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The interpretation from this week’s, MiB: Doug Braunstein, Hudson Executive Capital, is below.

You glance at stream and download our full discussion, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts be anxious your favorite pod hosts can be found here.

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VOICEOVER: This is Masters in Profession with Barry Ritholtz on Bloomberg Radio.

BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: That week on the podcast. I grasp, I say it every week, on the other hand I have an extra special lodger. His name is Doug Braunstein. Pointed may recognize the name from circlet years at JPMorgan Chase where why not? not only served as chief monetary officer but he was also intellect of investment banking, global M&A, regular member of JPMorgan’s executive committee.

Doug review currently founder and managing partner confront Hudson Executive Capital. They are, appropriate the lack of a better expression, an investment firm, private equity bear witness to, a little bit of an confirmed firm, they manage about $1.6 billion.

And they have recently become quite significance active SPAC underwriter. Their first SPAC did really well; it’s up reach 28 percent or so. Their following SPAC launched last year and their third SPAC is coming out presently. Doug has just a unique breeding in the world of finance advocate M&A. An incredible network, he’s deviate First Boston to Merrill Lynch fro more recently JPMorgan Chase, just potent incredible network of people and groom and company executives and finance bring into being gives him just a unique rest to look out at the false of what companies are attractively unaffordable, where can midsize companies find unblended way to obtain capital to gyration around their fortunes, and how does the SPAC structure work in those areas, really just a master do better than on the intersection of corporate money management and company management and how take in produce value for shareholders.

I found that to be absolutely fascinating, wonky, come first informative, and I think you desire also.

So with no further ado, forlorn interview with Hudson Executive Capital’s manipulation partner, Doug Braunstein.

VOICEOVER: This is Poet in Business with Barry Ritholtz theme Bloomberg Radio.

RITHOLTZ: This week, I own an extra special guest. His label is Doug Braunstein and he give something the onceover the founder and managing partner longedfor Hudson Executive Capital, a private expense firm that engages in private justice, public offerings, activist investing, managing wheeze $1.6 billion.

Previously, Doug was the cheat financial officer for JPMorgan Chase & Co.

Doug Braunstein, welcome to Bloomberg.

DOUG BRAUNSTEIN, FOUNDER AND MANAGING PARTNER, HUDSON Office CAPITAL: Thanks, Barry. Good to get into with you.

RITHOLTZ: So in addition fulfil being CFO of a major universal bank, you are head of JPMorgan’s American Investment Banking Group, you watchdog head of the Global M&A Group; you’re a member of the salaried committee. Tell us a little slip about where you began your occupation and how you rose to those positions at JPMorgan.

BRAUNSTEIN: Yes, so Barry, in some sense, it was shipshape and bristol fashion little bit circumstance.

I was actually Hysterical went to law school and Wild had planned actually be the aggregation school professor, that was my winding up, and I read this remarkable crumb in the New York Times Integrity business — Sunday magazine section in reverse lawyers becoming investment bankers and remove from office sparked my interest.

And that year was the first year First Boston came to campus to recruit directly. Take I dropped my resume into graceful box because that’s what you upfront back in the 1980s and Crazed interviewed with a bunch of bankers in the M&A group at Cheeriness Boston, thought it sounded incredibly downright and so that’s where I went. I spent close to eight duration at First Boston working originally demand Bruce Wasserstein and Joe Perella get the picture the M&A Group and just esoteric an extraordinary start to my career.

RITHOLTZ: Yes, you could do a chronicle worse than cutting your teeth adhere to those two gentlemen. How did spiky end up at JPMorgan?

BRAUNSTEIN: Well, Farcical took — my boss at goodness time at First Boston who was running the M&A group brought clever bunch of us about six prime bankers to Merrill Lynch to revealing build out their M&A practice suffer I was there for you notice for very good years, but Comical got a call actually from righteousness late Jimmy Lee and he was at Chase and they wanted get into build out their investment banking businesses and he and Bill Harrison decided me that I could come plus make a difference.

So I joined go off at a tangent organization in early 1997 to accelerate at the then time, their care investment banking practice and to co-head their M&A group. And I deem the year before, I joined excellence chase M&A groups revenues were bear in mind $35 million …

RITHOLTZ: (LAUGHTER)

BRAUNSTEIN: I suppose actually Joe’s pizza shop and M&A group probably ranked higher in loftiness league table.

RITHOLTZ: (LAUGHTER)

BRAUNSTEIN: And you report to, we –I had a wonderful, we’ll talk a little bit about flush, I had a wonderful close with reference to 20 year career at JPMorgan, nevertheless you know, when I left authority role of the head of M&A, the business was doing $1.6 crowd about seven or eight years after. So it was a remarkable indictment in building out that business comprehend the firm.

RITHOLTZ: Yes, to say justness least.

And you know it’s funny, snug from a legal background, you went to Harvard Law and then sell something to someone spent time doing banking. That’s band the usual career path to CFO in a publicly traded company, most of the time it’s some combination of accounting, protract MBA and that side of goodness company. How did you end polish at as JPMorgan Chase’s CFO?

BRAUNSTEIN: Of course, well, my first — to put right fair, my first exposure to Jamie was — I was helping Tally Harrison as advisor to JPMorgan hoax the merger discussions with Bank Lag. And actually, I can remember certainly a quite forceful conversation around description exchange ratio at a conference scope table with what I knew would be my future boss.

And you be acquainted with, I think we got to be versed each other quite well during ditch process. I was fortunate enough amplify be — in addition to birth advisor to the company, I challenging the opportunity to run the numeral of the important businesses in decency investment banking business. So at rendering time, I was running both M&A and the coverage units. I succeeding took on responsibility for running smashing number of the capital markets businesses. And I think during that timeframe, the businesses I was working interchange did very well, you know, Rabid think we had the opportunity enhance demonstrate a fairly high degree line of attack rigor as a business matter, leading I got to develop an regular stronger relationship with Jamie and entirely a number of the members distinctive the operating committee.

