Chris and Rob Michalik are twin brothers and co-founders of Kinderhook Industries, a middle-market private equity firm overseeing $8 billion focused on healthcare services, environmental services, and the automotive aftermarket. Chris and Rob joined me on Private Equity Deals to discuss one of their portfolio companies, Ironclad Environmental Services, and that conversation is replayed in the feed. This time around, we discuss their story attached at the hip. We cover their background and path to starting Kinderhook, including rooming together for the first 26 years of their lives. We discuss the firm's family-like culture, three pillars of its investment approach, unwarranted scrutiny of private equity in the healthcare sector, and the recent example of their purchase of Stewardship Medical Group out of the bankrupt Steward Healthcare.

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On episode eight of season three of Private Equity Deals, Chris and Rob Michalik discuss Kinderhook Industries’ investment in Ironclad Environmental Services.

Chris and Rob are twin brothers and co-founders of Kinderhook, a twenty-year-old private equity firm that manages $5 billion specializing in middle-market businesses across healthcare services, environmental services, and automotive/light manufacturing.

Ironclad Environmental Services is a leading provider of logistics-based solutions focused on the containment of industrial waste. It has 50 branches and a fleet of 29,000 specialized rental assets that store, separate, and transport liquid and solid industrial waste.

Our conversation covers Kinderhook’s identification, due diligence, and negotiation of the deal. We discuss a significant early add-on acquisition, progress-to-date, and the future of Ironclad.

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Scott Bessent is the CEO and CIO of Key Square Group and a renowned global macro investor. His 40-year investment career has included two stints at Soros Fund Management, the first for a decade under Stan Druckenmiller and the second for five as CIO. In between, Scott launched a hedge fund, retired, and joined me at Protégé Partners when he learned retirement wasn’t for him.

Following his second tour at Soros, Scott started Key Square with $4.5 billion, one of the largest hedge fund launches in history. Scott has been profiled in two best-selling investment books, Steve Drobny’s Inside the House of Money and Sebastian Mallaby’s More Money than God.

Our conversation covers Scott’s investment path learning research from Jim Rogers, short selling from Jim Chanos, global macro investing from George Soros and Stan Druckenmiller, and twice hanging his own shingle. We discuss high-conviction ideas, asymmetric asset selection, position sizing, risk management, a hub and spoke approach, and core challenges of the global macro hedge fund business. 

I once told Scott that he could read the newspaper six months ahead of time because I had never encountered someone with his ability to connect dots and imagine investments others had not considered. His interest in improving the country’s economic picture has led him to shed his publicity-shy nature, and I’m grateful for the opportunity to share his story. Take Capital Allocators Audience Engagement Survey

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Ricky Sandler is one of the OGs of fundamental long-short equity investing. Ricky started managing a hedge fund thirty years ago and founded Eminence Capital a few years later. Today, he is the CEO and CIO at Eminence, where he oversees $7 billion across long-short, long-only, and long-extension strategies.

Our conversation covers Ricky’s path to launching Eminence in his twenties and the evolution of long-short investing in the decades since. We dive into Eminence's culture, adaptation in the investment process, and creation of investment products to meet the needs of allocators, each of which has been an essential part of the firm’s ability to survive and thrive amid changing market dynamics.

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The Yale Investments Office will soon select its first round of Prospect Fellowship recipients. I’ve been thinking about why Yale launched the Fellowship and what might happen as it rolls out. Yale, emerging managers, and other allocators have opportunities and risks arising from the program, including some potential unintended consequences. Read Ted’s blog here.

Brad Briner is the leading candidate for the Treasurer of North Carolina in the upcoming November election, a role that includes managing the state’s $115 billion pension fund. Brad put himself in the ring for the seat after twenty-five years of investment experience, serving most recently as Co-CIO of Willett Advisors, Michael Bloomberg’s family office. For more background on Willett, my conversation from 2019 with Chairman Steve Rattner is replayed in the feed.

