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And welcome everybody to another
Smart Money Circle show. 

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I'm Adam Sarhan. 
With me today is Kurt Nye, who's

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the CFA. 
He's the Group Head of 

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Alternative Investments and 
Managing Director at Mai Capital

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with approximately 17 billion in
assets under management. 

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Kurt, thank you so much for 
taking the time and welcome to 

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the Smart Money Circle. 
Thank you, Adam. 

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Thank you for having me. 
So it was like to begin. 

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Kurt, can you tell us a little 
about your story and how you got

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to where you are today, please? 
Sure so. 

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Yeah, maybe starting with the 
company and then I'll weave in 

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my my personal story. 
Mai has a really interesting 

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history. 
So we're actually going to hit 

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our 50th anniversary this 
December. 

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Thank you. 
And it was originally 

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established as part of IMG, the 
sports agency. 

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And our first client was Arnold 
Palmer. 

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That was true through 2004, when
the agency side of the business 

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and media side of the business 
split from the wealth management

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side of the business. 
And then in 2007, it was 

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acquired by our current managing
partner, Rick Buenicorp. 

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That's where I come in. 
So I I actually interned with 

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Mai in 2007 shortly after Rick 
purchased the firm. 

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I left for a few years and then 
came back in in 2011 to help 

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build out our alternative 
investments practice. 

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OK, got it. 
I love that. 

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So next question, tell us a 
little about your investment 

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strategy please. 
Sure. 

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Our, our investment strategy is,
is really a goals based 

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strategy. 
And so when we look at the 

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investable universe, we break it
into six asset classes. 

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So I would think like like most 
people we have cash equities, 

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fixed income, but then we really
break alternatives into three 

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separate buckets. 
We have income low volatility 

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alternatives which are used as 
complements or replacements for 

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traditional fixed income. 
We have growth alternatives 

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where you're you're really 
investing to try to beat the 

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returns available in public 
markets and that would include 

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asset classes like private 
equity and venture capital. 

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And then we have real asset 
alternatives and and these are 

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asset classes that confer a 
degree of protection from 

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inflation. 
So think about things like 

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operating real estate where you 
can push along rental increases 

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in inflationary times or things 
like infrastructure which may 

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have contractual CPI based 
escalators. 

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Or maybe able to pass along 
increases just based on their 

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monopolistic characteristics. 
Oh, nice. 

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So for you as an alternative 
manager, are you? 

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What are your correlations? 
I'm assuming it's not the S&P 

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500. 
What are some benchmarks that 

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you look for? 
And then do you look for 

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uncorrelated assets or how 
exactly do you set up 

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portfolios? 
All all of the above our our 

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focus is on understanding the 
economic drivers of the 

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investment and the associated 
risks. 

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And and so maybe diving into a 
couple examples would would give

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you a feel for our, our 
philosophy. 

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So in the income low volatility 
alternatives bucket, one of the 

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areas that we've been in in like
since 2011 has been triple net 

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lease real estate. 
And and I'll tie this back to 

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the the risk conversation in a 
minute, but in a triple net 

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lease that means the tenants 
responsible for the taxes, the 

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insurance and the maintenance, 
the rent check you collect every

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month. 
It is basically your net 

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operating income and we we found
a group that specializes in 12 

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net lease real estate with 
investment grade tenants on long

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term leases. 
And and so for us the way we 

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view that from a risk 
perspective is that it's really 

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becomes a credit risk play on 
the credit health of the tenant 

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and in fact you can underwrite 
it to the building being 

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worthless at the end of the 
lease and still achieve single 

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digit net IRR. 
That's not a real estate 

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investment. 
Or said another way, most real 

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estate investments we look at, 
if you assume the building's 

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worthless, things have gone 
very, very wrong, Right? 

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Yeah, right. 
And so when we look at that and 

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you asked about how we think 
about the risks and the value 

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and why you'd want to go into an
alternative, we started off and 

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we looked at. 
OK. 

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Well, for the same credit risk, 
what can we achieve if we're 

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investing in the bonds of the 
same same issuer? 

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And is there a positive spread 
to be gained by accessing this 

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credit risk through the triple 
net real estate? 

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Then we looked at, OK, are there
any public market ways of 

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accessing the same asset class 
all else equal, we'd prefer to 

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go into a liquid strategy in the
public markets, right. 