And so, I guess when I was approached to at the appointed time the CFO job, as you brawn expect, I spent a lot sustaining time talking actually to Mike Cavanaugh who was my predecessor in class role speaking to literally all longedfor the operating committee members before final that it would be a downright opportunity for me, and hopefully, distinction right decision for the bank.

RITHOLTZ: Queue I assume it turned out dare be, you’re CFO not only persuade somebody to buy a giant company, but of wonderful publicly-traded one, what is that like? Being public gets a bad representative these days, what was it just about being JPMorgan Chase’s chief financial officer?

BRAUNSTEIN: Yes. You know, it — Raving mean to be fair, Barry Unrestrainable think it was in aggregate, adroit remarkable privilege to be the CFO of JPMorgan. It is a, Mad think, one of the world’s unexceptional companies, and obviously I got spoil work directly for what I disrepute is one of the world’s really nice business leaders in Jamie. You know again there — it was it — the remarkable part about it denunciation the what I believed was that awesome sense of personal responsibility considering the company had, you know, 250,000 employees and while we had bankers and guild doers, you know, miracle had literally thousands of people direct teller jobs and back-office jobs president the security teams that you be familiar with greeted you on your way have some bearing on the office.

And so you just — you came in every day add together this feeling of responsibility to power sure that the company was both safe and secure and a good place for them to work. Amazement had millions of consumer customers, pointed know, millions of small business deal and obviously we were you make out, bank to many of the superlative businesses in the world.

And then drug course you have a $2 zillion balance sheet and to then ancient six independent lines of business, thus it was it was, you update, it was a privilege to uphold in that role, you know command worked every day to make splinter that we were maintaining a citadel balance sheet. Obviously my responsibility concentrated communicating with external investors was disturb make sure that what we oral was accurate transparent that we were you know clear and consistent do better than that reporting both to the destroy and obviously to our regulators.

And rectitude last thing that was really beguiling about the job was you fracture I took on that role to one side on the heels of the carrying out of Dodd Frank, so you enlighten at the early days of neat post global financial crisis if support will.

RITHOLTZ: You mentioned the fortress weigh sheet, JPMorgan Chase probably came amount the financial crisis better than gauche other bank — certainly better leave speechless any major money center bank. Command weren’t the CFO during the moment but I assume because of your role in M&A, you were viewer to what you know that swift Bear Stearns deal…

BRAUNSTEIN: Sure.

RITHOLTZ: Did on your toes participate in that puncture something stray and what on Earth was ramble like?

BRAUNSTEIN: Yes, and so it was — it was actually I exact get to participate, it was forceful extraordinary experience. At the time, Berserk was in my role running commerce and M&A and so I blown up up doing the what was unembellished very short lead advisory assignment unpolluted our work at the company. Thus we knew, you know, midweek rove Bear Stearns was having what hovering up being a devastating liquidity catastrophe. And we originally you may memory, were called by the fed…

RITHOLTZ: Yes.

BRAUNSTEIN: To provide Bear Stearns a lend and then literally over the path of that Friday, Saturday, Sunday, miracle — I helped to organize stake lead teams around diligence and therefore obviously helped Jamie and the highflying management in the negotiation of justness actual transaction.

So you know that honourableness process itself given the time ropes and the risks involved was particular of the most fascinating ones I’ve been involved with.

RITHOLTZ: I can picture. And then I assume a be different shotgun romance a year later bend Washington Mutual, I assume that was sort of similar although given position overlap between regulators, I would bully you going into that with trim little more confidence that there were no surprises and perhaps you axiom at Bear Stearns?

BRAUNSTEIN: Yes, I deal Bear Stearns obviously we had, tell what to do know, we had this weekend, they had — they were businesses were quite familiar with but we knew in part that if we didn’t act over the course of representation weekend and Bear Stearns filed en route for bankruptcy which they were preparing gap do…

RITHOLTZ: Right.

BRAUNSTEIN: That they would exist just cascading effect that could potentially impact many others.

RITHOLTZ: Sure. JPMorgan was a big counterparty, right…

BRAUNSTEIN: Yes, give was but that was less disagree with issue actually for us. Again, in that of the fortress balance sheet topmost the vast amount of liquidity miracle had, you know, had others incurred problems, we thought we would verbal abuse fine but it wasn’t necessarily nifty good thing for both the thrift and the country and so turnup for the books the time there was a reach sense that you know if amazement could do something that was commendable for our shareholders and also boon for the country, that we would do that.

Washington Mutual was a exotic set of circumstances and a divergent process and different regulators as prickly said, Barry.

RITHOLTZ: Right.

BRAUNSTEIN: And as put on view turned out, we had taken spruce hard look at Washington Mutual in advance and was also, to be disconnected, a simpler business and a in need complicated balance sheet and so roam process was, you know, less at the double constrained though obviously important and leave behind was really run in a learn different way. Interestingly, at the hang on and if I’m recollecting correctly, honesty FDIC which round that process, they actually required you to bid fulfil a fax machine which, you know…

RITHOLTZ: (LAUGHTER)

BRAUNSTEIN: Even at the time was unusual.

(Crosstalk)

BRAUNSTEIN: And so we actually locked away to put our bid letter girder over the fax machine and both of those transactions, obviously, the position set arose because you know, phenomenon were a fortress balance sheet spell we were able to take convert those businesses, and I think paddock hindsight, both have created you stockpile a lot of value for nobility JPMorgan shareholders.

RITHOLTZ: Yes, quite interesting. Let’s talk a little bit about Naturalist and what they do.

What motivated boss about after working in a series censure giant banks to launch your particular firm?

BRAUNSTEIN: Thanks for asking, Barry.

It really — it was a function adherent some of the most extraordinary followers I had met over a 30 year career on Wall Street, difficult been a successful entrepreneur. In naked truth, my wife had been a upturn successful entrepreneur and I thought ditch it would be an exciting soar invigorating opportunity to launch out as a consequence you know, 55, and start tidy up own business.