I don’t often get to talk about really poor investment performance on the podcast, but this time we do. North Carolina has finished dead last among peers over the last three and five years, that’s 50th of 50 states. Its twenty-year returns are almost equally dismal. This significant underperformance resulted from an overlay conservative asset allocation that will leave you shaking your head. Unfortunately, it’s what happens when unsophisticated professionals are tasked with serious investment jobs.

Our conversation covers Brad’s story, investment and leadership insights from his experience and time at Willett, the problems with North Carolina’s investing and governance, and Brad’s desire and plan to turn around the state’s pension performance.

I’ve known Brad for ten years and want to do everything I can to help him both win the important seat and succeed once there. So if you happen to live in North Carolina, please get out and vote – every vote truly counts in low turnout races like thisIf, like most of us, you don’t live there, please tell any friends you have who do live in the state. Lastly, if Brad is successful at the polls, he’ll need to build out a team with talented professionals who share his passion for investing and making a difference. Maybe you can help there too.

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Steve Rattner is the Chairman and CEO of Willett Advisors, which invests former New York Mayor Michael Bloomberg’s personal and philanthropic assets. Steve’s career has ranged from a journalist for the New York Times to investment banking at Lehman Brothers, Morgan Stanley and Lazard Freres, to founding private equity firm Quadrangle Group, and lastly to serving in the Obama Administration as head of the successful restructure of the automobile industry after the financial crisis. He returned to oversee Willett Advisors after his work in the government.

Our conversations starts with a quick tour through each of Steve’s careers, and then turns to his work investing the assets of Michael Bloomberg’s family office, including selecting an investment model, building a team of specialists, using internal management to supplement external managers, and thinking through private equity, hedge funds, public equity, and the manager selection process. We close with Steve’s perspectives on China and his ongoing engagement in politics.

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Matt Miller is the Managing Director of Grey Rock Investment Partners. Matt co-founded Grey Rock as a traditional oil and gas manager in 2013. Today, the firm manages $1 billion across both natural resources and renewables by identifying attractive niches in each that do not tradeoff human interest for returns. Our conversation covers Matt’s path to the energy sector and founding of Grey Rock, the ongoing need for natural resources, and the identification of dislocations that create niche opportunities. We turn to Grey Rock’s own ‘energy transition’ intended to resolve ESG pressures while meeting client return objectives, including the overcapitalization of most renewable strategies, discovery of an attractive niche in carbon capture, and complexity in making it work.

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Kristof Gleich is the President and CIO of Harbor Capital Advisors. Harbor is a forty-year old firm that manages $62 billion by partnering with boutique active managers to roll out active ETFs, collective investment trusts, and historically, mutual funds. Kristof joined Harbor in 2018 and watched as the actively managed mutual fund company had $22 billion of outflows, or a third of its assets, in his first year on the job. He led a turnaround of the business to transition from a traditional mutual fund company to an innovative leader in the active ETF space. Our conversation covers the lessons Kristof learned about culture from his time at Goldman Sachs and JP Morgan, and his application of those lessons to turnaround Harbor. We discuss the challenges of making it happen, the rise of active ETFs, Harbor’s approach to standing out in a crowded field, its manager selection process, distribution, and the future of alternative investments in the ETF space.

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Stephen Nesbitt is the CEO and CIO of Cliffwater, an investment consultant and asset management firm specializing in alternative that oversees a combined $110 billion, including $30 billion in private market interval funds that begin just five years ago. Steve founded Cliffwater in 2004 to serve the burgeoning institutional market for alternative investments and bet the farm with a pivot to managing private credit assets for RIAs in 2019. That shift has been one of the most successful initiatives in the industry in the last five years and catapulted Cliffwater to one of the market leaders and brands serving the RIA community.

Our conversation covers Steve's journey as a consultant, formation of Cliffwater, and focus on alternatives. We then discuss his strategic shift to managing assets for RIAs, including the development of a private debt index fund, innovation in fund structures, management of liquidity, distribution in the RIA channel, and new initiatives on the come.

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