The Specialist Hedge Fund That Has Crushed the S&P 500 | Moez Kassam of Anson Funds
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It's about being that big fish, small pond, but looking at catalysts. A company can be overvalued, but when are people actually going to realize the emperor has no clothes? It's around a catalyst. They're saying, "We're working on this product and it's about to launch on X date," or it's not going to be reflected in the earnings. With us, the idea is

we can take advantage of those situations. And that's the day where the light comes out.

Before we get started, I just want to do a quick disclaimer that nothing we say here is investment advice, as well nothing we say is marketing or advertising for Anson Funds. Everything is meant to be informative about the fund management industry.

Hello, everyone. Welcome to another edition of Other People's Money. I am joined today by Moez Kassam, the CIO and founder of Anson Funds, a Toronto-based hedge fund manager that has annualized 15% since their inception in 2007. Moez, thank you so much for joining me today.

Thank you, Max, for having me. I'm excited to be here. I'm very excited to speak with you because there are not too many fund managers out of Canada that have put up the track record that you have. I don't know if it's something in the water. What is it with Canadian managers?

I think Canada is a great place to live. It's an interesting spot. But from a financial basis, it's a bit limiting. You have a lot of retail-focused investors. You have large pension funds. And then you have a bunch of commodity investors. It's really not your typical hedge fund-type environment.

I'm not saying you've never touched a natural resources company before, but as you said, so many of the investors are commodity-focused investors. So how did you decide to take this more global generalist approach to equity investing?

You know, we're mainly a U.S. equity shop. So 70, 75% of what we do is on the U.S. side. So, you know, we're a long short equity fund. We've got a bunch of strategies around shorting, activism, long investing, and we're a very deal, big deal underwriting shop. So, you know, being in Canada is more a function of

where I was from originally, but we view ourselves as more a New York-esque type fund. Let's go back to the beginning and the launch. I mean, there's so many different ways that people start out. Obviously, the easiest way to do it is to go work at a big shop, do well there, and get blessed by the boss to go out on your own, and hopefully he writes you a large check.

to start you off. I don't believe that's how you got your start. So how did Anson Funds start? And can we talk a little bit about the trajectory of growth to now what I believe is a billion-dollar fund that you have? That's a $2 billion fund where we are today.

But yeah, the trajectory has been pretty crazy. When I launched the fund, it was 2007, we launched with 7 million bucks. And just to take it a step back, I'd always been enamored by financial markets, high school, university, trading through. And yeah, it wasn't the traditional approach, didn't go work at an investment bank or a larger fund to begin with. But

I was able to meet the people from Trafalgar Asset Managers, which is a multi-billion pound fund in the UK. The principal was actually in the Big Shore. And we made a deal together. And that's where we started running money. And it was a great time that I thought, if I could take the approach that we learned working with these guys, bring it back to Canada, be a big...

fish in a small pond would be all great. And so I came back in 2007 to launch the fund. And, you know, I thought we'd launched with like $30 million. Trafalgar was a huge name.

Goldman owned 30% of the fund at that point, but everyone was doing so well. The commodities were all the rage. I'd knock on every door and I'd say, we've got an interesting hedge strategy. We do work not just on the long side, but we've got a great short strategy. Every manager and high net worth guy

They said, you know what, I've got 10 funds. They're all doing well. I don't need you. And I'm like, you know, at some point the market will change and hedge will become a focus. And, you know, 2008 was a big year, you know, in that everybody had a terrible run. And, you know, we lost a lot of money on our longs as well. But our short strategy held in and we were up 1%. And that was a real defining moment for us.

A lot of people think they put up that heroic year, they protect capital in a down market, that it's just going to all come in the next day. I know that that was a defining moment for you in the track record. I'm sure it got you some success, but it's still a long road to $2 billion. So what did that look like over time?

Max, it's a great question. And I ponder and think about it all the time. Like you said, we put up that number and you're like, oh my God, everyone's down 50%. We're up one. Everyone's going to throw money. But remember, investing is a psychological game. Coming out of the subprime crisis, nobody was allocating money anywhere. It didn't matter how well you did. We had so many guys that were with us and they'd say, thank you for...

being a great custodian of my wealth, but I need it back because I have capital calls and all these other places and there's gates put up and it was chaos. And like you said, it's slow and steady. I know a lot of your investors, a lot of your listeners are people looking to raise money and you got to realize it's slow and steady that wins the game. And the idea is focus on

articulating a competitive advantage and strategy, showing the results, and then the money will become easier to achieve and attain. Where people put such an emphasis on marketing right away, and the opportunity cost is the returns themselves.

And also what marketing looks like differs a lot from fund to fund. Some people it's hiring a placement agent. Some people it's going out and doing lots of podcasts. Like it really differs. So in Canada, were you coming to the U.S. to market? Were you going around in Toronto on Bay Street trying to find people? Was it high net worth? When you're at that early stage, where were you having success?