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It's it's easier. 
You're not a liquid. 

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But when we looked at the public
markets and there are some large

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triple net reads, you ended up 
with a couple of things. 

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You had valuations that they 
were much higher than private 

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markets and that's not always 
true, but it was in this case. 

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And then you also had the credit
quality of the portfolio wasn't 

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100% focused on investment 
grades. 

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So it it, it just wasn't the an 
apples to apples comparison. 

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So then we looked at. 
When we had the public markets 

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we looked at then, are we being 
compensated for the additional 

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risks of going the private 
route? 

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Are we being compensated for 
being a liquid? 

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Are we being compensated for the
fee structure? 

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Does the structure of the 
private investment do a good job

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of aligning incentives and we're
able to kind of check all those 

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boxes and eventually make it to 
where we're comfortable making 

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an allocation for our clients, 
understood. 

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So that makes that makes sense. 
So let's talk about risk a 

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little bit deeper. 
How do you manage risk? 

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I know you do mostly private 
investments. 

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And what are some mistakes do 
you see people make with respect

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to risk management, please? 
Sure. 

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So maybe the first thing about 
risk that we think about is we 

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want to make sure that we can 
understand the thesis of the 

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investment. 
We really want to dig in on the 

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economic drivers. 
We don't think we can get our 

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arms around a particular 
investment. 

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We'll we'll just pass on it. 
You know, the investable 

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universe is large enough that 
that we don't, our philosophy is

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we don't need to try to hit 
every good opportunity, we just 

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want to avoid the blow UPS as as
much as we possibly can, right? 

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Right. 
And so that becomes kind of 

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paramount first understanding 
the thesis, make sure it also 

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fits with MA is view of the 
world. 

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You know, if the rest of our 
investment committee is going in

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One Direction, the alternative 
scheme doesn't want to bring an 

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idea that contradicts that. 
And so that's number one. 

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Once we've identified A thesis 
that that we like, we want to 

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find what we believe is the best
possible organization to execute

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on that thesis. 
We're big believers that you you

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want to allocate to the the 
right team and that people 

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really, really matter on the 
execution side. 

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What does that mean for us? 
That means we're going to look 

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for groups that have had 
sustained track record of 

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success over multiple market 
cycles. 

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I think an interesting example. 
And and very different today 

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than if we were having this 
conversation a couple years ago 

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is in the venture capital space,
right you you've seen a huge DE 

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rating of multiples and what 
you've seen is a lot of mark to 

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market performance fade away and
and some of it that hasn't faded

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away might might fade away and 
maybe future investor updates. 

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And so we don't put a lot of 
emphasis or give a lot of weight

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to an unrealized track record. 
We want to invest. 

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We will like that multiple 
market cycles of experience 

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because when you're doing a 
private long term investment, if

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the odds are pretty high that 
there's going to be a recession 

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at some point during your 
holding period. 

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I I don't know if the next 
recession is going to be in in 

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three months or in three years. 
But if we're making an 

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investment that's going to last 
for the next 10 years, odds are 

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at some point there's going to 
be some kind of economic 

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challenge, right. 
So we're big believers in the 

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team. 
What we'll do once we've 

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identified the thesis and the 
team as much as we possibly can,

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is try to bring expertise in 
from our professional networks. 

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Sometimes we've honestly had 
clients who are executives in 

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certain areas be able to help us
out and we'll try to validate 

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what we've understood in the 
thesis and the team. 

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We recognize that it's a big 
world out there. 

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It's it's impossible for us to 
know everything. 

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And so we'll try to bring that 
expertise to help us make sure 

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we don't have any blind spots. 
And then we'll look at the 

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structure, you know private 
investing for better or worse, 

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each opportunity can be 
structured a little bit 

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differently and and specifically
in the structure you're going to

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see different economic 
arrangements with sponsors. 

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Sometimes they do a very good 
job. 

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We think of aligning incentives 
for instance we're not against a

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market rate performance fee or 
or better. 

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You know, we're going to try to 
negotiate for better. 

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But what we don't like to see is
a compensation structure where 

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even if the investment sponsor 
delivers mediocre results for 

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our clients, they're paid very 
handsomely. 

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We think that's a just a poor 
alignment of of incentives. 

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The other thing that we like to 
do when we're going through the 

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the legal documents is we like 
to see protections for our 

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investors, you know, I think in 
in the liquid markets if you 

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decide you don't like a stock 
tomorrow. 

