[REPLAY] Adam Blitz – Inside Hedge Fund Allocation (Capital Allocators, EP.17)

Selection Process

Adam Blitz, CEO of Evanston Capital Management, emphasizes a bottom-up approach in manager selection, prioritizing exceptional talent over fitting managers into preconceived market views. He believes that great managers with a sustainable edge are scarce and crucial for success 1. Blitz explains that Evanston meets over 200 new managers annually, with most introductions coming from prime brokers and existing managers 2. He values passion and a genuine love for the work as key indicators of a manager's potential 3.

Just because you're passionate about it, enjoy it, doesn't mean you're any good at it. But it's hard to see a lot of staying power, even if you're very good, if you're not enjoying it and feel that passion and competitiveness to do very well.

--- Adam Blitz

This passion, combined with a repeatable and sustainable edge, forms the foundation of their selection process.

   

Decision-Making

The decision-making process at Evanston Capital is characterized by a flat organizational structure, requiring unanimous approval from a nine-person investment committee for manager inclusion 4. Blitz highlights the importance of avoiding groupthink and encourages healthy debate among team members. He notes that some of their best investments have been those with initial disagreements, emphasizing the value of diverse perspectives 5.

If we can't convince each other something's an interesting idea, it probably isn't an interesting idea.

--- Adam Blitz

This dynamic fosters a collaborative environment where all voices are heard, ensuring well-rounded investment decisions.

   

Meeting Dynamics

Meetings at Evanston Capital are seen as learning opportunities, even if the likelihood of investment is low. Blitz believes that every meeting can provide valuable insights into the market or corroborate existing views 6. The firm also explores data analysis to enhance manager selection, focusing on qualitative factors like passion and motivation 7.

We think so much of manager selection and trying to figure out who's going to do well prospectively is based on much softer factors, such as why is the person doing this? What drives them?

--- Adam Blitz

This approach underscores the importance of both qualitative and quantitative elements in their evaluation process.