Macro Challenges and Credit Opportunities: Davidson Kempner’s Tony Yoseloff
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To another episode of Goldman Sachs Exchanges for Great Investors. I'm Tony Pascarello, Global Head of Hedge Fund Coverage in Goldman Sachs' Global Banking and Markets. Division. I have the pleasure of speaking with Tony Yosalov, the Managing Partner and Chief Investment Officer of Davidson Kempner Capital Management. Davidson Kempner is a hedge fund with approximately $37,000,000,000 in assets assets under management. Tony joined Davidson Kempner in 1999 and has helped navigate the firm through market cycles along the way. While Davidson Kempner has many different strategies, the firm is know
So Davidson Kempner actually started out as Marvin Davidson's family office. Marvin Davidson was a senior executive at Bear Stearns in the 1970s. He left in 1981, and his goal was basically to be able to manage his own money in a way that was non correlated to the overall markets, but to still be able to generate strong returns. So he started literally in his townhouse. This was in the Basement Floor of a townhouse on the Upper East Side. Give me a year.
When was this?
So 1983 is when the firm started. Tom Kaptner joined him a couple years later. And the idea was to basically pair investing in opportunistic credit situations, which was Tom's expertise from his time at Goldman Sachs, to investing in different arbitrage situations, particularly risk arbitrage because that would have been big in that era. And those were some of the areas that Marvin ran at Bear Stearns. Fast forward to 1987, Tom approached Marvin, said, hey. I think we got a good thing going here. Maybe we can take in some outside money. So Marvin said, well, I don't wanna spend my time on this
And what would you say makes the firm unique? Well, it's interesting.
If you start from what we've become, and again, the origins of Davis and Kempner was we would have been one of the early absolute return firms, I do think we have a fairly unique mixture of public equity strategies, public debt strategies, and private debt strategies all rolled into one institution. You certainly have institutions that have each of those individually of a size and scale that are equal to or greater than ours, but you don't have that many folks who bring them all together. You know, in our absolute return related strategies, we think it's important to have a healthy combination
Let's drill into the markets today, the setup today. What are you and your partners most focused on?
You know, there's a few things that are really of interest in our areas of opportunistic credit and event driven investing, which are really the areas that we focus on. So I'll talk about a few big themes. The first theme I wanna talk about is interest rates. And I know the excitement if you read the newspaper in 2025 is the fact that we're likely to have lower base rates in The United States. It's all been telegraphed by the administration in terms of where things are likely heading, and the Fed seems to be starting to move along. To me, the bigger interest rate story that we're still unlocki
of time on at DK. Let's talk about the business cycle. Each investor is gonna have their own way of thinking about the business cycle. And in a way, you've referenced a couple different ones already. In a way, COVID, the COVID era each year has, under itself, almost been its own business cycle, I think 2020 versus 2022. I'm curious. When you walk in the office every day, how much of your process is trying to assess the cycle? And I think what I'm trying to get at is how much is a top down versus a bottom up process?
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