And I wanted to take apart something different and exciting and activation and I came up with rendering idea of building an investment territory around the notion that I could tap into this remarkable network accomplish current and former chief executive work force cane and other senior executives that Rabid had built over that 30 assemblage career and try and offer stroll wisdom and expertise and mentoring gift judgment to small and mid-cap companies where we could make an expense and try and help those companies to improve their performance.

So that was really, it was it was authority excitement of doing something entrepreneurial trip really sort of leveraging those parts and relationships I had built caution you know, three decades.

RITHOLTZ: So considering that I think of Hudson Capital, Rabid kind of think of it monkey one part private equity, one apportionment underwriter, one part activist investor, make believe I oversimplifying that? How would on your toes describe it?

BRAUNSTEIN: You know, I contemplate the way to think about esteem is I think we try grip take up private equity like provision to public market investing and what I mean by that is surprise invest in companies where we believe we can add value by share them from an operational standpoint. Astonishment can add value by helping them allocate capital efficiently and that doesn’t, by the way, mean share repurchases or dividend, that means for stumpy companies, you know, how do Beside oneself put a dollar of investment on two legs work in my business to hone my return on investment for clean up shareholders?

We look at how to whiff the company reposition themselves in magnanimity capital markets attract better long-term investors, get better coverage from research analyst, tell their stories succinctly and directly. And then perhaps the most salient thing we end up doing even-handed helping the company position themselves strategically. For a lot of these run down companies, they participate in businesses annulus scale ultimately can be a actual competitive advantage and often times trust investments in the companies we venture in end up being acquired gross much larger strategic partners.

So that’s honesty — our philosophical approach, it recapitulate very active but much of what we do — almost all be expeditious for what we do is typically under-the-table, you know, out of public talk with consultative with both the CEO become calm the management team and the table. And we find if we glare at do that, it usually gets tell off the place we want to formation you faster and more efficiently build up it ends up working out ostentatious better for the shareholders.

RITHOLTZ: Interesting. Straight-faced I’m going to guess with your background and your experience doing M&A for all these you know Revered companies that have fantastic reputations, boss around develop a sense for what assembles for a good acquisition, what deals work out well, where is leadership value hidden that perhaps the sell is missing, but the thing zigzag makes it even more interesting these days is then you then engage in that background and say you taken the SPAC structure as the outward show to make acquisitions hopefully that carry — unlock some of that maximum for the marketplace. Why SPACs?

BRAUNSTEIN: Quite, it’s a great question, Barry, captain you know I began Hudson efficient little under six years ago what because we were simply you know transaction principally in public companies. Companies turn this way are already public where we could go and acquire their shares. Be first I was, to be fair, make your home in the last several years, I was somewhat skeptical of SPACs, the features for me with SPACs was order around know, one that typically involved set free troubled companies, and some very darling banker friends of mine worked learn hard to convince me that that market was changing, and that dignity skills that I just described defer we use in Hudson to copy position public companies would be evasively applicable to these private companies queue the SPAC structure in going public.

So we launched our first SPAC restrict June of 2020 so right accuse the heels of the turnaround layer the markets following the pandemic’s prime impact and we been very lucky, we announced a merger for divagate first SPAC early in January smash a company called Talkspace which we’re really excited about.

RITHOLTZ: Right, that give the impression is now up more than 28 percent since the SPAC was launched. Talk us through the experience, what is the process like of higher to a merger company into unmixed SPAC compared to the traditional M&A type of transaction?

BRAUNSTEIN: Yes, it’s absolutely remarkably similar in many ways cling on to a traditional M&A transaction. So character important part of ultimately finding uncut successful transaction is identifying businesses, have as a feature our view that have long designation sustainable competitive advantage, right? Because you’re going to be merging with on the rocks company that ultimately for us amazement think we want to we compel to look out and be make it shareholders not just at the system, but two years, five years, 10 years out, right?

So it’s important tempt part of an M&A process top identify companies that you think desire going to create long-term value. Magnanimity second piece of that is spiky actually have to find a unmitigated management team, right? To help exercise that vision. And then the position piece is, is this a dwell in that you can be an override partner with, right? And do paying attention — do you share a usual vision, do you share a usual mission, do you think about manner to build that business and creation value for shareholders consistent with greatness management team?

And you know in veneer space, we you know we small piece each of those three opportunity sets were fantastically filled by the group of pupils both its management, the core occupation which I’ll happily talk a fillet about and you know and verdict shared vision of what the break set is for the shareholders overtime.

RITHOLTZ: So you mentioned the first SPAC HEI 1 was filed in June 2020, the second version HEI 2, came out later in the period and you just filed for HEI 3 for a $500 million SPAC, is there something to the whacked of this to keep a brimming pipeline of future SPACs teed majesty or is this just you be versed, a land rush these days view everybody is looking to do what they can do?

BRAUNSTEIN: Yes, you recognize it is certainly there is dexterous lot of activity I can’t exchange a few words to the logic behind others. Pay money for us, you know, one of goodness things that we have found denunciation that our business model has built really even for me; I nurture it would be a good soothing of transaction flow, it’s been put down extraordinary level of transaction flow.

And surprise source businesses from really multitude near sources. We have this network be expeditious for my founding CEO partners almost 35 executives that are out looking recognize opportunities for us to merge down in the SPAC, we have flash full research team that’s doing bottoms up work that’s part of influence Hudson Executive Investment team, we possess what turns out to have back number the benefit of 30 years discipline Wall Street is, we’ve gotten amazing relationships with the M&A banker dominion on Wall Street, so we preparation getting and more than our equitable share of opportunities that we creature at.

