Capital Allocators – [REPLAY] Jonathan Lewinsohn – Diameter Capital Partners (Manager Meetings, EP.05)

Date: February 2, 2026
Host: Ted Seides
Guest Host: Kristen Van Gelder, Deputy CIO, Evanston Capital
Guest: Jonathan Lewinsohn, Co-Founder, Diameter Capital Partners

Episode Overview

This in-depth episode features Kristen Van Gelder, Deputy CIO at Evanston Capital, in a wide-ranging conversation with Jonathan Lewinsohn, co-founder of Diameter Capital Partners. The discussion unpacks the origins and strategy of Diameter, explores Jonathan's path from law and investment banking to hedge fund manager, and delves into practical lessons on investing in the credit markets. Their conversation offers a behind-the-scenes look at portfolio construction, risk management, adapting to crisis (specifically COVID-19), and the philosophy guiding all-weather, cross-spectrum credit investing.

Key Discussion Points and Insights

1. Evanston’s “Day One” Investment in Diameter

(Kristen Van Gelder on why they backed Diameter from inception)

• Familiarity with Founders:
  Evanston had longstanding relationships with both founders (Jonathan and Scott Goodwin) through their prior firm Anchorage, facilitating deep reference checks and validation of success. (04:59)
• Early Stage Emphasis:
  Evanston prioritizes identifying and underwriting smaller, hungry managers with aligned incentives, rather than spreading risk among many lower-conviction positions.
  “We prefer to do all of our work upfront and gain a lot of conviction and invest in a size that really is going to matter to performance. We don’t take toehold positions and see how it works over time.” – Kristen (10:43)
• Complementary Skill Sets:
  The founders brought together research-focused distressed experience and dynamic trading acumen—enabling long/short, fully spectrum credit investing. (06:28)
• Portfolio Fit:
  Diameter's flagship was viewed as a true “all-weather” strategy, serving as a ballast for the hedge fund portfolio.

2. Jonathan Lewinsohn’s Background and Investment Philosophy

• Early Influence:
  Parents influenced his analytic curiosity from childhood—a deep foundation for future investing. “I had a father who was an equity research analyst... walking into a supermarket and thinking how they make money is something that I was really lucky to get from my parents.” – Jonathan (12:31)
• Transition from Law to Investing:
  Realized passion was in combining investment analysis with law, especially through bankruptcy and restructuring. “Distressed debt investing was a way to combine my passion for investing and my background and interest in law.” – Jonathan (13:20)
• Anchorage Capital Lessons:
  Exposure to top-down industry analysis before doing bottom-up work, with an emphasis on understanding and preparing for macroeconomic change. “You have to constantly be thinking about the downside protection in what you invest. So instead of just always looking… you have to obsessively say, if the macroeconomic context changes, how much am I going to lose?” – Jonathan (17:54)
• Shorting as a Discipline:
  Developed a framework for evaluating both winners and losers, emphasizing that shorting helps balance bias and fully understand business fragility.

3. Collaboration and Founding of Diameter Capital

• Partnership with Scott Goodwin:
  Their complementary skills (trading and research) merged at Anchorage, later forming the backbone of Diameter’s approach. “Traders and analysts do not like each other... At Anchorage, Scott and I were very lucky to work at a place that really wanted both.” – Jonathan (25:46)
• All-Weather Investing Thesis:
  Recognized that credit’s cyclical risk can be mitigated with nimbleness, liquidity, and seamless integration between research and trading.
  “Large enough to be relevant, small enough to be nimble... providing investors that kind of across credit experience. And so that's what we set out to do.” – Jonathan (31:10)
• Flat Team Structure:
  Advocates for direct engagement by portfolio managers in analysis and position construction, minimizing hierarchical friction common in traditional finance. “You need portfolio managers who are really engaged there every day... That kind of breadth of doing it within credit is really what is our hallmark.” – Jonathan (31:51)

4. Tactical Flexibility and Crisis Response (COVID-19 Case Study)

• Emphasizing Liquidity, Not Illiquids:
  Maintained a liquid portfolio pre-crisis, crucial for fast repositioning. “If all of a sudden you're being pitched a lot of 9% illiquids, you maybe really want to realize that you're creating a situation where if the world changes, you're going to have no flexibility in your portfolio.” – Jonathan (33:50)
• Observing Signals, Aggressive Repositioning:
  Early recognition of COVID’s impact (e.g., Wuhan lockdown) allowed a rapid reduction of risk and move to short cyclical sectors such as energy and travel.
  • Notable Moment:
    “Scott and I... realized two things. A, we knew Wuhan because we'd been so focused on the trade wars... and our take was if this was bad enough to shut Wuhan... people are not taking this seriously enough. And so we got home and we sold a lot of our longs, particularly things in very cyclical industries.” – Jonathan (36:31)
• Dynamic Short and Long Adjustments:
  Shifted from net long to net short rapidly; when Federal Reserve action became evident, pivoted to buying high-quality investment grade credits at distressed pricing.
• Execution and Relationships:
  Their native presence in various credit markets yielded superior allocations in syndicated rescue deals—access unavailable to “tourists” outside regular participants. “Our model is don’t be a tourist, know the people in every space when that space gets interesting...” – Jonathan (41:17)

