Tony Robbins’ Favorite Asset Class
Tony Robbins’ Favorite Asset Class
Inside the “GP Stakes” Business
Tony Robbins is America’s most famous self-help guru. His positivity coupled with a honed dynamism have won him a powerful following. In the forty years since he broke onto the motivational speaking circuit, more than 4 million people have attended one of his seminars, and over 50 million have absorbed his teachings via audio programs and educational videos. Robbins’ annual Date with Destiny showcase – likened by some to a secular revival meeting – has sold out seven years in a row. Tickets for this year’s 6-day event in West Palm Beach in December sell for between $4,500 and $10,000.
Robbins has leveraged his brand to enormous effect. He has written six international bestsellers including Unlimited Power: The New Science of Personal Achievement and its follow-up Awaken the Giant Within. He advises world leaders, sportspeople, entertainers, and top business executives; a Fortune magazine cover ten years ago described him as “the CEO whisperer”. And he has invested in more than 100 privately held businesses with combined sales in excess of $7 billion a year.
All of which has made him very rich. According to some estimates, Robbins is worth $620 million. So what does Tony Robbins do with his own money?
In his latest book, The Holy Grail of Investing, he reveals all. Before you rush out to buy it, I should warn you: it’s not a classic. Friend of Net Interest, Nick Maggiulli, wrote a review following its publication a few weeks ago. A key criticism is that it serves as a sales pitch for one of the businesses Robbins is invested in: a Houston-based investment firm called CAZ Investments whose founder, Christopher Zook, co-authors the book. A disclosure up-front cautions that “as shareholders, Mr Robbins and Mr Zook have a financial incentive to promote and direct business to CAZ Investments.” Each chapter then concludes with a URL directing readers to the CAZ Investments website.
But when it comes to wealth management, Robbins is no slouch. His coaching clients include hedge fund managers Paul Tudor Jones and Ray Dalio. “I was blown away by him,” Dalio told Fortune magazine. “He got the investment concepts we talk about better than many highly professional institutional investors who devote their lives to this subject… He’s able to see things in a simple but granular way. It’s a talent. I find that it’s a rare case that people have an ability to see things in a simple way and also appreciate the complexity of things. He’s blessed with a mind that allows him to see that way.”
Robbins begins his book describing a meeting he had nearly ten years ago with one of Paul Tudor Jones’ former partners, a successful fund manager who remains unnamed. They were having a conversation about alternative investments and Robbins was venting his frustration. It was an asset class he wanted more exposure to but “getting an ‘allocation’ in a highly sought-after private equity fund is the wealthy person’s version of getting past the velvet rope at a hot new nightclub,” he complained.
The fund manager explained that he had it all wrong. “Instead of fighting to get into a fund as an LP investor (a limited partner),” he said, why not “join up and become an owner of the entity known as the GP (general partner)?”
Robbins knew that the general partner – the asset manager running the underlying fund – was normally owned by its founders and high level employees:
“One can actually buy a piece of the GP!?” I asked, somewhat baffled. He nodded with the grin of a tenured veteran. This was a paradigm-shifting moment for me. After all, many of the financial titans I have interviewed became billionaires by owning their own asset management firms (and thus being the general partner)... These are the people that, given the opportunity, I want to sit shoulder-to-shoulder with as partners. Could it really be possible that I could own a sliver of their business of managing money?
The fund manager introduced Robbins to the idea of “GP stakes” – funds that buy minority positions in asset management firms. The model borrows from private equity, yet rather than pursue acquisitions across industries, it looks inward at its own industry, where cash flows can be very high.
There are a number of specialists active in the field of GP stake-building. They include Petershill (run by Goldman Sachs), Blue Owl (formerly Dyal) and Blackstone. Through CAZ Investments, Robbins became an investor with Blue Owl. The week his book was released, CAZ Investments announced a $1 billion commitment to Blue Owl’s latest fund, Blue Owl GP Stakes Fund VI. It comes 18 months after a similar commitment to Blue Owl’s prior fund, which constituted an eighth of its total capital raised. In total, CAZ Investments has allocated $4.7 billion to the GP stakes business, giving it exposure to more than 60 different private asset management firms.
So what are the merits of GP stakes? To find out what Tony Robbins is so excited by, read on.