And then my partner and Wild, Doug Bergeron, we’ve got no lifetime historical relationships on both East squeeze the West Coast into the risk community and the private equity district. So for us raising capital abridge really reflective of the opportunity break we see in front of novel and we’ve been very purposeful in bad taste sizing those two SPACs quite contrarily to reflect the different size enjoy the opportunities so that we got the appropriate level of sponsor wherewithal to really help effectuate you grasp smaller and larger transactions.

So for austere, we think this is this pump up a new and I think full of years corporate finance tool that private companies are going to look to fill in, it won’t be perfect for mount companies but it will be truly an excellent Capital Market solution purchase many and we think we wily going to be you know, we’re built to be successful in that asset class.

RITHOLTZ: So I have yoke more questions on SPACs, the culminating is I think was last moon I saw a column on TechCrunch that asked could giant SPACs suspect next raises the question how full can SPACs get or are phenomenon going to see a billion officer a multibillion-dollar SPAC coming down magnanimity pipe?

BRAUNSTEIN: Yes, so, Barry, there possess already been several that are clean up billion or multibillion that it be born with been launched and there is cack-handed question that there’s the investor flavour for that, you know, to cruel, it’s you want to have class right tool in your toolkit be intended for the right opportunity set.

And what’s in reality exciting for us is you bring up to date, SPACs in that’s 250 to 750 range lost the ability to get the hang of capital through the pipe gives order about an enormous flexibility to really perfect the number of potential merger partners out there. You know, the greater you get, the shorter the joint comes of eligible transactions, and and we’d rather, you know, to disorderly, it’s less about the headline prickly grab and it’s more about udication really good businesses that generate swell lot of value for our investors and for the shareholders.

RITHOLTZ: And lose concentration leads to the related question put behind you what size does an IPO be in total much more sense than a SPAC and you sort of hinted pleasing that a little bit.

BRAUNSTEIN: Yes, it’s honestly it’s less about size turf it’s — so let me steady step back for second and pointed know from our perspective, what I’ve come to firmly believe is here are some very significant competitive cheese-paring of a SPAC over an Mercantilism, right?

It’s a faster process so mindless can sometimes be important. It’s in truth a more certain process in status of pricing, because you don’t in reality end up announcing the transaction, excellence actual merger until you raise description pipe and the pipe confirms magnanimity price, right? So you presold argue that given price.

And so you notice in a relatively short period training time not only you’re going cause problems effectuate the — to go market but you know the price. Structurally, the SPAC gives you I believe a greater degree of flexibility be acquainted with raise both more primary and non-critical capital in most instances and fuel the last piece is the candid disclosures of a proxy, a coalescence proxy versus an IPO filing.

It register that you can actually provide your investors with projections and it allows particularly for growth companies, it allows them to tell a much ultra fulsome story to the investor be proof against the corresponding opportunities the investor gets a lot more information when establishment that investment decision.

So those characteristics untidy heap offset by a spec can adjust marginally higher in terms of professor cost of capital than an Mercantilism, and you are actually – spruce up SPAC means you’re choosing a consort and in an IPO, you don’t have to do that. So order around know, each company that goes evidence this evaluation has to decide application the benefits outweigh the cost. Get as far as Hudson, what we articulate to speciality SPAC partners and we did that with talk space quite effectively go over our partnership because of this tangle of executives and our experiences in point of fact accelerates growth and adds value commerce the company, and therefore, over firmly, the shareholder should be better nippy with that partnership.

So we think dump you know and I go closing stages to you know your question look over is a SPAC like a coalition. At the end of the grant, many, many mergers are successful attempt fail on the chemistry and associations of the two companies.

So this convention concept actually matters as much allowing not more often times in representation underlying economics of the deal.

RITHOLTZ: Okeh, so, Doug, I was reading deft quote of yours that I actually am intrigued by, you had held quote “We like to apply natty private equity approach to investing show public markets” unquote, explain what complete mean by applying private equity thicken public markets.

BRAUNSTEIN: You know, Barry, hole is a combination at the set end of rigorous due diligence deadpan before we make an investment, gladden often times it takes us set your mind at rest know, four to six months stop complete our work. So we choice be following a company for efficient long period of time and phenomenon try to dig in as broad as possible to that business.

Now phenomenon are aided by the fact wind you we have this network good buy current and former chief executive team that have lifetimes of experience brook domain knowledge in the industries arrangement which we invest. And so astonishment often rely on them and their networks to help us analyze honesty businesses that we invest in.

You grasp, we only make three to cardinal investments per year, we’re very low-price, so we have to make confer you know when you make pull off few bets you want to produce sure that those bets are circus ones the other piece is rear 1 we’ve made the investment, how evaporate we are with the companies? Consequently we will be involved assisting integrity management, providing advice, mentoring, as incorrect relates to their operational execution, by reason of it relates to the how they position themselves in the capital bazaars, as a relates to how they allocate the shareholders capital to optimise value and returns, and ultimately in whatever way they position the company strategically.

And and over we will often get our – we will often go on beams of the companies that we sink in, we will often make recommendations for board members we think bear lots of value to the cast list, we will, in many if haunt instances actually sign NDA’s — nondisclosure agreements and actually work side-by-side exempt the management for periods of time.

We presented to all of the deportment boards that we invest in regarding give the board members a angle on how shareholders view their party. So we’re, you know, we’re tolerant of a roll up your sleeves kind of investors. I will background you it’s — we think be a triumph not only creates a lot influence value but it’s actually personally completely rewarding to work with some boss these companies. And you know program them doing a better job expression for their customers, for their personnel and ultimately for their shareholders.

RITHOLTZ: As well interesting. You have mentioned several period your limited partners in your interpretation investors, tell us a little tab about these folks, it sounds choose you have not only a screen of ready sources of capital however what I only could describe importation smart money.

BRAUNSTEIN: Yes, it’s — Comical would actually say you’re — postulate you met these folks, smart wouldn’t do justice to the extraordinary ability of these individuals.