5. Process Discipline and Research Philosophy

• Writing as Clarity Tool:
  Used written communications (e.g., COVID blog, quarterly letters) to distill complicated situations. “Writing is a very helpful thing to boil down very complicated things to yourself and to prove to yourself that you’re right. ...If you have to cite a reference that you do when you write, it really makes sure that you’re not bogus.” – Jonathan (42:31)
• Macro vs. Micro – Integration over Specialization:
  While not a macro fund, considers macro understanding essential context for all investments. All company analyses start with broader industry and economic perspectives.
  • Quote:
    “You want to invest in good businesses and you need to really understand the businesses. And as you pointed out, most of the time, macro is boring. We think it’s crucial to always have a really deep macro view.” – Jonathan (44:12)
• Building and Scaling a Process-Heavy Analyst Team:
  Culture favors process rigor—analysts participate in intensive preparations, offsite work, and regular rigorous reviews.

6. Selective and Cyclical Engagement in Distressed Debt

• Secular vs. Cyclical Distress:
  Distressed debt is only attractive when driven by cyclical—not structural—issues. Avoids businesses in “secular decline” (e.g., retail or coal without a turnaround angle). “We really want to focus on investments where A, it’s cyclical and B, we can get out before the secular takes over.” – Jonathan (47:54)
• Market Evolution:
  The distressed opportunity set has become more competitive and less attractive with a prevalence of “bad businesses” and stronger central bank interventions shrinking natural cycles.
• Positioning in Bankruptcies:
  Opts to participate actively, but not control, to ensure positions remain tradable post-reorg, and to avoid being stuck with illiquid “reorg equities.”

7. Role of Shorting

• Purposeful, Not Just for Hedging:
  Shorts are a vital tool for unbiased analysis and alpha generation—not just as portfolio hedges. “We don’t really think about shorts as hedges. We think about them as ways to make money in companies that no longer make money the way they used to.” – Jonathan (55:55)
• Microcycles as Opportunity:
  Regularly scans for industry “microcycles” or disruptions—energy, retail, telecom—as prime shorting opportunities.

8. Lightning Round: Personal and Professional Reflections (56:05–62:09)

• Hobbies: Running, consuming audiobooks/podcasts at double speed. “I ran the marathon in 2018. And I run a lot and I listen to podcasts and I think about the world.” (56:18)
• Daily Habit: Flossing.
• Personal Pet Peeve: Superficial conversation with strangers.
• Investment Pet Peeve: Overengineering narratives to fit desired outcomes, neglecting actual causation. “This consistent attempt to create narratives where they might not be really annoys me as a portfolio manager.” (57:19)
• Favorite Book: Everybody Lies by Seth Stephens-Davidowitz—changed perspective on polls, data, and human behavior. (58:12)
• Biggest Mistake/Lesson: Formerly sought shortcuts; learned dedication and hard work is the true edge. “Assume that everyone around you is smarter than you and that your only edge is going to be working harder than them.” (60:03)
• Parental Teaching: Nothing will be handed to you; relentless work and learning are fundamentals. (60:50)
• Life Lesson Wished Known Earlier: There are no shortcuts; lasting results require sustained effort.

Notable Quotes & Memorable Moments

• “If there’s anyone that can kind of continue to drive these good results even at a larger asset size, I would bet on them.” – Kristen (11:26)
• “Writing... is a very helpful thing to boil down very complicated things to yourself and to prove to yourself that you’re right.” – Jonathan (42:31)
• “Liquids become in vogue and they end up not returning a lot. If... you’re being pitched a lot of 9% illiquids, you maybe really want to realize that you’re... going to have no flexibility in your portfolio.” – Jonathan (33:50)
• “Cycles are short, speed of capital is crucial. You can't be fast and smart if you're not thinking about macro and micro.” – Jonathan (44:56)
• “Shorting is not only important to kind of keep being unbiased, but it’s crucial part of a portfolio because you can consistently make money. Because every single year companies break and companies fail to perform.” – Jonathan (55:55)
• “Assume that everyone around you is smarter than you and that your only edge is going to be working harder than them.” – Jonathan (60:03)

Timestamps for Important Segments

• Evanston’s rationale for “Day One” investment – 04:59 – 11:26
• Jonathan Lewinsohn’s background and early influences – 12:17 – 15:37
• Philosophy from Anchorage and Centerbridge experiences – 15:44 – 25:18
• Founding of Diameter Capital: partnership, vision, structure – 25:46 – 33:06
• COVID crisis portfolio pivot and process – 33:50 – 42:07
• Writing as an investment discipline – 42:31 – 44:00
• Macro/micro balance in credit investing – 44:12 – 45:51
• Building an analyst team and research process – 46:15 – 47:36
• Selective distressed investing: cyclical vs secular – 47:54 – 53:17
• Shorting philosophy and execution – 53:36 – 56:05
• Personal habits, peeves, recommended reading, and life lessons – 56:05 – 62:09

Episode Takeaways

• Diameter’s approach blends research rigour and tactical trading, enabling nimble moves across the credit spectrum.
• A flat, process-driven team structure and an all-weather portfolio mindset set them apart from cyclical or narrowly specialized credit funds.
• Success rests on deep preparation, risk management, continual re-examination of bias, and willingness to shift dramatically when conditions change.

This episode is essential listening for anyone interested in modern credit hedge fund management, building resilient portfolios, and learning from the lived experiences of leading institutional investors.