Brett Barakett - Digging for the Puck at Tremblant Capital (EP.386)

Market Risks

Managing market risks is a critical component of Tremblant Capital's strategy. Brett Barakett emphasizes the importance of understanding what you know, what you don't know, and the unknowns that can cause stress 1. He shares an example of counterparty risk management, where they withdrew funds from Lehman Brothers before its collapse, highlighting the importance of not taking unnecessary risks 1.

We do not get paid to take that risk. We need counterparties as part of our business. But I don't get paid to take counterparty risk, and so we will not take counterparty risk.

--- Brett Barakett

Additionally, Brett discusses the development of an advanced risk engine and the importance of quantitative risk metrics in managing a portfolio 2.

   

Operational Risks

Operational risk management at Tremblant Capital involves a comprehensive approach to internal risks. Brett outlines the five levels of risk, including fundamental stock risk, investor risk, and operational risk, which encompasses the management of cash flow and employee contracts 3.

When we talk about managing risk, I want to make sure we're clear that we want to manage the risk of real capital loss, that we're going to lose real money, as opposed to just managing the volatility.

--- Brett Barakett

He also highlights the importance of aligning with clients who understand the firm's strategies and the necessity of maintaining liquidity without imposing gates on strategies 4.