You know, for me, I live and breathe my hedge fund. It's my world. People say, oh, my God, you do so much work, but I don't look at it as work. It's just my life. And so I would travel everywhere with my tear sheet and I would laugh with the guys internally. How many people will I give my tear sheet to along the way on a trip? You know, one time I'm sitting at an airport and you just start chatting. And I tell people the secret to selling is having a good product.

And I genuinely believe we have an unbelievable product. And earlier on, you know, we were focusing a lot of fraud and scam and going after all these nefarious actors and promoters. And the stories are so great. And it's all around academies, right?

When guys are promoting a company, it's really for a function of either getting the stock price up so they can sell it like a pump and dump, or they're trying to raise money and inadvertently it goes down as well. So I would just tell the stories of what we were doing and say, this is a very differentiating situation. And I'd always tell people, you know, in Canada, my pitch would be, I don't know anything about research in motion, which was Blackberry. Everybody talked about Blackberry back in the day, but I go, these are super large situations.

And I don't have a competitive advantage, but you show me $100 million small fraud that's just retail investors on one side and a bunch of promoters. I know I have a massive advantage looking at that situation. And was it your influence from Trafalgar that brought you into this? How do you start to develop these strategies that are so differentiated? I know

that the fund is described as having five or six or so sub-strategies that are the core of what you do. How do those develop over time?

You know, it's funny, my history, you know, I remember working in high school an entire summer. And at the end of the summer, I thought, you know, I was already an avid player and understander of the stock market. And I got one of those email promotions that came in your emails. The start of the internet was like 1997. And it said, oh, this stock is going to grow 500% because this is going to happen and that's going to happen. And I'm like, wow, this is great. I'm going to take the $2,000 I saved from working all summer and I'm going to turn it into 10%.

And then I put the money into the position and within a few weeks, the stock dropped 75%. And I was shocked. And at the end of the day, I'm like, what happened here? And I started reading online about short selling and people who were shorting it. And I go, I didn't even know what shorting was. And so I read more and more and I contacted everyone that was around the situation. I go, wow, if I can get duped like this, so can anyone else.

And so that's where the being enamored by short selling came from, saying that not a lot of people are doing it, but it's such an interesting thing where there's hype and euphoria around situations. And so that's really how I got my start. And then I joined every chat room and blog and everything out there to understand that

the understand the shorts and understand how to find new situations. This was all the rage, dot-com mania. I went to university at that point. It was 1999. And that's really what started the journey. I find that oftentimes the vintage of the investor does influence the type of strategy that they have. So you really got your start around the dot-com bubble, and then you launched the fund

right around the GFC. But we went through periods that were quite different than that for a lot of the existence of the fund where short selling was extremely difficult. So how do you think about short selling at times when it's not shooting fish in a barrel?

Max, it's a great way of thinking about it. As I mentioned, we've been in an upwards market. All the idols that I had are gurus that were running short funds or successful short strategies. They're effectively out of the game. They either lost their AUM or said, "I've made enough money. I'm just going to do this on the side," because it is very hard

to run a successful short strategy, you know, with the market just continually going up. So for us, again, it's about being that big fish, small pond, but looking at catalysts, right? So a company can be overvalued, but when are people actually going to realize the emperor has no clothes, right? It's around a catalyst. They're saying we're working on this product and it's about to launch on X date or it's not going to be reflected in the earnings. So with us,

the idea is we can take advantage of those situations and that's the day where the light comes out and you can see that all that glitters is not always gold.

What about just bad companies? There's this, I think, misconception that stocks only go up, but most stocks are pretty bad companies. There's a lot of bad companies out there, and there's a few good companies that drive the indexes forward. But overall, in the universe of all of the stocks out there, most of them are dogs. So not all of them are fraud. Some of them just can't get out of their own way. How do you think about those type of companies?

Yeah, you know, for us, we find that the dogs, as you call them, they really end up gravitating or ending up around big themes, right? If you're a dog company in a, you know, a random biotech or healthcare company, you're not getting that type of retail investor excited.

But you end up finding these around the big theme. So crypto was a big theme and AI and data centers is a big theme. And you have industry leaders, but then you have a bunch of people underneath that are just sort of, we call them the me too's. And so for us, we gravitate towards looking at those types of situations

and taking advantage of them trying to be in an area where they really shouldn't be, because they're just trying to get the retail investor behind them, which is what we're seeing today in the meme world. It's everyone's trying to be that next meme-esque company.

And do you like to go against the memers as a short seller? Or is it just something that you watch for enjoyment and for fun? For me, enjoyment and fun and the investment go hand in hand. So yeah, I enjoy being on the other side at times. You know, I'm a very big... I'm a very...

I appreciate the Wall Street bets type world that exists. I never thought it would be possible pre-COVID that you could have this type of organizational structure and flow and could actually work and the meme army. It was a fascinating time for us. And so for us, we try to focus on the smaller situation. So everyone was focused on GameStop.

And that's what really got the army together. But we had a very successful outcome for us looking at Hertz and AMC that was the same type of investor, but what we believe didn't have that same tail risk as GameStop.

