Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund
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Welcome to another episode of Goldman Sachs Exchanges Great Investors. I'm Tony Pasquarello, global head of hedge fund coverage in global banking and markets and co head of OneGS. And today, I have the great pleasure of sitting down with my friend Paul Britton. Paul is the founder and CEO of Capstone Investment Advisors, a global investment firm with about 11,000,000,000 in assets under management. Capstone focus is on derivatives and strategies that capture alpha and protect against downside risk. Capstone recently celebrated its twentieth anniversary, and so this will be a great opportunity
You're welcome. Glad to be here. Thank you for the invite.
So I wanna get your take on the current environment, but let me just go back to the beginning. Let's just start the beginning of Capstone. What were the origins? What was the impetus? Why did you decide to launch the business in 02/2004?
My DNA is in the options market making space. And we we built a relatively successful firm, and then I moved over to The States in 02/2001 to look to expand our European operations into The US. By kind of 02/2004, I realized that the market making business and the providing liquidity business was really becoming a technology arms race. So the more capex you would spend, the higher probability that you had of being the most successful in the game. So it felt to me that it was a winner takes all game. Mhmm. And who knows? Today, I could be sat here of having Capstone Securities and competing alo
Right. And who knows? But I think we probably agree. The instinct was probably correct that the path you you struck was the right one.
I listen. I can't complain Yeah.
That I
sat here with you. 11,000,000,000 of a million lender. And I remember distinctly people being like, gosh, mate, if you ever get to a billion dollars, and that sounded incredibly scary to me. And then you just you trust the process, you trust the people around you, and you're sharing your story and your vision with investors to be able to see whether investors buy into that narrative and that story as well.
And along that path, when was the first moment where you thought, okay. I think I'm I think I'm on to something big?
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