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You sell it right, pretty 
straightforward. 

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On the on the private investment
side, it's it's not it's much 

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more of a a marriage versus 
dating and you're in it for the 

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long term and you want to make 
sure that you're protecting your

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investors along the way. 
So what is, what are ways of 

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doing that? 
We like to see discretion within

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a box where the investment 
criteria are really laid out for

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the investment sponsor if we're 
investing with them for a 

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particular set of skills or 
expertise. 

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We don't want to hear about how 
they went another direction at 

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at our next update, especially 
because we're not making an 

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investment in isolation, we're 
making it in the context of an 

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overall asset allocation 
framework with very targeted 

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risk exposures in mind. 
So that's those are our three 

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big areas, the thesis, the team 
and the structure and and we 

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emphasize those during our our 
diligence process. 

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Got it. 
And that makes perfect sense. 

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So with respect to exiting when 
something's wrong, let's say the

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thesis is busted. 
I had somebody on the show tell 

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me that literally that line 
before and with with 

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alternatives and it's not liquid
stock you can sell it or futures

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or currencies, something along 
those lines, it's liquid but in 

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your world it's not liquid. 
So assuming things don't work 

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and I love what you said earlier
about avoid the big blow UPS, I 

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mean that's almost the name of 
the game, right? 

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If you could do that, then the 
upside will take care of itself.

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How do you know when A when 
you're wrong thesis is busted, 

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and then B how do you make sure 
that that risk is manageable? 

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Is it a position size initially 
with the allocation going into 

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it so even if it does go to 
zero, you're not totally wiped 

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out? 
Or are there other things that 

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you do along the way to be like,
hey, we made a mistake here, we 

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need to exit? 
How do you know when you're 

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wrong? 
And then how do you exit in 

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illiquid situation? 
Yeah, it's a great question. 

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Ultimately, you know when you're
wrong, when the investment 

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doesn't, doesn't work out and 
doesn't hit the kind of return 

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objectives that you originally 
set out. 

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We spend a lot of time on the 
front end because that's that's 

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really once you've made your 
allocation you're you're in 

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right. 
So on the front end we want to 

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go understand those those risk 
drivers, those economic drivers.

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And then what we do when we're 
thinking about making an 

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allocation to any alternative is
we work very closely with our 

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our CIO to figure out a maximum 
allocation size and we're going 

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to vary that allocation size 
depending on our perceived risk 

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of the. 
Alternative investment. 

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So in something that's more 
concentrated we're going to set 

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a a very small Max allocation 
size and something that's more 

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diversified we're going to go a 
little bit larger. 

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So I think that's why we spend 
so much time because if you if 

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you messed up on on that 
understanding of risk that's 

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where I think you get into 
trouble. 

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You know if we're, if we're 
talking about a high risk, high 

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return type investment and you 
can speak clearly to the. 

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Return potential but also the 
risks and it it goes down I 

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people I think generally people 
understand that like we're 

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taking risks we're we're trying 
to hit those higher returns if 

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that doesn't work out no one 
wants that but it it can happen 

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right. 
I I think the issue comes in if 

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you have a misalignment of 
understanding where you think 

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something and you present it as.
I think this is lower risk. 

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And then it ends up actually you
misunderstood it and it ends up 

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being higher risk. 
And I think one of the 

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challenges in in private 
investing as it relates to risk 

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is that when you think about 
comparing stuff to public 

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markets, you're you have a few 
really hard challenges. 

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So first the the data available 
in in private investing it is 

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much, much more sparse, right. 
You don't have these huge. 

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Manicure databases of data. 
There's no crisp database on on 

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the private investment side, 
there are data providers. 

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We use them. 
They're not perfect. 

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And then when you're thinking 
about the statistics on on 

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private investing, you always 
need to take them, I think with 

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a grain of salt. 
So I I've seen for instance 

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some. 
What I think are egregiously 

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high reported sharp ratios. 
OK, I see what you're saying. 

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Driven by kind of like super low
volatility numbers and if you're

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not having a true mark to market
process underlying the 

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investment then I think you need
to approach those with a a very 

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high degree of of skepticism. 
You know if you if you see a 

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sharp ratio that that exceeds 
the medallion fund, right then 

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then like. 
Take a step back and say that 

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that probably doesn't doesn't 
actually exist. 

