John Pfeffer - Crypto for Institutions (Capital Allocators, EP.54)

Capital Allocators – Inside the Institutional Investment Industry

Ted Seides – Allocator and Asset Management Expert

Investing, Capitalallocation, Business

4.8 • 806 Ratings

🗓️ 28 May 2018

⏱️ 51 minutes

🔗️ Recording | iTunes | RSS

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Summary

John Pfeffer is an entrepreneur, investor and author of “An (Institutional) Investor’s Take on Cryptoassets.” He is currently Partner of Pfeffer Capital. In the 2000s, John was a Member at private equity firm KKR, and in the 1990s, he was Chairman of the Executive Board of leading French IT company Groupe Allium S.A. Before that, he advised on turnarounds while with McKinsey in Europe and Latin America.

Our conversation jumps in the thought process and structure behind John’s family office portfolio, which combines building new businesses alongside fund investments in public equity, private equity and venture capital. We touch on common issues like active vs. passive, access and fees, but from a very different insider’s perspective.

We then turn to his work in the crypto world and discuss his framework for incorporating crypto investing in a portfolio, conducting research in the space, defining the proposition for store of value and utility protocols, and valuing tokens and coins.

John was the first investor I’ve come across that has both done a deep dive into the crypto world and is neither all-in nor all-out. He connects markets and economics with the complex ecosystem just simply enough that a layman like me can follow along.

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Show Notes

2:38 – How John thinks about managing his own capital

2:51 – Process to find a business to build

5:08 – Sizing of thematic deals

5:50 – New project copying a European retail model

7:18 – Core of the portfolio

9:02 – Biases of investment alternatives

11:18 – How will tax changes impact the private equity business

11:49 – What does he know about GP’s as an insider that other LP’s might not know

13:53 – How do they tackle venture capital investing

16:25 – Fees

17:40 – First involvement in looking at cryptocurrencies

17:46 – Institutional Investors Take on Crypto Assets

19:40 – Where do crypto assets fit in the structure of the portfolio

21:20 – Holding period for an asymmetric option

22:07 – What else did he do in cryptoassets after that first investment

24:54 – Store of value and utility protocols

29:51 – Valuing crypto assets

31:51 – Velocity of crypto exchange

40:12 – Gold replacement value of bitcoin

45:21 – Closing questions

Transcript

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0:00.0	Capital Allocators is brought to you by Ten East, an investment platform for sophisticated investors to access private markets.
0:10.5	Ten East brings benefits of having your own family office without the cost and headaches of doing so.
0:16.8	It's founded and led by Michael LaFelle, former deputy executive managing member of Davidson Kempner.
0:24.2	Michael and his investment team offer members the opportunity to co-invest by offering at their
0:29.1	discretion. Michael and his team source, diligence, and commit material personal capital to each
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0:38.9	offer exposure to private credit, real estate, niche venture and private equity, and other
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0:49.2	The principles have over a decade track record of investing in these types of exposures
0:53.5	across more than 350
0:55.7	transactions. Post-investment, the Tennis team conducts ongoing monitoring and reporting,
1:01.8	just as you'd expect from an institutional investment organization. I've known Michael for about a
1:07.0	decade, and after becoming impressed by the quality of 10 East offerings, its research
1:11.6	process, and high-quality investment team, I became an advisor to the organization, an investor
1:17.1	in multiple offerings. You can learn more and join me as a member at 10-east.com. That's the number 10,
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