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Tom Basso: I go away from the industry and retire and have a smile on my face most days. Lo and behold, Eric Crittenden, about three years ago, calls me out of the blue. He and I have known each other for a couple of decades. He's here in Scottsdale, so am I. He says, "Tom, I don't know if you know this, but I'm out of my old firm, and I would love to have lunch with you. I've been kicking around a few things." He sits there and lays out this whole thing about how he is thinking of doing an alternative management fund that can do securities and futures and blending them together, single manager, multi-strategy, same thing as TrendStat.

He wants to put it inside of a mutual fund, which is so much more sellable than a partnership is, Investment Company Act of '40. "Oh, my God." I said, "Eric, do you know how much that's going to cost?" He says, "Yes, I do. It's going to be $400,000 to $500,000 probably in legal expenses." I said, "Then you realize you're going to have to have a team of people." He says, "Yes, I think I have an idea who I could get."

Then he starts laying out the strategy to me. I'm blown away. It is brilliant. It is simple. I love it. It has aspects of trend following. It deals very well with large capacity. He can easily manage several billion without any issues at all. He lays it all out at lunch. The lunch was like four hours long. I’m blown away.

Jeff Malec: Hopefully, it was a good spot.

Tom: My adrenaline was flowing. I was so sky high.

Jeff: You were back in the game.

Tom: Hah, no, not at that point. I was still retired, so he starts saying, "Well, let's get together again. I'm going to think about it some more and you think about it too. Let's get together in a couple months." Another three months goes by. We get on another three-hour lunch and we talk about it. Now he's got people identified. He's got a little bit more structure to what he thinks he's going to need to pull it off. I tweaked it a little bit. I said, "You know, Eric, from my standpoint, I think you're being too conservative. I think you're this and that." We hem and haw. I give him my grandfatherly advice at that point because I'm getting in my late 60s and he's still a little younger than I am.

He writes that all up, and he comes back to me and says, "Tom, I'm ready to go. I think I've got all the pieces of the puzzle together. I've got my software under development. I got the people doing the software. I've taken programming myself. I know what markets I'm going to trade. I've done a lot of simulations. I think I'm ready to go." I said, "How much you got to raise." He told me the number. I made a few phone calls, and inside of I think it was five days, had all of the capital raised for the management company. Within about six, seven months, they put together the legal on it, which was extensive. It was very expensive. These are lawyers that are going to charge $300-$400 an hour. It is insanely expensive.

Jeff: At least.

Tom: Not very many people really understand this stuff. You got to do offshore corporation to take care of the future side and get it to fit inside the mutual fund. You got to get your fund managers, your custodians, all that garbage. Oh my gosh, so much legal work. Finally get it together, finally pull the people together. I've raised the capital. They eat into the capital by half a million or so to get the thing off the ground. They've got a budget for the rest of it.

Comes time to form the board. I'm on the board, a guy named TK Kallenbach is on the board, and Eric's on the board. There's three people. Eric and I are pretty darn knowledgeable of investments, you could say. TK has run the highest level, he's on the board of Cathay Pacific. He's at the highest level of boards out there in the world in the airline industry but very good with corporate structure.

Jeff: That's got to be a tough board to have been on the past year.

Tom: Oh, no, not really. No. It turns out--

Jeff: No, Cathay Pacific.

Tom: Oh, yes, yes, yes, yes. Absolutely.

Jeff: With the pandemic and airlines going down.

Tom: And Hong Kong is their headquarters.

Jeff: Yes. There's a lot of issues there.

Tom: Even more interesting. We have a blast at our board meetings. We worked so well together. Management team is so talented. They're above 50 million now, and we're trying to get together happy hour to celebrate going over 50 million. They're beating their expectations on both performance of the fund, the risk versus their sector. We're beating our marketing goals in terms of assets under management. Everything is cruising along.

Jeff: We've done a pod with Eric. We'll put it in the show notes.

Tom: Standpoint internally is actually taking care of the problem for you.

Jeff: Right.

Tom: It's beautiful. I love it.

Jeff: It's solving a market problem and a behavioral problem.