Allocator Insights: Part I. Alan Snyder, Shinnecock Partners
About Alan Snyder
Alan C. Snyder is the Managing General Partner of Shinnecock Partners, a 28-year-old family office investment boutique.
Present – General Partner, Shinnecock Group; Chairman and Board Member, Western Los Angeles Boy Scout
Formerly – Founder, Snap Insurance LLC; Founder, Chairman, CEO, Answer Financial (largest non-carrier seller of auto/home insurance in U.S.); CEO, Aurora National Life Assurance; Executive-in-Charge, Executive Life; President/COO First Executive Life ($20bn in assets); E.V.P./Board Member, Dean Witter (predecessor to Morgan Stanley), launched Discover card as part of a three-member team; CEO Comspec (film production company); Baker Scholar, Harvard Business School; Wall St. Journal Award, Georgetown University; Boy Scout’s Americanism Award/Silver Beaver
Prologue by Ole Rollag
Investment management can be a funny business. When it comes to fund management, there are 1000’s of books that will open the door to buying stocks, bonds, managing portfolios, etc.
However, when it comes to buying third party funds, it is a different story. Third-party fund allocators have a very difficult time because the level of complexity is so high. Not only do you need to ask yourself if you want to be in an asset class, but then you also have to ask yourself who are the best managers in that asset class and will they actually do what they say they will.
My grandfather was a veterinarian. Until I was 18, I thought he was basically a second-order doctor (NOT 2nd rate!). What I meant was that although operating on animals was a very noble endeavor, he wasn’t a brain surgeon operating on humans.
Then someone pointed out that veterinarians, in many ways, need to be more skilled than human doctors. Animals can’t tell you where they hurt. Not only that, you need to learn a huge variety of different anatomies and issues that animals have; from horses to hounds.
I think in many ways third-party fund allocators are in the same boat. It is easier to manage a portfolio of equities than it is to manage a group of different equity managers. It is often a very complex and under-appreciated job.
You cannot find 1000’s of books to guide you through the challenges of third-party fund management. In fact, I haven’t even found one! Nor is there an association of allocators. If anyone knows of something like this, please do share.
Most allocators have to learn the hard way. This is one of the reasons why we publish Allocator Insights; because if we publish enough information, eventually the industry could get a better sense of what is going on.
Like the veterinary practice, allocating is a dark art in many ways. Fund Managers don’t often know why they are special or how to convey this clearly. Allocators have to get past a lot of noise in order to understand the value a manager brings.
This brings us to Alan Snyder. Alan is a veteran in the industry and if you remember the name Drexel Burnham Lambert, you will appreciate his street cred. Alan now specializes in alternative lending and has written a number of blog posts explaining a myriad of ideas relating to this space. For the purpose of compliance, we are not recommending, endorsing, or anything else for Shinnecock.
We must also point out that Alan is one of a number of experts in this field. However, he is one of the only third-party allocators that has lifted the veil when it comes to allocating to third party managers. In doing so, we can start to appreciate the amount of work carried out when it comes to giving a ticket. Because of the multiple factors involved, it can be a mind boggling job.
Instead of doing our usual interview, we have decided to break away from the typical format in order to bring you two thought pieces:
- The real effort and work undertaken when it comes to due diligence in order to allocate to a manager.
- Why they divest.
We know that we are breaking away from our traditional 1000 word essay but, it seems unfair to do otherwise. We will publish three issues over three days, this one being the first. We hope you enjoy.
For the PDF version of this interview, click here