Prince: When it comes to investing, do you have any regrets?
Cohen: For us, the proverbial one that got away was the subprime trade-the short side of it, of course. We did a lot of work on the trade in the late part of the cycle. We were establishing bilateral derivative agreements, collecting data and talking with several professionals about joining us to execute when the collapse started. Frankly, I think we were three months too late, especially because we like to be early. We firmly believed the housing market was increasingly inflated. We didn't necessarily know where the top was, but, in our constant search for cheap options, thought this trade should be part of our tail risk strategy. Oh well!
Prince: Would you consider taking outside money?
Cohen: Well, we are really focused on our own knitting for the moment, but we have gotten more than a few offers from the family office community to co-invest with us, which is flattering. Scale cuts both ways. Girth can give us access to certain opportunities, but it can also get in the way and prevent us from earning really high returns in niche categories. I would describe our position as "interested as a future possibility."
Prince: What is your philosophy on recruiting your team?
Cohen: Most of our investment professionals come from the institutional world-investment banking, hedge funds and private equity. Philosophically, we are committed to conducting our business with the highest levels of integrity. Thus, we hire with that foremost in our mind. We hire for, and encourage, creativity, contrarian ideas, entrepreneurialism and open debate. I am proud of the skill sets and professionalism of our team members, but even more so for them as people. I'm also lucky to have learned long ago the key to success is hire people smarter than you!
Prince: Thanks for your time.