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Increased sophistication in manager assessment is an important trend in the search for alpha. My conversations with Michael Mauboussin and Annie Duke suggested frameworks to think about enhanced decision-making processes and prompted a deeper dive into the ways allocators and managers can improve their craft. This week and next explores some of the tools available to help make it happen.

Basil Qunibi is the CEO of Novus Partners, a data analytics company whose mission is to help the world\u2019s top investors generate higher returns. As big data pervades commerce across industries, Novus is the most well-known provider of tools to analyze investment manager performance, allowing allocators to play Moneyball by breaking down the attributes of manager skill. Novus\u2019 200 clients are split between allocators and hedge fund managers who collectively oversee approximately $3.5 trillion of assets.\xa0 You can learn more about the company and its service at novus.com

Our conversation starts with Basil\u2019s path to creating Novus and dives into the tools an allocator can use to improve their understanding of a manager\u2019s skill, including the data sets available to allocators, the levers a manager employs in driving returns, the relationship between data and a manager\u2019s process, a framework to analyze crowded names, and future horizons for data-driven assessments of managers.

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Show Notes

DONATE TO CYCLE FOR SURVIVAL,\xa0http://mskcc.convio.net/goto/ted.

2:46 \u2013 The founding of Novus

5:45 \u2013 What did the qualitative assessment of managers look like at first for Basil

6:50 \u2013 How did he start to quantify managers

09:47 \u2013 What he saw in the initial data

13:24 \u2013 The early days of Novus, going all the way back to the concept

\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0 14:05 \u2013 Direct from Dell: Strategies that Revolutionized an Industry

\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0 14:07 \u2013 Sam Walton: Made In America

16:27 \u2013 Novus\u2019 first product

19:13 \u2013 Core components of measuring the skill of a manager

\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0 19:54 \u2013 Exposure management

\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0 22:10 \u2013 Capital allocation

\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0 23:27 \u2013 Idea selection

\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0 24:10 \u2013 Position sizing

\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0\xa0 25:11 \u2013 Tactical trading

25:45 \u2013 How should this data be used

28:08 \u2013 Why this data is useful for capital allocators

30:48 \u2013 How efficient is the market for talent

31:54 \u2013 What has happened to stocks that are crowded compared to those that aren\u2019t

35:15 \u2013 How does Novus use conviction in their metrics

36:43 \u2013 Consensus and concentration

40:02 \u2013 How Novus went from servicing allocators to also helping managers themselves

42:22 \u2013 Overview of Novus\u2019 clients and what they\u2019ve been able to learn from all of this data

46:45 \u2013 What other markets could Novus be applicable to

48:56 \u2013 Most creative application of this data by a client

49:53 \u2013 Closing questions