And so are you ever looking to take a shot at the king, like the leader of these sorts of trends? Obviously, there's so many electric vehicle companies that went down and Tesla is still standing. I mean, obviously, it's down significantly from highs recently as we record this, but certainly not the outcome that many of the other like EV SPACs of the 21 vintage came out to be.

Yeah, you know, it's an interesting one, right? Like we have these conversations internally. Like I said, I go back to that mantra. We don't need to have an opinion on BlackBerry. It's the same thing as we don't need to have an opinion on Tesla. You know, I think Elon Musk is an incredible, incredible individual. And yeah, maybe the company is overvalued, but why bother Tesla?

dealing with a situation where you have super smart people on both sides of the equation, where we can focus on those me-tos, the companies that are pretending or trying to be the next Tesla, but they're not, you know, they don't have the R&D, they don't have the thing, they don't have the skill set. You know, so you have Chinese EV companies, you had so many people coming out of SPAC

world during the COVID mania, our focus around that was there. But you have Elon Musk and Larry Ellison as his chairman and real companies behind it, T. Rowe, et cetera. For us, that's a 55-45 game where we're looking at the smaller EV companies. To us, those are 90-10. So for us, expected value is a major decision maker of where we put our time and effort.

What about some of the other non-short selling focus strategies? I know the fund is generally trying to be around market neutral, but sometimes you are carrying positive market exposure. So is that just because of the structural forces of markets gravitating upwards and you view that as exposure you need to have just because that's the way markets trend and shorting is where you're generating the alpha? Or do you think about alpha on the long side as well?

We think of alpha on the long side as well. And when you're a $7 million fund starting in 2007, it's very different from being $2 billion in 2025. You can't really operate a short only structure. What we realized with the market's going up, you have to augment.

and add in structures that are a little differentiating, but still staying core to your true principles. So we're very excited. We launched an activism practice a few years ago where we met a guy named Sagar Gupta. We're always looking at funds to see the hidden analyst behind the PM. And we met Sagar and were very impressed with the way he was looking at activism. And so I made an offer to him and say, listen, why don't you come and work with us?

And we can do what you're doing there, but you can run the show. You can run this portfolio. And he hit the ground running. He came out of Legion in the US. Our first position was Tulio, which became pretty public. He, within a couple of months, was able to get the CEO ousted. And we got a long position in the $50 range. And it went all the way to $150. And so you can really see, again, catalyst-oriented business.

affecting change. And it worked out very well. And now we're publicly on Lionsgate, the big Hollywood entertainment company. So stay tuned on that one. It's another interesting situation. It's a well-known war for talent with pod shops hoovering up so many people. So as a single manager in the war for talent, I guess you're not a single manager anymore. But how do you think about

bringing talent in and making, making somebody like Sagar choose you over going to, you know, a larger, you know, us brand name fund? Yeah, no, it's, it's definitely an interesting question. You know, I think it's two, there's two parts to that question, right? One is, you know, attracting those guys like Sagar and you're saying, look, look at the platform we developed, you know, we've got great performance. We've got a good amount of AUM. We have very sticky money.

And we're going to give you the autonomy, right? A lot of people talk about this pod shop emergence. It is great. There are big payouts, but the leash is very small. And you don't really have a lot of autonomy. And your band is, your square, your box is like that. And for us, we're a believer in people. We're going to rely on the person. We're going to offer the cross-pollination of our different strategies. The idea is we all work together. We are operating in different places.

structures, but everyone can come together to make two plus two, 10. And so I think that's an attractive thing to people who are potentially looking to join us. The other feature is we're here in Canada. And as I mentioned previously, there are no big hedge funds in Canada. So you have a lot of people that come out of our great schools.

They work in the investment banks because a lot of banks are here. Then they go work in London and New York, but everybody wants to come back to Canada to raise a family, I find. So when they come back, they've got a great skill set, great work experience. They're on a lot of people, and we have amazing diversity here. So we get a look at some great talent. People look at our returns and ask, how is it done? And I go, I'm standing on the shoulders of giants. We have unbelievable talent here at Anson.

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That's Fintool.com. Now let's get back to today's episode. What about the other sort of sub strategies that you run? Do you really silo them between individuals or teams that focus on finding ideas in that particular sub strategy? Or is everybody fishing in the same pond and whatever you catch that day you catch?

There are, you know, we don't want to be so structured and rigid that, you know, a guy here and the other person is here. So there is definitely some crossover, but generally people stick to their respective fields. So just, you know, we've got about six, seven portfolio managers, and then we have an analyst bench team underneath. So there's like 10 analysts underneath. They're all working with different guys at different times.

