What has your journey to the trading desk been like?I spent the first 20 years of my career at the global bulge bracket banks, first in investment banking and then on the institutional equity desks, in a cross-asset and special situations role. I started my career at Bear Stearns in 2001, then migrated to Credit Suisse in 2008. I was there through 2015, then Bank of America, before I joined Conversant Capital in early 2021. I spent a lot of time in my sell-side days working as a conduit between capital markets and the origination desk within investment banking as a bridge into the public side, covering hedge funds and multi strategy investment managers for anything equity-linked and credit with a cross-asset mindset.
I was at Bear Stearns through the JP Morgan integration, and I would have been a Bear Stearns lifer had it not been for the intriguing opportunity to join Credit Suisse as a multi-asset and special situations spokesperson across all products. I made the jump to Credit Suisse and we developed this product nucleus within the equities division to facilitate content distribution and market making across all asset classes, including volatility strategies tailored for hedge fund clients.
Mike Simanovsky, the founder and CIO at Conversant, served as a partner at Senator Investment Group, there for nine years before launching Conversant in early 2020. During Conversant’s formative stages, Mike and I had befriended one another while I was on the sell-side. He envisioned Conversant as a platform to capitalise on real estate opportunities across the liquidity spectrum in both public and private and up and down the capital structure including equity and credit. When Mike called me about the opportunity to join Conversant, he emphasised the firm’s long-term, buy-and-hold strategy, akin to private equity. He didn’t need a day-to-day trader, he sought someone who spoke his language, had a long-term mindset, and could be conversant across markets. Mike was building an investment team and process focused on idea generation and creative structuring. I was drawn to the flexibility of this mandate.
What does your role involve?
I oversee the capital markets function and I assist in origination. Our public positions and investments have originated through a rigorous capital markets process. We spend a lot of time thinking about capital markets activity and how that could create potential opportunities on both the public and private investment side.
There’s been a reopening in capital markets. It seems like a lot of issuers are trying to finance or fund next year’s capital needs and are getting ahead of it opportunistically. It’s been busy. On the equity capital markets (ECM) side, volumes are up significantly, close to double from last year, and even more so since 2022. I maintain constant dialogue with ECM and leveraged finance desks to identify the next potential investment opportunities.
Taking a step back, our investment team consists of seven professionals, including the chief investment officer, three principals, two analysts and myself. We structure the team by real estate sub-sector. We of course cover the traditional real estate sub-sectors, but also emphasise non-traditional real estate and real estate-adjacent sub-sectors, including digital infrastructure, asset managers, car washes, and student housing, as an example subset. Each investment professional is responsible for covering their respective sub-sectors across public and private markets. We have a lot of go-getters on the investment team which I love. We all sit together in our headquarters, and we emphasise collaboration. There’s a very healthy dialogue at all times at both the portfolio-level and the position-level.
Despite being a smaller organisation, we have a strong institutionalised process. My day may range from trading liquid US stocks to more illiquid European names. We do a lot of bespoke or more idiosyncratic trading when it comes to distressed bonds or structured credit.
We take a capital structure agnostic approach to our investment mandate and spend a lot of time thinking about relative value within the capital structure. We look for the opportunity that best achieves opportunistic returns on the best risk-adjusted basis, be it in equities, corporate bonds, distressed bonds, bank debt, or convertibles. We do some listed options more on the index side as hedging instruments. We are nimble and agile.
What is the core skillset for someone in your role?
It’s important to have awareness on cross-market currents and on what’s happening globally across every trading jurisdiction. But even more so locally, whether it is US and Europe and just having a good handle on whether it might be rates or a factor or certain style that is percolating in the market. It’s about being balanced and having a good pulse and awareness of what’s going on across markets. I’m wired to be idea-generative and an idea-oriented person.
Why did you choose Conversant?
The beauty of what we’re doing at Conversant lies in our ability to be flexible and opportunistic. We pride ourselves on being a flexible capital provider to real estate and real estate-related companies and platforms, investing throughout the capital cycle. We’re opportunistic in nature, looking for situations that meet or exceed our return thresholds on a risk-adjusted basis. We have a synergistic approach to both public and private investments, leveraging insights from the private markets to inform our strategies in the public markets, and vice-versa.
What are you seeing in terms of market impact following the election?
There’s a lot of copycat behaviour. People have a playbook from the 2016 election, a script for US exceptionalism, deregulation and reflation. I think we’ve come a little too far, too fast. The markets have cheered the new administration coming in and what that means for deregulation, consolidation, tax and tariff policy, but there are still several unknowns. With regards to deregulation, for us, it’s about what it might mean for further loosening in commercial real estate or real estate credit and how that might convert into further capital markets activity and lending. The setup for 2025 is harder. The S&P is at around 22 times earnings. The last election, it was 16 times earnings. The bar to beat is a lot higher. If you’re a company in the US, it’s time to grow or go home and there will be very little margin for error.
We’re not macro timers. We’re not handicapping election outcomes, but a lot of what we do is rate sensitive. We own a lot of rate proxies with duration, so one thing we think about is mitigating those sensitivities. You’re entering a fed cutting cycle, yet rates are 65bps wider since the first cut in September. What does that tell you? Growth is good and clearly there are renewed inflationary/fiscal worries given the new administration. There might be a tipping point soon in the 10-year, let’s say around 4.5%, and we are mindful how quickly sentiment could shift in real estate and more so homebuilders. If we had 5% rates again that might quickly become a market problem.
This might speak to overall more deregulation or banks willingness to lend or make markets, but it does seem like there’s more desire to take risk from the bigger banks who have the balance sheets. In terms of market making or liquidity facilitation, a lot of the bigger firms have the appetite to do it. From my vantage point, you are already seeing more risk bids at tighter discounts in block form.
What workflows are ripe for more automation?
There’s a lot of analytics already being offered. You’re seeing it from vendors in Bloomberg around portfolio construction and analytics to augment or improve processes specifically to correlation and factor tilts. One of the things that you might see is for deals specifically in the US and Europe, you’ll ultimately see better deal indication streamlining, meaning direct order entry of orders for ECM deals. That’s one thing that I’m focused on.
Everyone’s obsessed with AI replacing human capital. It’s certainly a unique resource, but in our view, you are always going to need someone on the other end of the phone. Our business is relationship-based and complex whether it is market making or investment banking and origination deal making. Human capital will not be replaced. Will it be improved through AI productivity and enhancement efficiency? I believe so.
What advice would you give to yourself or someone starting out in your sphere now?
Be long-term minded and patient. Markets are efficient and if you’re good at what you do and you prove it, there’s natural progression in your seat whether that’s ultimately running a desk or an entire division at a large investment bank. A lot of people look for instant gratification, but my advice is to play the long game. Act instinctively yet take calculated risks. Competency and ability always prevail.
I was an analyst at the time of the global financial crisis. I was 28 years old and only seven years out of college. It was a frightening time given the unknowns. However, everyone at Bear Stearns went on to do bigger things. I take a lot of comfort in knowing that the best athletes ended up in great seats at some great firms.