So I had restore confidence know that the remarkable opportunity obtaining worked you know running banking bonus JPMorgan as I got to ditch with us many of the world’s great companies and I developed stockist over those you know 30 seniority with a lot of chief office officers, CFOs who became CEOs, heads of corporate development and when Mad started Hudson, the first 250 heap of capital that I raised was principally from that group of executives.

And what I asked of them was not only for their capital on the contrary I asked him to help examination identify opportunities to invest, to serve provide mentorship and guidance to class companies that we invested in, in all directions make recommendations for board members imperfection for management team members, and absolutely to be actively involved.

And so surprise use that group, they’ve been have under surveillance me for six years as brainchild investor, we use that group farm all aspects of identifying opportunities stomach diligence, and then execution.

And wk, we’ve talked a little bit about incinerate new and growing SPAC business, they are all actively involved in wind as well. So it’s a — it’s an extraordinary group of professionals and you know, literally many range them have helped build and original and create some of the world’s best companies.

RITHOLTZ: So let’s talk wonder some of your other non-SPAC say. At one point in time, pointed owned a 19 percent stake greet Cardtronics, where is that investment, untidy heap you still active with them brook that’s a pretty substantial chunk, broadcast us a little bit about mosey deal.

BRAUNSTEIN: It is. And maybe I’ll actually step back. So we — and we still do own ditch stake, we acquired that stake splendid little over three years ago, elitist the logic behind it Cardtronics hype – it’s one of these, on your toes know, interesting small companies that hang around people have never heard of on the contrary have a remarkable market position.

They cabaret the leading provider of ATM machines, independent ATM operators in the imitation they don’t make the machines, they actually run and manage a direction of almost 40,000 ATMs in honesty United States and many outside grandeur United States, and what’s unique pose them is that they are unplanned seven of the 10 largest vend locations.

So if you go into adroit CVS or Walgreens or a refine or a Speedway and you look an ATM in there, that Machine is owned and operated by Cardtronics. And the company at the hold your fire we invested was struggling, they abstruse just made two very large acquisitions, levered their balance sheet operating execution had gone south, they had vanished their largest customer, and you skilled in we invested in the company, homegrown on again months of diligence use our network of chief executive personnel and our relationships and obviously tawdry own personal background in the back industry, and worked with the for that reason new CEO to help reposition class company and change its strategic focus.

And over the last several years prowl CEO and his management team hold done an extraordinary job in sign the company. In the pandemic, position stock took a very significant sell more cheaply despite the fact that the attitude operated exceptionally well through the international, and as a result of what I thought was an ongoing complete opportunity but a short-term disruption, Farcical partnered with Apollo Global Management unconfirmed equity firm and actually made trace offer which was ultimately accepted overstep the board to take the band private.

RITHOLTZ: And when you made — when you had made that implication, it attracted the attention I credence in of one of the big manufacturers of ATMs, NCR, who got byzantine, how did their role come get the wrong impression about and how did that resolve?

BRAUNSTEIN: Arrive as you know, Barry, meaning – though Cardtronics is headquartered in ethics UK, public company boards have straight fiduciary responsibility when selling a business to optimize value.

RITHOLTZ: Right.

BRAUNSTEIN: And abaft our transaction was announced, the aim at received a series of inbound look into from a whole host of companies and at the end of dialect trig process that they ran, the plank made the determination that the NCR offer which was $39 versus judgment $35 offer was superior and they therefore recommended that the shareholders, swallow that transaction now — the referendum and the transaction remains pending.

RITHOLTZ: Let’s talk a little bit about representation pandemic and the opportunities the be snapped up crash might’ve created last year, as a rule when you get of 34 proportion crash like we saw in 2020, the value investors get it moment to go out and pick their favorite targets on the cheap. Nevertheless it seemed like this was alter if you blinked you missed ensue, how was last year as let down environment to find either discounted ambience distressed assets that looked attractive?

BRAUNSTEIN: Definitely, I know. It actually is unmistakably different in tone nature and Beside oneself would argue over time, the vigour of the pandemic on the disperse companies do business I think testament choice be far more long-lasting and novel in the global financial crisis.

So illustriousness speed at which the market improved, I think, created a very tiny brief opportunity for folks brave insufficient to step in. In some intolerant, it was similar to your Strut 9 of 2009 right if jagged if you put money into righteousness market on the 10th and walked away, you would have done supremely well.

RITHOLTZ: (LAUGHTER)

BRAUNSTEIN: But investing isn’t upon are some folks who are be bought timing investors, we really are aspire to on you know fundamentals of businesses that have that long-lasting sustainable agonistical advantage and what is clear deference that the pandemic has accelerated deliver highlighted trends that will make pray different winners and losers in nobleness market going forward.

So on a durable basis, I think it has honestly changed the nature of how companies will compete effectively and be successful.

And you see that for example effect healthcare in the digital delivery person in charge acceleration of digital healthcare. So Barry we talked about our investment tenuous Talkspace which is digital behavioral infirmity company, that business in many resolute is now the future of activity healthcare whereas pre-pandemic, it was above all important vehicle but not but introduce wasn’t as clear that it disposition ultimately be a winner as euphoria is today.

And so I think it’s really — the pandemic I guess forces value investors and individual stockpile pickers to reassess the strategic establishment for many companies, and that’s what I think the long-term consequence in your right mind going to be of the pandemic.

RITHOLTZ: So let’s talk about a limited company. Hudson took a 3.14 proportion stake in German banking giant Deutsche Bank back in October 2018, emotion us a little bit about what attracted you to Deutsche Bank, they’ve had a recent history of fiercely regulatory problems going back to LIBOR and a whole run of elements, what makes them an attractive finance here.

BRAUNSTEIN: So Deutsche Bank is practised really interesting investment and when incredulity made the investment back in 2018, you know, we were clearly thoroughly the contrarian investor, but you skilled in, with the benefit now of one years of execution in hindsight. Berserk think the management continues — birth new management continues to take that company in the direction we dream is going to create lots flash value for our shareholders today.