And we're always looking for new strategies that we can articulate a competitive advantage. A great example of that is, I knew this one guy because we always talk about Canadian REITs and opportunities here, Michael Masagi. I'd known him for upwards of 15 years, always peppering him on REIT situations. And he ran the largest REIT fund in Canada. It was larger than all other REIT funds combined, but it was on the mutual fund side. And I would always be like,

Don't you want to do something a little more interesting, get involved? And he has that hunger and desire to run his own money. And I said, listen, come do it with us. Same story. We've got a platform. We've got an ability to really take things forward. And you've got the autonomy where if you want to go and do activism, you can do activism. If you want to lean on us and help you and do stuff together, we can do it together. And so we launched

what became the Anson Arch Tactical REIT Fund, which takes outside capital as well. And we've had some great outperformance. And the idea is all these guys can start working together internally. And there's a lot that comes out from that open dialogue.

And when you launch a sort of separate fund like that, are you sort of co-investing from the master fund? Are you willing to do strategies that are not going into the master fund and are like kept on their own? Or are you only launching things that you also want to put into that sort of overall strategy vehicle?

I think for us, the idea is we want to take advantage of the situation, right? This is our bread and butter. We're incubating funds internally, seeing what works, what doesn't. And we're like, wow, this is so good. And it has a runway. We can offer it externally. So primarily, the objective is to make money for the Anson Investments Master Fund, the large fund. And then externally, they can manage money separately for that respective thing. We don't have any fund that we do that's completely separate from the flagship.

They're all tangential and co-invested. So, you know, you invest in us, some of that money is invested in those external funds. There's no double fees or any of that. But that's a platform for them to go and raise more money on the side and have the right relationships, prime broker, regulatory, everything. And then they can go and raise money separately as well.

Well, yeah, because some investors do want the direct exposure to specific things. Now, is that something that has been part of your growth? SMAs and sort of the customization for large LPs is a huge area where independent managers are able to differentiate themselves. Like if you go to Citadel or Millennium and you say, I really like this thing that you do, this one thing, they're not going to give you a custom strategy. But

smaller managers seem to be more willing to do that. Is that something that you've been approached to do? And is it something that you've implemented at the business level? We've been approached by this all the time. Millenniums, they're very good at what they do at finding great performance uncorrelated and then saying, hey, do you want to do more of it? And again, if I was starting a fund today, I think we would have to be in that SMA world.

But for us, by the graces of God, we launched this before the proliferation of that type of strategy. So all our emphasis and focus is on the master fund. We don't need to have SMAs where today you do. Our largest investors have compounded over time. 90% of our money has actually been in our fund for over ten years.

When we don't really take in a lot of new money, the emphasis is on making money. Everybody, I think, starts out and they say, well, if I just compound at this rate and X number of years, I'm going to be where I want to be. But it's hard to build the business around that in the periods where the AUM is lower. So how did you think about reinvesting, bringing on talent in the sort of leaner AUM years? It's a constant evolution. And like I said,

Back then, it was a lot easier than it is today. Today, you're battling all these pod shops and high payout ratios, and you really got to stick to your knitting. As a young manager, as a smaller fund, the emphasis is always around raising money. And yeah, costs are high, but if you have an articulated competitive advantage...

and you have a strategy that works, and then it shows in the performance, the money always follows suit. These guys are going to find you, or you're going to find the right guys. For us, we've been lucky. We don't rely on a lot of

I brokers and IAs and wholesalers and third party marketers, you know, after Trafalgar, it was a lot of Swiss family office money, a lot of fund to funds. For us, I wanted to go into focusing on single family office and focusing on super high net worth.

Those guys have a lot of money. They have an ability to understand your strategy. And you can speak directly with the principal at times. And the beauty of those managers, of those guys who are managing money, is they're earning money from whatever they're doing outside of that every year. And they have an allocation decision to make. And at the end of the year, they need to put that money somewhere. And if you're doing well, you're going to get more of it.

A lot of people have talked about single family offices as being very sticky capital, but this idea of

them continuing to add over time is actually something I haven't heard too much about. Yeah, I think you need to have multiple pokes in the fire, but I've always loved the single family office investor, the super high net worth investor, not only from that fundraising perspective, but we're generalists in nature. So if I'm looking at a particular industry and I've got that guy as an investor who's in that industry, one phone call talking to him or her,

You have the wealth and experience that you can't really get on your own with hundreds of hours of work. And people love talking about their own business and their own industry. And I say, when I ask that respective investor, I say, we, because I believe he or she is part of our family. We're in this together. And then they start saying we. And it's internalized. And they want to see you succeed.

The beauty of this single family office investor is those guys are entrepreneurs. You're an entrepreneur. You articulate that hunger and energy, and all they see is themselves in you, and they want you to succeed. Where if you're looking at advisors in that world, it's a whole different set of situation to deal with on that side.

Do they have teams that are looking for managers, looking through databases? Are you hanging out at the country club? How do you meet these ultra high net worth single family office types? Because it's all well and good to say, well, I focus on single family offices, but there's still a lot more to it than that.

For sure. It's hard and it takes hustle. But and yeah, I don't think hanging out at the country club is the best strategy. But, you know, I joined the YPO, the Young Presidents Organization, where it's, you know, the largest, most successful managers in the world who are under the age of 50. And you're not even soliciting money, but you just tell people what you're doing.

and how you're doing it. And if they see that sense of pride and they see that there's something real, you're kind of appealing to their greed and their sense of excitement. And they want to get involved. They want you to ask. And you purposely stay away from it. You wait for them to say, hey, how do I get involved?

