Dan Sundheim of D1 Capital on the art of public market investing

Describe what D1 does, AUM strategy for the uninitiated.

Yeah.

So we invest in public and private companies.

We do fundamental analysis, and so deep research, trying to understand business models, trying to understand company prospects, choosing the right management team, and whether it's public or private, we're investing with the horizon of three to five years and we applied the same due diligence process to both public and private.

Obviously, private is a one-way door and public is a two-way door, so that's different.

Is private actually a

one-way door even as just the private markets have matured and there's so much more secondary activity and things like that? Do you still have to treat it as a one-way door? Definitely.

I mean, you can sell the best companies you can sell easily,

but those aren't the companies you want to sell.

So we rarely transact in the secondary market because we don't want to sell the best companies.

And it's hard.

People think you can just transact in the secondary market, but if you're going to sell $50 million, $100 million, People have to get information rights from the company and then it's like- And

it's viewed as a signal if you're like-

Exactly.

If I go to the management team and say, I want to sell and the person doesn't follow through, it's not great.

So the AUM is about 25 billion, about two-thirds private, $10 million public.

Public is long, short, all bottom-up, no quant.

Really kind of the same thing people were doing in terms of stock picking 30 years ago.

And when you say no quant, that is you're contrasting to some of the more short-term kind of technical firms that are just trading based on what will happen the next day, the next week, the next month.

Exactly.

And we're not using any computer programs to guide our trading.

We're not...

We are not trading based on quarters.

You could be doing my job the same way 20 years ago.

You wouldn't have exactly the same tools.