James “Jamie” Dinan founded York Capital Management in September 1991. It manages USD 20bn AUM. Jamie previously worked at the well-known 1980s Wall Street firm Donaldson, Lufkin & Jenrette, Inc. In the 1987 crash, he lost his entire personal fortune of USD 600,000. His personal net worth today is an estimated USD 2.2bn.
“I started with 3.6m AUM, it was just me and the secretary.”James “Jamie” Dinan
“I kept telling myself: ‘If you build it, they will come.’ The first few years were lonely.”
“I believed if I took the numbers up, they will come. And they came, and came, and came. And now we have USD 20bn AUM.”
“Information has completely changed. In many ways, investing was a lot easier before the Internet. The Internet democratised nearly everything, including information flow in the investment industry.”
“We got newspapers the day before they came out. You had to know how to get them.”
“We got on the phone and rang people on the ground. Dialling for dollars.”
“Wall Street firms gave their best clients a heads-up. It was a grey area. That’s how research was paid for. In 1999, the SEC made everyone get treated the same.”
“It used to be about getting information. Then it became about judgement.”
James “Jamie” Dinan on the question: “Where will money be made in the future? “
“The big money will be made in the growth space because the market size is so huge. Scalability, global. Disruptive technologies!”
“In Europe it’s all this bank deleveraging trades. There we don’t compete with any of these alpha-buster data-mining quant companies. You are in a bespoke market.”
“In the listed space it is EVERY market outside of the US. Less machines over there. You are not allowed to park your computer 20 inches from the exchange, in the US you are allowed to rent this space. Sometimes you want to go where it’s less competitive. If you really want to pick stocks, you want to pick them outside of the US. Besides that, go to where the rocket scientists cannot go and it’s more of a people’s business.”
“I spent the first seven or eight years of my time at York spending 95% of my time on research to get that edge. It was only then that we hired our first marketing person.”
James “Jamie” Dinan on AUM: “As a smaller manager, you can do things that large-cap managers cannot do. If you can trade small- and mid-caps then you probably only trade against peers like yourself, and you probably create value.”
On activism and regulation
“Activism is no. 1 in public markets when it comes to generating alpha; that is true in any market where there is the rule of law. It has to be constructive activism, where a company needs a wake-up call, where there is a blueprint.”
“Re disruption, I look at two things.
- Who is still making a lot of money??
E.g., Mastercard and Visa.
“If you are going into a world where everything is digital, why should you as a merchant give 2% to these guys? Any firm that is making a lot of money, somebody somewhere (dozens of people in a dozen different garages) are thinking about how to get that lunch.”
- Disruption from a regulatory statement
“Anything that a consumer is spending on that he doesn’t particularly like. Anything that is regulated that the government is involved in runs the risk of disruptive regulation. Right now, they are looking at big tech. Look at the anger in California about the electricity situation. Healthcare is going to get it. Industries where consumers are not happy. A lot of this has already happened overseas. You have to be worried about that in addition to just technology. Is Bezos coming for you or the government?”