Because they're thinking you're going to ask them for money. But you're just telling your story. And you're telling an interesting situation. I go, that's why I don't like managers who are looking at Amazon. Look at this situation and ABC. And then you see their eyes light up. And it's engaging. They want to be part of it. This stuff can be so contagious if done right.

Yeah. And are these mostly other Canadians? Are they international? And how do you think, do you have to have like a Cayman offshore fund for your international folks? Yeah. So we have a master feeder structure. So we have a US onshore LP for US investors, and we have a Cayman offshore fund that deals with our Canadians and offshore investors. So, you know, you're meeting them everywhere. It's not just, you know, for us, 25, 30% of our money is from the US

20% of our money is from Canada. 50% is offshore. But like the U S the U S side, a lot of it came from, you know, my co-founder Bruce Winston, who was very integral on growing this business early on. And you need to have the right partners when you're running a hedge fund. Right. So I was more young and hungry and cavalier and, you know, at the beginning and you want an elderly statesman. So Bruce Winston was much older than me. Uh,

a great guy and thoughtful leader spoke five languages. And, you know, it was the yin to the yang. And the idea is if you have the right people on board, you can take your strategy, your fund to, to new heights. Okay. And what, what are the new heights you are setting your sights on looking forward? You mentioned you've hit 2 billion and you have six, six or seven portfolio managers. What is the future trajectory?

The future trajectory for me and the fund, you know, the fund, like I said, I live and breathe it. But for me, you know, we're starting to focus myself a lot of, you know, you end up doing really well and you want to find a way to give back. So philanthropy has become a big thing for me now, which, you know, has that same level of excitement that I remembered early in the fund world. I'm now finding it in the philanthropy world. And what are your big pushes at the moment?

You gotta understand my background. My family, we came out of East Africa, war-torn Zaire in the mid '70s, overnight came to Canada and people look at our family and me and they say success and it's the individual, but it's not true. There's a multitude of factors that lead to success.

And Canada has been such a great nurturing place for us, you know, provided that social safety net at the beginning. And I think that was key to success. And I think that everyone deserves an opportunity that we need to all focus on level the playing field.

You know, we need, you know, to give people an opportunity. So when we first, my wife and I, we launched a foundation, you know, we were doing the traditional approach to give it. And I realized, why are we not taking advantage of what we have

and our fund. And we're constantly looking at data and competitive advantage and return on equity. And I said, we got to view philanthropy in the same light. So we turned our foundation into an equity fund where we're looking at providing equity and realizing equity, but looking for a return on equity, looking for an opportunity that can actually generate results. And we have a great, great

initiative that we just began called Great to Gold, which was for the Canadian Olympic Foundation. And, you know, as you in this part of life, you're meeting interesting people all the time. And I was meeting with a few athletes as I got involved with the Canadian Olympic Foundation. And I was like, wow, like most of your listeners are American. You guys have an unbelievable background.

where it comes to athletes and promoting athletes and giving them the infrastructure. In Canada, it's not the same way, right? We're a very humble nation and, you know, believe in the hard way to the top of the mountain at times. You guys seem to be pretty fired up recently.

Yeah, yeah. So we're, you know, we're not a guy that's going to lay down, right? So I'm sorry, we're not going to be your 51st state. But you know, we're, we're going to be a great neighbor. I was interested to get the tone. What is the tone like up there? Yeah, the tone, the tone is the tone, we're seeing a lot of Canadian pride. And you know, that Canadian pride goes back to what I was talking about. You know, we started this Olympic initiative.

and said that all these athletes aren't getting the support like Americans are getting or people overseas. And if we could take some of that headwind that they're facing and put on some tailwind, give them a little more access to capital, ease their path, could this be a great outcome? And we used our guys internally and we crunched numbers and we came up with, we came back and we came up with a system to back athletes. And Canada had its record performance

At the games, and 40% of the athletes were great to gold recipients, that initiative that we literally started a year ago. And are you getting payback on that or is it just pride? It's payback in that we're in a time that needs...

We're in a time that needs pride. And one of the athletes that we had met along the way was this girl named Eleanor Harvey, who was a fencer, right? We ended up looking at who gets money at the end of the day are the tennis players, hockey players,

the 100 meter dash guy. But the fencer is the same type of metal at the end of the day. And we met this girl, Eleanor Harvey, and she was top 10 in the world, but dealing with such a hard path. She was sleeping in her fencing studio at night and cleaning during the day just to pay for her membership. And her parents had to sell their house to support her. And I'm like, wow, she's able to get here

top 10 in the world dealing with all this, if we can remove some of those stumbling blocks, how much better could she get? And so we made her one of the recipients and got her to quit her job and get more coaching. And Canada got its first ever medal in fencing. And she called me that night, imagine from Paris, crying and saying, thank you so much. You're so much a part of this. And it's an unbelievable, that's the return for me, right? It's, it's,

That's the return is seeing that we can actually get these type of results, not just in the stock market, but in everyday life. And now we're trying to do that to make Toronto, to make Canada and the world a better place. What about at the fund level? Obviously, short selling has capacity constraints to it. Is this something that you think can scale even further or are you going to have to layer on other sub strategies to take the fund to the next level?

