The part of this job that doesn't make it into investor letters is often the part that matters most.
I want to write about something that doesn't come up much in investment circles but that I think about constantly: the relationship between how a firm operates internally and how well it performs externally. In my experience, these things are not as separate as people tend to assume.
Why I care about operations so much
As president of our fund, my mandate spans both the investment function and the operational one. That means I think about things that a pure portfolio manager might never touch — vendor relationships, compliance infrastructure, team development, technology stack. Some of my peers find this kind of work tedious. I've come to find it genuinely interesting, because I've seen the consequences of doing it poorly.
A fund with operational problems is a fund that eventually underperforms, regardless of how good the underlying investment ideas are. Talented analysts leave for better-run shops. Regulatory issues consume bandwidth at the worst possible moments. LPs lose confidence not in the thesis, but in the team's ability to execute. The investment thesis can be perfect and the firm can still fail.
Culture as competitive advantage
The word "culture" gets used so much in business contexts that it's started to feel hollow. But culture is just shorthand for: how do people behave when no one is watching? Do analysts bring the bad news forward or suppress it? Do senior team members mentor juniors or hoard their network? Is intellectual honesty rewarded or punished when it conflicts with a position we already hold?
"The best signal I've found for a healthy investment culture is simple: can a junior analyst say 'I think we're wrong about this' without it being a career risk?"
At our fund, I try to model this from the top. When I'm wrong — and I am, more often than I'd like — I try to say so plainly, explain what I missed, and move on without drama. Not because it's comfortable, but because it's the only way to build a team that will actually tell you the truth when you need to hear it.
Conviction without rigidity
Healthcare investing requires genuine conviction. The sector is complex, the analysis is detailed, and the time horizons are often long. If you don't actually believe in what you own, you'll sell at the wrong moment or hold through a thesis break because you're not watching closely enough. Conviction matters.
But conviction has a shadow side: rigidity. The investor who is deeply convinced of a thesis is also the investor most at risk of ignoring disconfirming evidence. I've learned — slowly, and with some painful tuition — that the goal is to hold your views firmly enough to weather normal volatility, but loosely enough to update when the world is genuinely telling you something new.
That balance — between conviction and openness — is something I work on continuously. I don't think you ever fully solve it. But I think the act of working on it is what separates investors who improve over time from those who don't.