W. Ben Hunt

Co-Founder and CIO

 @EpsilonTheory

Ben Hunt is the creator of Epsilon Theory and inspiration behind Second Foundation Partners, which he co-founded with Rusty Guinn in June 2018.

Epsilon Theory, Second Foundation’s principal publishing brand, is a newsletter and website that examines markets through the lenses of game theory and history. Over 100,000 professional investors and allocators across 180 countries read Epsilon Theory for its fresh perspective and novel insights into market dynamics. As Chief Investment Officer, Ben bears primary responsibility for determining the Company’s investment views and positioning of model portfolios. He is also the primary author of materials distributed through Epsilon Theory.

Ben taught political science for 10 years: at New York University from 1991 until 1997 and (with tenure) at Southern Methodist University from 1997 until 2000. He also wrote two academic books: Getting to War (Univ. of Michigan Press, 1997) and Policy and Party Competition (Routledge, 1992), which he co-authored with Michael Laver. Ben is the founder of two technology companies and the co-founder of SmartEquip, Inc., a software company for the construction equipment industry that provides intelligent schematics and parts diagrams to facilitate e-commerce in spare parts.

He began his investment career in 2003, first in venture capital and subsequently on two long/short equity hedge funds. He worked at Iridian Asset Management from 2006 until 2011 and TIG Advisors from 2012 until 2013. He joined Rusty at Salient in 2013, where he combined his background as a portfolio manager, risk manager, and entrepreneur with academic experience in game theory and econometrics to work with Salient’s own portfolio managers and its financial advisor clients to improve client outcomes.

Ben is a graduate of Vanderbilt University (1986) and earned his Ph.D. in Government from Harvard University in 1991. He lives in the wilds of Redding, CT on Little River Farm, where he personifies the dilettante farmer that has been a stock comedic character since Cicero's day. Luckily his wife, Jennifer, and four daughters, Harper, Hannah, Haven and Halle, are always there to save the day. Ben's hobbies include comic books, Alabama football, beekeeping, and humoring Rusty in trivia "competitions".

Articles by Ben:

The Zeitgeist | 3.5.2019

By Ben Hunt | March 5, 2019 | 5 Comments

Fiat News and narrative construction galore in today’s set of the most on-narrative financial media articles.

What links them all? Dopamine is a helluva drug.

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In the Flow – Why Your Long-Vol Allocation Isn’t Working

By Ben Hunt | March 4, 2019 | Comments Off on In the Flow – Why Your Long-Vol Allocation Isn’t Working

It’s not impossible for market volatility to spike massively through some deflationary shock to the financial system like a China-driven credit crisis or an Italy-driven euro crisis. What’s impossible is TO GET PAID for taking out an insurance policy against the last war.

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The Zeitgeist | 3.4.2019

By Ben Hunt | March 4, 2019 | 1 Comment

The new Zeitgeist is here! Now with all the snippets and twice the snark.

Every morning, we run the Narrative Machine on the past 24 hours worth of financial media to find the articles that are representative of some sort of chord that has been struck in Narrative-world. They’re not the best articles – often far from it – but they will arm you for the Narrative wars of the day ahead.

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Heads I Win, Tails You Lose

By Ben Hunt | March 3, 2019 | 12 Comments

Why are institutional investors in trouble with the new Zeitgeist of capital markets transformed into a political utility?

Because everything you think you know about portfolio diversification will fail. Because emerging markets are going to be crushed before this is over. Because everyone’s inflation-investing muscles have atrophied to the point of helplessness. Because you think long-vol and crisis-alpha are things.

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They’re Not Even Pretending Anymore

By Ben Hunt | February 27, 2019 | 5 Comments

Now that Jay Powell’s semi-annual Congressional testimony has finished up, it’s time for a brief walk down Memory Lane.

As with everything else in our Washington clown show, nothing really changes. This has all happened before.

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In the Flow – It’s the Multiple, Stupid

By Ben Hunt | February 25, 2019 | Comments Off on In the Flow – It’s the Multiple, Stupid

Whether it’s ITT and Hal Geneen, or Teledyne and Henry Singleton, or GE and Jeff Immelt, or Berkshire Hathaway and Warren Buffett … at some point these companies get too big to continue growing through acquisition. There’s no more step-function P/E growth to be had on the E side of the equation. So they ALWAYS start focusing on the P side – the multiple – which is entirely a creature of narrative.

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Pricing Power (pt. 3) – Government Collaboration

By Ben Hunt | February 24, 2019 | 10 Comments

What killing active investment management? It’s not some monster hiding behind the rabbit. No, it IS the little white bunny. It’s the Zeitgeist of capital markets transformed into a political utility, innocuous on the surface … but with killer teeth.

How do you defeat the Zeitgeist? You don’t. The smart move, in fact, is to help the killer rabbit.

But there IS another way.

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In the Flow – Focus Fields

By Ben Hunt | February 11, 2019 | Comments Off on In the Flow – Focus Fields

Two distinct market narratives that came into sharper focus last week – Global Growth Slowdown! and Democratic Socialism!. The first was pushed by the usual market Missionaries – the WSJ and the FT and the talking heads on CNBC – and the latter was pushed by the usual political Missionaries – Trump and AOC and Bernie and the rest of the 2020 presidential crowd.

But only one of these narratives makes a long-term difference for your portfolio.

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But We Need the Eggs

By Ben Hunt | February 10, 2019 | 1 Comment

We’re all passengers in the backseat of the State-driven car, and we all suspect that our drivers might be high-functioning lunatics, and we’re all terrified about what they might do next.

But we need the eggs.

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Pricing Power (pt. 2) – Intellectual Property

By Ben Hunt | February 6, 2019 | 1 Comment

Your mother was a hamster and your father smelt of elderberries … the pricing power found in intellectual property. It’s not as easy as it looks.

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