It's interesting, right? We believe that short selling was capacity constrained. And with COVID and the mean trading, the volumes and liquidity have gone quite large and market caps have gotten quite large. We have had to, you can't just rely on one strategy. You need a bunch of sub strategies. But like I said, you've got to be

true to your core. So the strategies we've added, and getting those six, seven PMs around the sub strategies, the reads, the activism, they work for us and we can articulate a competitive advantage and show it day in, day out on the stuff we're involved in. But yeah, like you said, Max, you have to evolve as you grow, otherwise you will fall by the wayside.

One of the shortcomings that I often see when looking for exciting new managers is they might have the good track record, but then when you ask them, how did you make your money? Can you quantify that?

what specific things you did that you did well that you made your money on. They don't really often have attribution analysis to be able to articulate that competitive advantage. And I think it's a marketing problem from not being able to talk to potential investors and current investors to explain what you do and why it's working or why it's not working.

but also from operationally to just improve and do more of what's working, do less of what's not working, that sort of thing. How do you think about attribution and...

Being sort of rigorous in understanding what works and what doesn't for both of those reasons. Yeah. You know what? When you're a new manager, it's hard to understand the attributions, right? Or articulate what's working, what's not. And does it really reflect in your P&L or how you can show it?

And at the end of the day, you know, we have, you know, because of our growth over time, we have pattern recognition. We have access to our data. We can't cut through, cut through all the information to really see what works and what's not. A good example is we love shorting vols.

And we love when there's euphoria and sentiment around names, stocks go up, but also the volatility on the options moves. And so for us, a stock's already gone like that. And then there's calls here that the vol is not much higher. And you can take an extra few dollars off by shorting those calls.

But what we realized in the post meme world, the risk reward isn't there the way it used to be because you can make $3, but if you're wrong and these things get mean, they can go to 30. So at that point, the data to us suggests you shouldn't be shorting calls the way we used to. So we've really adapted that strategy because the risk reward isn't there. GameStop and AMC and Hertz, great examples. We were in the thick of things during COVID.

And we did very, very well on the long side in our ideal book, but we were still shorting the meme-esque world. And what we realized is when we're normally batting, our batting average is 700, 800. We're usually right. And you're suddenly not getting things right and you're getting them really wrong. You need to just say, listen, it's not working. Cut the strategy. You have to have the fortitude to

And to say, you know what, be objective. When it's not working, cut it. And so we cut risk on the short side during the mean period during COVID and even last year. There were so many companies around AI and data centers and nuclear and quantum. And a lot of these companies have nothing to it, but you can't stand in front of a bullet train.

Yeah. And do you view that as a competitive advantage to be able to dial up and down exposures? I mean, so many funds, they have pretty rigorous mandates to be invested in a particular way, and they don't have as much discretion to be able to say, yeah, we want to take gross exposure down below 100% and take the volatility down.

Yeah, no, it's a great question. And I think that is a competitive advantage I have. People ask, what are my skill sets? You know, there's people who are way more brilliant and smart than me and analyzing companies or looking at financials. But I'm a big believer in, you know, the human psychology and being objective and being able to see around or through the noise.

And so, you know, we can be flexible and say, listen, it's not working. And I tell the managers, like I said, they have leeway. But at the end of the day, I said, listen, this isn't working. We've got to take it down. I think people respect it at the end of the day because it's all for the greater purposes. You know, we'll trade coffee beans if I can articulate or we see a competitive advantage. You know, COVID was a huge thing.

driver of our returns. And now, you know, it was really, you know, going back to March 2020, everybody was in a tailspin. You know, the markets were down, funds were down 20, 25% plus. We were down negligibly, but everybody was feeling that. I remember having a conversation with our managers before everybody left. And I said, guys, there is a real opportunity here. Everybody's got their head in the sand, their shoulder taps and all the pawn shops. Everybody's gone to cash.

trying to deal with what's coming. But with uncertainty comes opportunity. And I said, all the deals we try and do, we were competing against 10 guys. Now there's no one else at the table. We can really take advantage of this. So let's

do it, right? We've got an unbelievable investor base. Our LPs are very supportive. They're ready to rock. And we really were able to see the forest from the trees at that point. And it led to our greatest years, where we made 45% two years in a row, 20 and 21. So did you dive into the structured debt and equity financing side of things in COVID when everybody else had stepped back?