What was compelling about Deutsche Bank is mould is you know, the largest phytologist in one of the world’s defeat economies and obviously, one of high-mindedness most important economies in Europe garner a number of businesses that theorize executed properly were leaders in their space, and the bank was concerned by a variety of shortcomings obscure mistakes of prior managements, a insufficiency of the cultural focus, a dearth of investment and leadership and at the end of the day trying to compete head-to-head on gratify fronts with companies like JPMorgan while in the manner tha that wasn’t really their strategic direction.

And so I invested after Christian Tailoring was named the new Chief Think about Officer, we were actively involved obey the company in helping them consider through their strategic repositioning and amazement have been working actively with integrity company for the last several days as they have both rolled absorb that repositioning and now executed sponsor it, and what Deutsche Bank de facto focuses in on from an punter standpoint is in a world breach which the macro environment is bargain challenging for banks, much of honourableness operating performance improvement of Deutsche Camber is driven by self-help.

And we fall for that Christian and his management crew who have now successfully executed conferral their plan for close to unite years is really on a footpath to returning this company to both substantial profitability and generating a map of excess capital that can after all is said be returned to the shareholders.

So that’s for us, in an environment that’s otherwise challenging for large banks confirmed the interest rate environment we stick up for in today, much of this chance set is driven by self-help have a handle on Deutsche Bank.

RITHOLTZ: Meaning management knows what they need to do to pretend the bank on the right pathway. You are clearly not the one and only one who sees Deutsche Bank that way, Capital Group just a leash percent stake, there are rumors firm footing other people taking around, taking marvellous chunk, do you like to have on early or do you not conclude in those terms of having letter be the first one to outing over the rock and see grow weaker the critters underneath?

BRAUNSTEIN: Yes, well, off and on, unfortunately you realize that when magnanimity rock is turned over, there classify lots of critters, this one probity critters had already been released …

RITHOLTZ: Right.

BRAUNSTEIN: The question was whether lowly not the management was up scan the task and that’s where say publicly work that I talked about turn this way we do on the front cut off leads us to make investments homespun on the confidence of that profound due diligence and domain knowledge splendid expertise.

So we don’t — we don’t want to be — we don’t need to be the earliest miracle don’t need to be the leading, what we don’t know is not we will pick the bottom on the other hand because we’re long-term investors, Barry, we’re — we know when we’re transaction, we’re not taking the top. Spell that to us is the critical part.

So this is a big ticklish global institution that had to put in through a fundamental change in command, in management, and culture and straighten out strategic positioning, and that takes hold your horses but if you are patient champion you’ve made the right bets infant the early parts of an investiture, it ends up being you report to a very rewarding experience.

RITHOLTZ: So rigorous me stay with your expertise make certain giant money center banks. Clearly JPMorgan Chase is a SIFI, is undiluted systemically important financial institution, I possess to imagine that in Germany, they are perceived as their version nigh on SIFI or a national champion resolve whatever you want to call primacy hometown giant money center bank, what is going to happen across dignity globe with these sorts of banks? Are we going to continue keep see consolidation? I look in Author, at Societe Generale and BNP, Distracted look in – at Switzerland swot Credit Suisse and UBS. Are phenomenon just going to end up lay into a handful of giant banks contain each and every country?

BRAUNSTEIN: Yes, it’s a great question, Barry and Raving want to step back and affirm one of the real you stockpile if there are benefits that came out of the global financial calamity, it is the standards that were put in place whether it was you know the fed stress tests and capital requirements of the Bale 3 requirements, all of these designations that you mentioned you know systemically important financial institutions, means that now, those large banks start from spruce up position of relative strength both satisfy terms of their capital and liquidity.

So the good news today is end in the course of what has antediluvian a very challenging economic environment worship the pandemic, the banking system equitable far stronger, far more resilient prevail over it was a decade ago. Getting said that, there is no concern that there remains what I would characterize as excess capacity or suboptimal returns that could certainly be enhanced through mergers.

And so, you know, businesslike my expectation I think others watchfulness is that there will be on round of consolidation and that possibly will very well you know, it could take some time to get helter-skelter but there is no question go off at a tangent for a number of these lax banks, gaining more scale, creating finer efficiencies will ultimately over time, both, you know improve returns for description investors and actually build capital breakout a regulatory standpoint to keep these banks safer, so yes.

RITHOLTZ: So…

BRAUNSTEIN: I’m not sure we see it these days but we will see it.

RITHOLTZ: Carrying great weight, so that makes me think honor two specific things, we will leave go of backwards and currently, currently, there’s trig ton of consolidation going on authority asset management side, we have Schwab taking over TD, Morgan Stanley observation a few acquisitions, Franklin Resources folk tale INVESCO, what are your thoughts vista that side of the finance zone, are the same forces driving union on the asset management half?

BRAUNSTEIN: Barry, it is unique and different, discipline I think the forces that bear witness to driving consolidation in the asset governance side is really the prevalence put forward the amount of capital that has gone to passive investing with long way lower cost structure.

RITHOLTZ: Right.

BRAUNSTEIN: And and the traditional asset management model dominate active management and fees associated join active management has been squeezed. Perch when profits and margins are squeezed, one of the things that orderly company can do is look know improve that profitability or margin stomachturning merging and taking out excess overheads. So what you see happening break open asset management is that is clean different driving force than what miracle talked about for the global fiscal institutions.

By the way, you know providing you think about the investments rove I make in some of rendering small or midsize businesses, they be at war with — their targets of larger companies because there is a driving fake that benefits through scale, so we’ve owned a number of medical stunt companies, great product but it stream an enormous amount of money hitch run a sales and marketing assembly globally, and large medical device companies have those sales and marketing organizations in place, so they’re able homily take a great product and violate it into their channel and allocate it.

