Paul Enright – Inside Long-Short Equity Investing (Capital Allocators, EP.266)

Capital Allocators – Inside the Institutional Investment Industry

Paul Enright is a private investor managing his own capital under single family office, Krainos Capital. Paul opened Krainos after a dozen years at Viking Global Investors, the multi-billion dollar long-short equity hedge fund that also has been one of the most successful breeding grounds for talent in the industry. He has a deep understanding of intricacies of long-short equity investing and a knack for explaining it well. Our conversation covers Paul’s career path to Viking, training while there, and advice to early-career investors. We dive into the distinction between business analysis and stock picking, and the importance of portfolio management to investment success. In the process, we discuss liquidity, shorting, portfolio rebalancing, incentive compensation, and market structure. We close with Paul’s approach to managing his own money and his answers to a terrific set of questions sourced from his Twitter feed before the show.

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(3:11) Paul’s background (8:11) Training at Viking (10:02) Stock picking (12:18) Business analysis (19:54) Liquidity’s impact on valuation (24:03) Dynamic portfolio management (28:46) Rebalancing (32:03) Long/Short Dynamics (40:50) Compensation structures (43:11) Current market structure (50:29) Investment model as a family office (53:05) Thoughts on Twitter (57:07) Growing skills as a young PM (58:57) Advice to PMs in tough times (1:01:48) Best questions to ask managers (1:03:11) Closing questions