Yeah, Max, that's exactly what we did. Like I took the analyst pool that we're working on REITs and working on other strategies and move them all. We were here working all day, all night on a strategy that normally had one person in it. Suddenly there were eight people. We were reviewing eight to 10 deals a night. We had never traded a SPAC.

before. And at one point in 2020, 21, we had a billion dollar SPAC book because the risk reward was so great on new issued SPACs. You would buy them and then the euphoria would kick around who was involved and they'd go up and the warrants would go crazy. So between the SPAC book and the deal book, um,

So, we really took advantage of that and it was because we were able to pivot and see things objectively. I think most people think about hedge funds as they participate in the public markets. Not that the companies you're doing these structured debt and equity financing with aren't publicly traded, but it's maybe not something people think about for traditional long-short hedge fund strategy.

Is that something that goes back to the beginning of the fund or it evolved over time that you did sort of these direct deals?

Max, it's a great question, which kind of goes back to our DNA. So as I told you, when we launched the fund in the first few years, we were focused on a lot of fraud and scam. And I said, they're either doing it to do a pump and dump or they're looking to raise money. And then when you raise money in pipes, like a public investment in a public equity, you're usually doing it at a discount. And then there's a warrant attached because these are bad companies that can't get financing otherwise.

So I would be short ABCD and I would play that financing

which came whenever, months later or weeks later. And we'd get that free warrant. And I would just fold the warrant. And what I realized was all those warrants were expiring worthless. And because they're all usually bad companies that don't have access to financing. And so I'm like, why are we not taking advantage of this warrant book we have? And again, just being an observer of

interesting and great people. I had a friend of mine from high school named Amin Nafu, and he was working at TD as a portfolio manager. And I said, look, we've got this warrant book. You're an unbelievable engineer, software guy. Maybe there's a way to trade this warrant book a little better. And eventually I convinced him to come on board

to our business. And he ran what became a Delta trading book and doing the pipes as a whole. And then inadvertently you're trading around all these warrants and you're getting access to new deals. And it's become a huge driver of success for us over the years. Now, the SPAC boom obviously subsided a little bit. There are still, it's become definitely more popular than it was before 2021, but it's not quite the same. So when you bring somebody on, you make a big investment in

an area like that, and then the opportunity set dials back, how do you manage that as a business?

You have to be dynamic in your thinking. So like SPACs was our life for upwards of 18 months, two years. And all we were thinking about is new issues and who's going to come with another SPAC and currying favor with the investment banks and the management teams and trying to get allocations. And then one day it stops working and you have to realize it's not working and pivot. And so the mistakes portfolio managers make

is they, you know, rely on a strategy and think that they have to keep going at it. And you have to be able to realize when it's not working. And so, you know, you know,

SPACs was great and you realized one deal wasn't working, second deal wasn't working. You say, listen, let's cut this back. And the same thing happened in our pipeline, right? We did a great amount of deals and deals were great. And then after a while they don't work and you have to realize, okay, three, four aren't working. You got to scale back. You always have to be on your toes, right? So, you know,

We are always agile and able to switch on a dime, right? And that's the benefit of the multi-strategy approach. You aren't reliant on one thing to be your engine. You can, you know, what is the real role of a CIO? You're a conductor.

right? You're literally looking what's worked. The sax guys, the string guys are doing well. Let's put the emphasis on the string guys, right? The strings aren't working so well. Let's go to the trumpet, you know? And then that's the beauty is just being able to see over the horizon and saying, focus on what works and limiting what doesn't. And what is the...

Hot new thing du jour at Anson that you're looking at the market and saying, you talked about the REITs and why you focus there. But outside of REITs, is there anything else that you're like, this is somewhere we need to be putting more focus on?

Yeah, we're constantly evaluating with our team about what areas are a focus and what's in vogue and what should we be focusing on. Crypto keeps coming back. There's a big push. Donald Trump now part of the mandate making part of the US Reserve in crypto. So there's a lot of companies around that. This whole data center world, AI, all of these are big, hot retail topics. And that leads to...

For us, a lot of opportunity to underwrite companies and do deal financings for them. But then also on the flip side, because there's a lot of euphoria, because there's a lot of investor excitement and sentiment, there's opportunities on the short side.

Today, in the regular world, everybody's focused on this MAG7. There's such a concentration in this world on the largest tech companies that have been driving the S&P up. And now we're providing a little bit of headwind. But people don't realize. People are like, oh, I'm a safe investor. I'm passively invested in the S&P. But 30% of the S&P are these companies. That's not what I believe they believe.

think they're investing in. But when you're in a long-term growth market, nobody really sees the risks, right? It's only when you have a hiccup, people start to realize that, you know what, maybe this isn't what I thought it was. And so would you, do you ever own those sorts of

big market leading bellwether companies or pretty much never going to see them in your book? Yeah, I'll never say never. But for generally speaking, we don't traffic in those types of names. We may trade around something in a while during COVID.

I didn't know what was going to, I knew the shorts that weren't going to work and I knew the deals were going to work, but I didn't know what would work. So I go, you know what, let's just buy the S&P, which is going to give us that for a small period we're in the S&P or S&P calls. But for the most part, you know, we're a single stock company.

type fund that we're looking at different situations wherever we are. I have no competitive advantage telling you about Nvidia or Apple. And people, I always laugh, kids will come in for an interview and they start telling me about Amazon and the cloud. And I'm like, what do you really know about Amazon and the cloud? I don't know anything. And most people don't, where you have teams of former people who work there at these larger funds and asset managers, they can potentially articulate a competitive advantage. I definitely can't.

