17-slide presentation entitled How to cultivate mentors, make friends & develop deep, lasting relationships.
It turns out that there’s a five-step process (who knew?):
1) Pick a target
2) Pre-contact preparation
3) Initial contact
4) Initial follow-up
5) Long-term relationship building
It also turns out that you can use these same techniques to make friends, build strong lifelong relationships with them, and develop a reputation as a nice person. I can tell you with 100% certainty that if you are able to do this, you will not only have a wildly more successful business, but lead a far happier life. Who wouldn’t want that???
At another point, I was asked how I became a Baker Scholar (top 5% of my class) at Harvard Business School, so I shared an article I’d written when I graduated in 1994, 10 Strategies for Winning the Class Participation Game at Business School. I’d thought about publishing it at the time, but decided not to – until this month, I’d never shared it with anyone – because: a) it makes me look manipulative; and b) most of the techniques won’t work if everyone else is applying them (for example, never ask or answer questions, never speak in the first half of the class, etc.). I found the article in my archives, shared it with my students, and have now created a slide presentation based on it that I will teach at every bootcamp because the strategies not only apply to classrooms, but group discussions of all types (board meetings, meetings at work, family or friend gatherings, etc.).
Lastly, there were a bunch of shorter questions like: How was I able to afford living in NYC with two young children when I first launched my fund, when AUM was only $1 million? How could they become better writers and presenters, etc.?
In summary, what happened was astonishing to me: we ended up spending a significant amount of time during an advanced investing bootcamp on topics that are far afield from investing! At first glance, this might seem odd, but think about it: if you build a successful business, but everyone hates you and you’re miserable, then you’re a failure; if your fund has a big year, but your daughter develops an eating disorder, then you had a bad year. And it works the other way too: if you’re coming home every day to the stress and misery of a bad marriage, there’s no way that you’re going to be anywhere close to your best at work.
Appendix B: Testimonials
The following are from the first bootcamp/seminar that took place December 4-8, 2017. (All of my students gave me permission to share their testimonials, but some chose to remain anonymous.)
1) It was a wonderful, almost life-changing experience. In a nutshell, it felt like an intensive infusion of wisdom and practical advice. I also really enjoyed meeting the people in the group who were, without exception, intelligent, hard-working, open-minded and friendly. – Gabriel Grego, Quintessential Capital Management LLC
2) I would absolutely recommend this seminar to anyone aspiring to run their own investment management business. What is taught in this seminar is pure gold. It’s not taught anywhere else and there aren’t that many people in the world who really understand what it takes to raise a billion-dollar fund. I think that this is an incredible product. It’s not really a proxy for business school or Columbia’s value investing program. It’s more advanced and for someone farther ahead in their career. There are so many start-up, emerging managers who have no idea how to raise money and where to start.
3) I’m lost in words while expressing my appreciation. It was the mother of all seminars. Really. It was invaluable: so many wise teachings, thoughts and reflections, and opportunities for personal growth. When I got back to work, I spent the entire afternoon sharing with my team the many learnings from our week together. Your humility, candor and selflessness are all great trademarks of yours and were evident during the week. You are a heck of a role model and I’m so lucky to have you as my cherished friend. – Paco Carrillo, Mexico Value Partners
4) At the beginning of Whitney’s course, I didn’t know what to expect and had little idea of how to set up and market my business, but after only a few days it’s not an understatement that the seminar will make me millions of dollars and save me a great deal of trouble. Whitney laid out everything he did right in launching and growing his fund for more than a decade and then, perhaps more importantly, very honestly detailed what he did wrong. Through his connections, we also met with investors at the very top of the industry who were very generous with their time and open to all questions.