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Maybe these numbers are off and 
that kind of those statistics I 

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think sometimes are used from a 
a marketing perspective and I 

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think that's where people can 
get in into trouble. 

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Yeah, that makes sense. 
Yeah, because it's misleading 

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and they're they're looking at 
the wrong thing so to speak. 

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But yeah, that's a really good 
point. 

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OK, beautiful. 
So basically for the risk is 

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initially going into it, you're 
going to to determine how 

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aggressive quote UN quote you 
should be or how much risk you 

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should take. 
And then when you're in it, 

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you're in it. 
And then if you need to exit you

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can find the best ways to exit 
but you you're protected biggest

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initially you size it 
accordingly. 

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So even if it doesn't work out, 
you're not going to get 

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annihilated or have those big 
blow UPS in the portfolio 

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because the size itself is small
or is appropriate going into it.

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That that's right. 
And we also try to view these 

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asset classes. 
As as asset classes and you know

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I I mentioned before but I I 
can't predict the economic 

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cycle, right. 
And I would think most people 

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would also admit the same same 
thing. 

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And so we look at it as you want
to invest across economic 

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cycles, which means investing in
different vintages or years the 

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investments start because what 
you find when you look at the 

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private investing world is there
are certain vintages that are 

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the best performing you know. 
Those finishes tend to coincide 

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with times where it's difficult 
to to allocate capital, where it

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feels uncomfortable to allocate 
capital intuitively, right, like

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the buy lows kind of idea. 
But we want to make sure that 

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when we're speaking to our 
clients about private markets 

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investing that they're taking 
that systematic approach when it

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00:15:40,920 --> 00:15:45,880
feels easiest to make a private 
allocation exactly like it's 

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probably the exact time where 
you should be more a little more

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cautious. 
Right. 

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And I think that the 
conversation we're having right 

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now, the timing is, is really 
interesting because you've 

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actually seen a lot of capital 
pull back out out of private 

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markets. 
And when we talk to sponsors 

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across different asset classes, 
they're seeing opportunities now

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that that they haven't really 
seen since the GFC days, right? 

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00:16:12,520 --> 00:16:15,240
No, makes perfect sense. 
Beautiful shift the conversation

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a little bit. 
Curt, let's talk about some 

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timeless lessons you've learned 
along the way that you'd like to

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share with the audience, please.
Sure. 

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So I I would say that the first 
lesson I've learned is you never

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00:16:26,600 --> 00:16:29,920
stop learning. 
So I I've, I've done a lot of 

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formal training whether it's 
going going the NBA route at the

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University of Chicago, which was
a wonderful experience or going 

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00:16:39,200 --> 00:16:42,720
through the CFA program which is
also a wonderful experience. 

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But but things one, one of the 
great things about our industry 

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is that the opportunity set is 
always changing. 

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And because of that the risk set
is always changing. 

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So that that's something that 
gets me excited and and kind of 

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charged up to go into work every
day and and kind of tackle that.

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But you, you never stop 
learning. 

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You know you're always the risk 
sets changing and everything. 

315
00:17:07,680 --> 00:17:11,200
How about timeless mistakes? 
Timeless mistakes. 

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Oh jeez. 
So in terms of mistakes, I would

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say. 
Actually, more like no matter 

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00:17:20,960 --> 00:17:23,760
how good your thesis is, no 
matter how much work you've 

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00:17:23,760 --> 00:17:26,800
done, there's always, there's 
always some chance that that 

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00:17:26,800 --> 00:17:30,400
things go wrong, right? 
We we spend and it's really 

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00:17:30,400 --> 00:17:32,520
frustrating. 
So we spend an inordinate amount

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00:17:32,520 --> 00:17:35,520
of time trying to go through the
thesis, understand it. 

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00:17:35,520 --> 00:17:38,120
Sorry, Kurt. 
Kurt, it really is frustrating. 

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00:17:38,120 --> 00:17:40,280
I I feel you're 1000% sorry. 
Go ahead. 

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00:17:40,800 --> 00:17:45,240
So, so I think the humility to 
know that no matter how much. 

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00:17:45,800 --> 00:17:47,640
Effort you've put in. 
No matter how much time you've 

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00:17:47,640 --> 00:17:49,200
put in things can still go 
wrong. 