We want to always be a big fish in a small pond. That's the mantis. Every time I look at something, it comes back to that. We touched on it a little bit with the meme stock mania, but just the growth of the options market. Do you find yourself doing more in options as that has grown and become more liquid since the start of your career?

We definitely do a lot of work around options. As I mentioned, we're a little leery of shorting options the way we had historically, but that what you're referring to, we call it the gamma squeeze. So people are, you know, a stock moves like that and it goes to $10 and people are buying the $15 calls and $20 calls and there's a vortex of people moving it up.

And that can have a huge detrimental effect on someone who's short those types of names. We're very actively watching all lines of options on names we're in, and we're very cognizant of that proliferation part of the market as well.

But I mean, specifically, like if you wanted to short a name, maybe in 2010, you probably would have done it by directly shorting it. Now there might be more interesting ways that you can get the size of position that you want in.

inputs or some sort of other option structure that maybe you couldn't have done before just because it's a deeper and more liquid market? Yeah. To me, there's no free lunch. I think the option market is pretty sophisticated. Everybody comes back to looking at Citadel and Ken Griffin. I always tell our guys internally, that option you're trying, that put you're trying to buy, that's Ken Griffin on the other side. These things are very efficiently priced.

like the puts are very expensive on companies that you believe are acting untoward or have a lot of volatility associated with that. So I believe if you want a short of stock, it's best to short the stock because of the merits and issues there and deal with portfolio allocation.

You know, for us, we're very cognizant about risk. You know, we take it on a very sophisticated path. So we look at, you know, our risk, not just on a single name issue, but correlations among other things. And so for us, we take that very seriously. And it's a primary driver of how and when our books get created.

So what would be a big short for you? Like certain activist short sellers are going to try and get as big as they can get given the liquidity of a particular name going into like the release of a report. Other people, their short books are 200 names and they're all like 25, 50 bips, you know, somewhere in there. What's a big short at Anson?

Yeah. So for us, we don't, we're not a very concentrated short bookshop. Like we're generally looking at, you know, 2% positions, you know, on the high side, we do a lot of 50 basis points, a hundred basis point positions. You know, we're looking for singles and doubles on that's prior to strategy. You're never going to get super rich and growth on these types of names without taking a good amount of risk. But we believe that we can come up to bat, you know,

Charlie Rose style, you know, like we can get, you know, just be a guy that gets singles doubles on base, on base, on base. And that's going to lead to a lot of runs where we don't need to hit the home runs on those types of things. I'm from Cincinnati. So Pete, Pete Rose. Yeah. Charlie hustle. That was the, that was the mix up there. Yep. So look, um,

Obviously, you're in your office. We see the Anson Funds logo. So many funds now are mostly remote. They have their staff all over the country in the United States, or they might have an office they come into a couple times a week. How do you think about as you've grown and the teams have gotten bigger, dealing with remote work versus having people in office?

Yeah, Max, it's a very topical question today. We're actually the opposite. We're open office. We want people back. We wanted people back as soon as they could come back, right? For us, it's about open conversations. You come to our office. I'd love to have you here. Everyone sits together, one big open pit. Sometimes it can get a little loud, but I think the collaboration and the multiplier effect we get off each other is worth it. So there's no work from home conversation.

policy here. If you don't like that and it's not part of your DNA, you're probably not for us. The people who are here want to be heard. They want to be part of the action. They were dying to come back as quick as they can. I was the first guy in Windham. I love it. We love it. We live it. We breathe it. To us, these people aren't just people we work with. This is our lives, which all

you know, being about us being together and collaborating and leaning on one another.

You're now having multiple PMs. How do you think about, obviously, the pass-through expenses have gotten a lot of press recently at some of the big multi-managers. You have one portfolio manager who's up a lot. One portfolio manager is down. You got to pay that guy who's up or else they've got incentive to potentially leave. Do you have that multi-manager pod shop style approach?

compensation that you have to deal with, with your PMs? How does it work for you guys? Yeah, no, at the end of the day, it's, you know, these guys are the engines that could and people need to be paid and make money. And, you know, we don't get into that, the nuance about, you know, this versus that. But if someone gets paid and needs to be paid, they get paid, right? People

You know, this is a world where, you know, you're going after something, you're looking to make money and you can figure out, you can figure out the strategy and how much more people are making and people deserve to get paid and they should be paid. You know, if you've earned it, you know, I'd love to pay you. I'm proud of you. You know what I mean? I want to retain the best talent. I want to get the people paid and, you know, you get paid, you make more, you know, and then they want to do it again.

And I think we have a culture here where people like to win and like to make money and they should be paid for it. It's really a family. All right. Well, thank you so much for sharing all this about Anson, about your charities. It's been an absolute pleasure. Hopefully we can do it again. Thank you so much, Max.