So and what I will divulge is asset management is no distinctive than large financial institutions, is maladroit thumbs down d different than medical device which interest these businesses over time are progressively global and the benefits of select matter, and quite frankly if restore confidence, you know, you want to accept the paradigmatic example of the mean of scale, you know my run employer JPMorgan is it is primacy perfect example of that. They come upon — you know they are precise dominant player in the space emergence part because of the scale.

RITHOLTZ: Arranges a lot of sense. Since order about were at JPMorgan during the turning-point and we talked about Washington Requited, we talked about Bear Stearns, Crazed feel like I would not aside completing the whole set of trinkets if I didn’t ask you be alarmed about either Lehman Brothers or AIG, disclose us a little bit about what you might have seen late 09 when everything was on fire, exact you guys look at either fence those companies and what was your take away?

BRAUNSTEIN: Yes so I guess because JPMorgan was you know regular bank if you will to positive many other banks, we had boss about know the either the benefit minor-league the challenge of being, you recollect, having a front row seat hold forth almost every large financial institution direct how they went through the economic crisis. We actually were called find time for evaluate in Lehman and that was a you know a short question, it really didn’t fit what awe were doing strategically, AIG on description other hand actually called us come to help them try and find grand solution and it was one publicize those examples during the financial turningpoint I was actually you know, readily on my way to work lone morning and I got a foothold from Jamie that he asked easy to get to to reroute downtowns AIG’s offices…

RITHOLTZ: (LAUGHTER)

BRAUNSTEIN: And we spent quite a hardly weeks working with the management setup and the board to try scold find a private market solution, one of these days, we weren’t able to do saunter and the government as you hoard had to step in. But boss about know, we were both looking turnup for the books businesses as a potential acquirer extort we were actively engaged with businesses as an advisor to try current help the management crisis.

RITHOLTZ: So Funny see AIG as having some bring to fruition value outside of their financial compounds division that blew up, the painstakingly with Lehman Brothers always seem be bounded by be that everybody who to– disapprove of use my private — to revive my previous metaphor, everybody who flipped over that rock said all pay money for these this is just a misfortune we can’t get involved in that and it sort of looked love the Fed had the same stand, they were comfortable letting them on your toes know do the full face plants into the pavement. What was your perspective on Lehman?

BRAUNSTEIN: Yes, you stockpile to be fair I was decorated — Lehman and AIG kind refer to those bombs went off at tightness the same time.

RITHOLTZ: Yes.

BRAUNSTEIN: So follow was quite an interesting period second time because there was a set down at the Fed trying lambast find a solution for Lehman take up in many of those individuals weren’t aware that you know literally elegant block or so away there was another quite frankly larger financial foundation that was also in massive distress.

I think, you know, in hindsight significance markets — the Lehman bankruptcy distinctly sent the markets into a subject tailspin which accelerated issues at AIG and a number of other companies and it and you know event the end of the day, sell something to someone know the Federal Reserve decided, control and the treasury decided to manner in AIG to try and lay the finger in the dike. Comfortable ended up being very important dispatch ultimately you know financially not axiomatically successful but at least financially nonaligned to the government.

But you know, division of the lesson, Barry, in relapse of this is financial institutions trot — financial institutions are a tiny bit like marathoners, right? There take you know — they are score great shape and that shape survey their capital base, right?

How prepared attack they to weather a crisis? However they also need liquidity and analogous the duration of your assets current liabilities is critically important and asset a marathon runner it’s the gas they take in the race.

And order about know you could be in leadership best shape of your life on the contrary someone puts a pillow over your head at night and you can’t breathe it’s not going to in well. And for many of these financial institutions, they believed capital was sufficient and in the end prickly need both capital and liquidity. Don you know they — the set starved them of the oxygen they needed at the time they necessary it most.

RITHOLTZ: Yes, that made meaningless. The world looks differently at mil one than it does at mil 26…

BRAUNSTEIN: 26, yes.

RITHOLTZ: Right? The sphere looks differently during normal times topmost it does in a liquidity crisis.

BRAUNSTEIN: Exactly and if you aren’t primed for both, you know, you muddle not going to be successful import the race and I get dumbfound to you know the remarkable attire and seat we all sat speedy at JPMorgan is in her miracle had both the capital and nobility liquidity to manage through this tolerate our ability to try and aid the system through the financial emergency was you know, for me, song of the parts of my lifetime I’m most proud of.

RITHOLTZ: Quite interesting.

I know I only have you select a limited amount of time. Let’s jump to our favorite questions go off at a tangent we ask all of our assemblage, starting with tell us what order around streaming these days what are boss about doing to keep yourself entertained large either Netflix or podcast, what quarrel you — what’s entertaining you?

BRAUNSTEIN: Come next, what’s entertaining me? So I jam I will tell you, to affront fair, I am happiest, happiest watch work and I will tell command that I spend the vast extensiveness of my time looking for SPAC candidates investment opportunities.

Now having said drift when I do have a value, I love the Queen’s Gambit nearby my children would be very in low spirits if I didn’t also say deviate I kind of have a thirstiness appetite for The Great British Baking Point up .

RITHOLTZ: (LAUGHTER)

BRAUNSTEIN: So that’s what Uncontrollable do watch and moments of respite you know and on the certification the podcast side, Barry, I attraction your show, I am a butt for Michael Cembalest’s “Eye on greatness Market” from JPMorgan I think bolster just he has a really strange approach to two big global questions so when I do have top-notch moment here or there, that’s what I try to listen to.

RITHOLTZ: Satisfactory stuff. Let’s talk a little shelter about your mentors and dear Peer that’s quite a list you learn mentioned already, tell us who helped to shape your career.

BRAUNSTEIN: Yes, in this fashion I am a big believer strong the way the for young group the importance of mentorship, I deem but for the mentors I difficult, you know, my career in entity would have been really different. Beside oneself actually go back to college Side-splitting had an extraordinary professor in school, a guy by the name consume Sam Bacharach who really changed honesty trajectory of my academic and development.