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00:17:49,560 --> 00:17:53,240
And to make sure that your 
allocation sizing reflects that 

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00:17:53,240 --> 00:17:56,400
fact. 
It is kind of the lesson from 

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00:17:56,440 --> 00:18:01,520
mistakes and some of you know, I
can think of like my my personal

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00:18:01,520 --> 00:18:04,240
experience of of really just 
researching, digging in and then

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00:18:04,240 --> 00:18:06,920
something comes out of the left 
field and and you're like, Oh my

333
00:18:06,920 --> 00:18:11,880
gosh, 100 percent, 100%. 
That is so incredibly powerful. 

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00:18:11,880 --> 00:18:14,000
The humility side of it, 
understanding you're going to be

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00:18:14,000 --> 00:18:17,560
wrong, planning for those 
inevitabilities and then making 

336
00:18:17,560 --> 00:18:19,640
sure when you are wrong you're 
wrong as small as possible. 

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00:18:19,640 --> 00:18:22,080
I think is is really, really 
just magic. 

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00:18:23,200 --> 00:18:25,360
OK. 
Next question for you Kurt, What

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00:18:25,480 --> 00:18:27,520
is the best piece of advice 
you'd like to share with the 

340
00:18:27,520 --> 00:18:29,480
audience or give your 20 year 
old self? 

341
00:18:31,800 --> 00:18:34,920
So my best piece of advice I 
would share with the audience is

342
00:18:34,920 --> 00:18:38,000
that when you're making an 
investment and I I would say 

343
00:18:38,000 --> 00:18:40,760
this is true whether it's a 
public investment or private 

344
00:18:40,760 --> 00:18:43,440
investment. 
Make sure you're comfortable 

345
00:18:43,720 --> 00:18:46,320
with understanding how it how it
works. 

346
00:18:46,960 --> 00:18:51,200
I I've seen cases where 
someone's come to us with 

347
00:18:51,200 --> 00:18:54,960
pre-existing pre-existing 
investment portfolio and you ask

348
00:18:54,960 --> 00:18:57,600
them well how did how did this 
investment end up in there how 

349
00:18:57,600 --> 00:19:00,600
did that one end up in there 
They're like well my my friend 

350
00:19:00,600 --> 00:19:03,080
was doing it or I kind of felt 
pressure to do it. 

351
00:19:03,120 --> 00:19:05,000
I didn't really fully understand
it. 

352
00:19:05,560 --> 00:19:08,480
And and and that's not, that's 
not ideal, right? 

353
00:19:08,480 --> 00:19:11,240
You you're going to care the 
most about your own. 

354
00:19:11,720 --> 00:19:12,960
Portfolio. 
You want to have trusted 

355
00:19:12,960 --> 00:19:14,760
advisors. 
You need to understand how your 

356
00:19:14,760 --> 00:19:16,360
investments work. 
And there are enough good 

357
00:19:16,360 --> 00:19:19,320
investments out there where 
you'll be able to do that that 

358
00:19:19,320 --> 00:19:22,520
you don't need to stretch out 
outside of your comfort zone. 

359
00:19:22,920 --> 00:19:24,160
Got it? 
Got it. 

360
00:19:24,160 --> 00:19:25,880
That makes perfect sense. 
Well, beautiful. 

361
00:19:25,880 --> 00:19:27,280
Kurt, thank you so much for 
coming on the show. 

362
00:19:27,280 --> 00:19:30,200
What is the best way for people 
to learn more about Mai Capital 

363
00:19:30,200 --> 00:19:32,720
or get in touch with you? 
Or where would you like people 

364
00:19:32,720 --> 00:19:33,880
to go? 
Yeah. 

365
00:19:33,880 --> 00:19:39,200
So our website is 
www.mai.capital. 

366
00:19:39,480 --> 00:19:44,720
No.com we are able to grab a dot
dot capital domain and then my 

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00:19:44,720 --> 00:19:50,320
e-mail address, if anyone wants 
to reach out is KNYE at Mai dot 

368
00:19:50,320 --> 00:19:51,840
capital. 
Beautiful. 

369
00:19:52,040 --> 00:19:53,800
Well, Kurt, thank you so much 
and hopefully we'll have you on 

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00:19:53,800 --> 00:19:55,240
again soon. 
Awesome. 

371
00:19:55,240 --> 00:19:55,800
Thank you, Adam.