Lastly, I now have 12 friends who are very bright and at a similar point in their careers who I can bounce ideas off of, a clear plan for how to market and grow the business (it’s encouraging when you hear Bill Ackman tell you he likes your plan), and most importantly I know what pitfalls to avoid. – Angelo Martorell, Martorell Capital Partners
5) I would HIGHLY recommend it! I already have a bunch of people who I think would be interested and perfect candidates. – Peter Gylfe, Bay Street Capital Partners
6) Thanks again for all you’ve done for us. Your class was a profoundly life changing experience, and I think the rest of the guys would concur. – Jon Costello, Costello Investment Management, LLC
7) I was incredibly psyched to be a part of the seminar, but I wasn’t sure what to expect. Given some of the reading material, I assumed it would involve more theory and I was pleasantly surprised that wasn’t the case. One thing I didn’t expect was that there would be so much wisdom and life lessons intertwined with investing. I think this is a brilliant addition and one of the many ways that you can differentiate this program. If I had heard before the start that it would involve a discussion on marriage, I would have thought it was strange, but experiencing this in real time amongst the group was transformative. These tangents combined with endless practical advice on investing and raising money convinced me that there is no other program like this in the world.
8) Your seminar was outstanding. I didn’t expect to get so much out of it. Not only did we learn about investing, but also how to become better people. The group of people that you put together was significantly better than I could have imagined. I am looking forward to further strengthening my relationships with all of them and will try to contribute to each person’s future success. Also, I truly enjoyed our meetings with some of the world best investors, especially Tom Russo, who is a great personality; listening to his investment philosophy was like music to my ears. – Fabian Degen, Deutsche Asset Management
9) Whitney exceeded expectations and delivered a high quality seminar filled with excellent content, including nine meetings with industry insiders. It was extremely refreshing to learn from his experiences (including mistakes!) first-hand, as this is a business where rarely someone gets second chances. This seminar is must-do for anyone working at a hedge fund, as not only you will learn to analyze investments the right way, but you will also have a great sounding board to test your ideas (without putting any capital at risk). Whitney could have easily charged 10x for the seminar, and it still would have been a great bargain.
10) Thank you very much for a great week. I found “Whitney’s Worldly Wisdom” particularly insightful and helpful. It doesn’t matter how well you invest – if you’re reckless in your habits or are experiencing a divorce/splitting with your partner, your chances of doing well are dramatically reduced. Learning from peers in both the classroom and offline discussions is another immense, unexpected benefit. Unexpected in the sense that it’s easy to take for granted when you’re registering for the seminar, but you assembled a terrific group.
The guest speakers were great, each in their own way. Let’s take a high profile one like Bill Ackman: despite zillions of interviews and biographies you can read about him, there’s something very special about hearing directly from him what it was like to start his fund in those early days and the adversity he and his partner faced. Even simple words of encouragement like “there are always wealthy people out there willing to bet on a younger manager with little to no track record because often the track record is the manager himself and his ideas/case studies.” These stories and lessons stay with you and are invaluable. – Rob G.
11) I would highly recommend Whitney’s seminar to anybody who has a goal of launching a hedge fund or has already launched a fund and wants to achieve long-term success. There has been no place where you can learn how to maximize your probability of success – both as an investor and a hedge fund entrepreneur / businessperson. Working and killing it as an analyst and getting an MBA are helpful and provide a great foundation but they are not targeting specific issues of how to make a hedge fund successful. For example, at Stanford business school I was exposed to various investment styles and learned how to analyze industries and sustainable competitive advantage, build models and value companies. During the seminar, I learned how to balance contrarian investing with humility, build a team, select vendors, communicate with investors, and develop a fundraising strategy (just to name a few). These were things that were never covered in business school.
When I launched Caro-Kann Capital, friends who were few years ahead of me gave me a hand, but I ended up learning a lot by doing. There was no better way to do it three years ago, but now there is!
Whitney is an incredible teacher. He has wealth of knowledge and experience, and he has been an active and very well-respected member of the investment community for many years. On top of that, Whitney has an extremely high level of self-reflection, which means that he was able to effectively share with us how he achieved success as well as how he fell short. Very few people who have been running funds for decades can do that. Such ability to share and teach requires a certain type of personality and internal wiring, and Whitney has both. Finally, Whitney is fully committed to his students’ success, which was apparent by how much time he spent with us during the seminar (8:15am to 7:30pm daily, sometimes followed by dinner!). Whitney is not the type to run out the door at 5:01pm!
If you are running a fund or planning to do so, you need to do whatever you can to maximize your chance of success. You owe it to yourself and – more importantly – your investors. Participating in Whitney’s seminar and being an active learner will help you achieve exactly that. – Artem Fokin, Caro-Kann Capital LLC