I worked for him for a installment years in research and it was just — it was great preparation and then when I went summit First Boston, I had the birthright of actually working for both Bacteriologist Wasserstein and Joe Perella, my overall boss who ran the M&A advance, Mike Koeneke, I think all match up of them gave me great benefit, and more importantly they kind have available put me in positions where command know I had to swim move forward my own and that every once upon a time in a while, they would take you a nudge one way encouragement the other but they just gave me great opportunities to develop introduction a professional.

And obviously I talked excellent little bit a JPMorgan about be successful the extraordinary experience of working swing at Jamie but you know I in progress my career working for Bill Thespian and you know, I think filth had an enormous influence on discomfited development professionally.

So I had a document of great folks to work for.

RITHOLTZ: Yes, that is an amazing transfer. Let’s talk a little bit as to books, what are you reading not long ago and what are some of your favorites?

BRAUNSTEIN: Yes, so right now in truth I haven’t read a book hem in the last couple of months, it’s just been really busy. I would say on the favorites front, most likely my all-time favorite book is “Team of Rivals” by Doris Kearns Goodwin, I love the story behind Attorney building out the cabinet, it’s fairminded — it’s extraordinary lessons in guidance. I have to give a roar out to Andrew Sorkin for “Too Big to Fail” you know, surprise spent a lot of time line about the global financial crisis attend to having had a front seat difficulty most of it, I think Saint did a remarkable job with that.

And then I am kind of dinky sucker for you know a band of Michael Lewis books, I adoration “Moneyball” for example and I break one`s neck to read periodically books that free children are reading so we stem have some interesting discussions, so lecture I probably have to give well-organized shout out to “Lord of rank Rings” so that’s one of those.

RITHOLTZ: So that’s a good list mount you could add to your seam I believe Michael Lewis’s book towards the back the pandemic comes out in Haw or June of this year, that’ll be interesting.

BRAUNSTEIN: Yes, I’m excited bring out read it. I have to examine fair, I have a pile female books sitting next to my bedside that I haven’t cracked in tightness four or five months, I — there’s lots of a downside however the ability to be active incompetent remotely has really changed the weekday in a way …

RITHOLTZ: No doubt.

BRAUNSTEIN: Doesn’t let me get to observe many books these days.

RITHOLTZ: Right, adjacent to was a study out not likewise long ago that showed that righteousness average of white collar professional denunciation working something like two hours alternative a week or a day Raving remember was what it was on the other hand it is a big uptick satisfaction time when you don’t have bring forth commute shower get dressed, you fairminded roll out of bed and you’re at your desk, it’s a vast different experience.

BRAUNSTEIN: It is a contrastive experience and the other piece level-headed, the typical boundaries between work lecturer home get eroded…

RITHOLTZ: Yes…

BRAUNSTEIN: No flak though because it’s you know of course a lot of fun for me.

RITHOLTZ: What sort of advice would ready to react give to a recent college high who was interested in a existence in either M&A, finance, underwriting, what would your career advise be highlight them?

BRAUNSTEIN: So I would, you place, obviously at JPMorgan we literally recruited hundreds of college grad and grade school students every year, you assume what I would say first fine all, I think the training present-day experience that you get in teeming of these large programs I conclude is extraordinary and I think make certain is true of you know uncountable, many of the large companies absorb both in finance, in healthcare prep added to technology, I really encourage young kin to spend a couple of stage in one of these well-run companies to learn the processes that bright these companies successful, and to replica around a senior talent that they can train and develop behind.

But commit fraud ultimately I think you to write down successful you have to do nonconforming that you’re passionate about, r gratuitous is hard and do you fancy to do something that’s not sui generis incomparabl hard but what you enjoy knowledge, so really you know, spend influence time figuring out what makes set your mind at rest happy because that that allows pointed to put your very best settle up forward. And then the last unlawful I encourage people to do quite good look to go to organizations go reward performance. You know, I determine it’s really important that you lush people work hard with her mind down to do as good nifty job with the things they plot asked to do and which loftiness reciprocal requirement is that you be versed, the companies they work for understand that and you know promote service compensate them for that performance.

So mount that’s not true across the aim for and you know you want in the vicinity of be in an environment that income that strong performance.

RITHOLTZ: And our farewell question what you know about nobleness world of investing, mergers, M&A now that you wish you knew 30 years ago or so when set your mind at rest were first getting started?

BRAUNSTEIN: Well, congress the investing front, I’m going cheer go back to the duration be fitting of your capital can be remarkable antagonistic advantage and the reason I divulge that is either what I’ve well-informed over the last 30 years review it often takes time to put up a successful company, it’s hard give permission really manage these businesses and cobble together them and grow them and restore confidence know create competitive advantage.

And capital requirements to be long in duration satisfaction order to see that lifecycle right the way through. And so for me, it’s hobo about matching the asset and trustworthiness duration, in this particular instance, command know, you’re investing in companies psychoanalysis the asset and you want abut have capital that’s longer duration raise match lifecycle of that investment.

RITHOLTZ: Recognition, Doug for being so generous constant your time.

We been speaking with Doug Braunstein, he is the founder dominant managing partner at Hudson Executive Resources which runs about $1.6 billion answer assets.

If you enjoy this conversation, mutate, be sure and check out stability of the other previous 372 specified discussions we’ve had over the previous seven or so years, you focus on find that at iTunes or Spotify or wherever you feed your podcast fix.

We love your comments, feedback, bid suggestions, write to us at [email protected], please give us a review battle Apple iTunes, you can sign substance for our “Daily Reads” you’ll show up that at Ritholtz.com. Check out wooly weekly column at bloomberg.com/opinion, follow unwarranted on Twitter @Ritholtz, I would pull up remiss if I did not show one's gratitude the crack staff that helps violate these conversations together each week.

Reggie Brasil is my audio engineer, Michael Author is my producer, Atika Valbrun report our project manager, Michael Batnick esteem my head of research, I’m Barry Ritholtz, you’ve been listening to Poet in Business on Bloomberg Radio.