E5: Hedge Funds, VC, and Finding Alpha

In our 5th episode of The Riff, writer Byrne Hobart and investor Erik Torenberg are joined by Thomas Li, the CEO of Daloopa for a deep dive into the world of hedge funds. They discuss what venture capitalists may not know about hedge funds, what most people get wrong, crowding, and risk management. The conversation also touches on the role of the yield curve in investment strategies and the competition between everyday investors and hedge funds. Thomas Li is the CEO of Daloopa, where they provide enterprise grade financial models and model automation to hedge funds, asset management and investment banking. Need Soc 2 compliance? Get 20% off your first year of Secureframe by mentioning "The Riff" during your free demo: https://secureframe.com/riff --- Check out Erik's new show Request for Startups featuring a rotating cast of founders and investors sharing their requests for startups they want to exist in the world, and also their stories of navigating the idea maze in different sectors so founders don’t have to reinvent the wheel anymore. The first episode is out now - we cover better dating apps, references as a service, and WeWork for productivity Watch and Subscribe on Substack: https://requestforstartups.substack.com/p/receipt-based-dating-reference-checks Apple: https://podcasts.apple.com/us/podcast/request-for-startups-with-erik-torenberg/id1728659822 Spotify:https://open.spotify.com/show/739L1LR32QI2XyoZlRh5nv --- We're hiring across the board at Turpentine and for Erik's personal team on other projects he's incubating. He's hiring a Chief of Staff, EA, Head of Special Projects, Investment Associate, and more. For a list of JDs, check out: eriktorenberg.com. --- The Riff is a part of the Turpentine podcast network. Learn more: turpentine.co -- Thanks to our sponsor: SECUREFRAME Secureframe: the only compliance automation platform with AI capabilities that help customers speed up cloud remediation and security questionnaires. Get 20% off your first year of Secureframe by mentioning "The Riff" during your free demo: https://secureframe.com/riff --- LINKS: Byrne's writing: https://thediff.co --- RECOMMENDED PODCAST: Live Players With Samo Burja Join host Samo Burja and Erik Torenberg as they analyze the mindsets of today’s most intriguing business leaders, investors, and innovators through the lens of their bold actions and contrarian worldviews. Think: Elon, Sam Altman, Peter Thiel, George Soros and more. You’ll come away with a deeper understanding of the development of technology, business, political power, culture and more. LIsten and subscribe everywhere you get your podcasts: https://link.chtbl.com/liveplayers --- X / TWITTER: @eriktorenberg @byrnehobart @Daloopa1 (Daloopa) --- TIMESTAMPS: (00:00) Intro (01:36) Brief overview of hedge funds (04:54) History and landscape of hedge funds (13:08) Top firms and their strategies in the hedge fund world (17:22) Sponsor - SecureFrame (18:19) Hedge funds: Overview of the macro style (20:58) Distressed funds and risk parity (30:23) What they don't want to tell VCs about yield curves and why (32:18) When you're betting on a company, you're actually betting on two things - fundamental performance of the business + discount rate to discount the future cash flows of the business (34:45) Investing in early stage companies and trading interest rate futures (41:52) Are everyday investors competing with hedge funds in any meaningful sets? (50:20) What is the business of a hedge fund fundamentally? (58:52) How true is the peak pot thesis? (1:06:57) Unique things about working at a hedge fund (1:15:30) Wrap