Capital Allocators – Top 5 of 2025: #5 – Adrian Meli (Eagle Capital)

Date: December 22, 2025
Host: Ted Seides
Guest: Adrian Meli, Co-CIO, Eagle Capital Management
Theme: Applying hedge fund rigor to long-only public equities—building a style-agnostic, concentrated, and research-intensive team with a long-term horizon.

Episode Overview

This episode features a deep-dive conversation with Adrian Meli, Co-Chief Investment Officer of Eagle Capital Management, a $34 billion, 36-year-old long-only firm. Adrian recounts his formative experiences, transition from hedge fund investing, and the philosophy that underpins Eagle's unique approach: harnessing the demanding research practices of hedge funds for the long-only world, while capitalizing on inefficiencies amid evolving public equity market dynamics.

Key Discussion Points & Insights

1. Adrian’s Early Formation as an Investor

[05:53–09:09]

• Background: Raised in a household “ruthless about a good deal,” Adrian credits his father’s tenacity in seeking bargains and competitive household games (Monopoly, Acquire) for his early business instincts.
• Entrepreneurial Youth: “In first grade, [I] was buying all the Garfield folders at the school store and reselling them… The next year…trading tchotchkes for their parents’ jewelry and clocks.” (B, 07:56)
• Academic Path: Studied Econ and Psych at Williams, fascination with behavioral finance, early focus on value investing, and a first paper on hedge funds vs. mutual funds performance.

2. Lessons from the Hedge Fund World

[09:09–13:08]

• Environment: Post-dotcom, broad asset class exposure, and a culture of field research and direct CEO interaction.
• Market Evolution: Noting the “enormous alpha pool” due to inefficient markets and limited capital, Adrian says: “It doesn’t seem coincidence that the best hedge fund returns were from the late 90s to 2010.” (B, 11:02)
• Generalist vs. Specialist: He found the most success by hunting outliers across asset classes—a “generalist” approach.

3. The Move to Long Only: Strategic Rationale

[13:08–16:01]

• Career Decision: Sensing declining net returns in hedge funds due to capital inflows and high fees, Adrian saw potential in Eagle’s lower-fee, long-term structure.
• Hiring Vision: “Wouldn’t it be interesting if over time Eagle were able to develop this reputation of hiring…the same intensity or talent pool from the hedge fund world to this long only side at a lower fee structure?” (B, 14:30)
• Non‐Consensus Bet: Choosing long-only over hedge funds wasn’t obvious. “In retrospect, it was non consensus and it worked out really well.” (B, 15:46)

4. Building a Differentiated Organization

[16:01–24:23]

• Team Structure:
  • Small, elite analyst team, all paid by salary (no bonuses), compensated as owners (“eat the cooking”).
  • Long client relationships, diversified client base, focus on 5–7 year horizons.
  • Talent attraction pitch: “You only have to pick one new name every year or two to be successful here.” (B, 19:31)
• Management/IR Value: Eagle’s long-term orientation aligns with managements seeking stable shareholder bases, boosting access and collaboration not generally found among fast-trading funds.

5. Counterintuitive Compensation—No Bonuses

[24:23–26:21]

• Philosophy:
  • “We don’t have to pay base plus bonus because that’s not how the partners are paid… There’s no proof that this is the right way…but they like it better. They get paid every two weeks.” (B, 24:56)
  • Frees analysts from short-term performance pressure; aligns analysis with long horizon of investments.

6. Evolving Opportunity Set

[26:21–29:35]

• Embracing “Large Cap” with Intent:
  • “We picked to do this… returns of larger domestic equities were really good return streams with very low risk.” (B, 27:03)
  • Sees Eagle as “absolute return investors living in a relative return world,” modeling normalized free cash flows over 5–7 years.
• Portfolio Construction:
  • Seeking diverse earning streams, uncorrelated with macro cycles or factor bets.

7. Valuing Growth Businesses vs. Compounders

[29:35–32:36]

• Skepticism on High-Multiple Growth Tech:
  • “All companies die in the end; it’s just a question of when…” (B, 30:31)
  • “On the AI bill today I think it’s really tough… forecasting some of the big tech earning streams, you just have to be honest with yourself.” (B, 31:19)

8. Information Edge in Large Caps

[32:36–35:03]

• Shifting Small Cap Landscape: “That asset pool is not as rich as it used to be… the small cap index today—it’s a lot of biotech, a lot of unprofitable companies…” (B, 32:58)
• Research Process: Ripping apart large caps is less about unique access and more about outworking industry consensus, modeling realistic disruption/duration.

9. Portfolio Teamwork and Risk Calibration

[35:17–41:54]

• Generalist Framework with “Pragmatic Specialization”: Focus on outliers with intense deep dives by sector-prone analysts.
• Sizing Positions:
  • “The bigger positions tend to be things with lots of ballast…good balance sheets, good management.”
  • “The highest IRRs have the fattest tails…the smaller positions tend to be things that have fatter tails.” (B, 45:27)
• Risk Management: Seeks a portfolio robust to multiple economic outcomes, not just chasing highest IRRs.

10. Market Structure, Indexing, and Emerging Inefficiencies

[36:09–41:54]

• Efficiency Debate:
  • “Indexing made the world more efficient… but now all the capital has flowed short-term… the market is becoming a little more inefficient in certain areas…” (B, 37:00–38:45)
  • Points to recent cycles of meme stocks, overbidding, ignored cyclicals as evidence.

11. Examples of Out-of-Favor Opportunities

[42:02–44:50]

• Cites Sectors Like:
  • SaaS: “Trading at low multiples… the reason is AI might be right, but it might not.”
  • Homebuilders/Products: “Trophy multiples on trophy earnings… if you close your eyes three to five years, there will be a better day ahead.”
  • Healthcare/Medicare Advantage: “Are we at trough margins and at low multiples now?” (B, 42:33–44:30)

12. Eagle’s Active ETF Launch

[46:42–47:30]

• Rationale: “[Clients] like being able to click a button… the reception has been much higher than I would have thought. We want to have a resilient business.” (B, 46:55)

13. Staying Disciplined on Firm Growth and Talent

[47:30–49:29]

• No Growth Mandate: Content with current size, focus on excellence and continued ability to “find interesting pockets of Alpha.”
• Talent Focus: “We're trying to hire people that are better than me… if we can continue to do all this, and the industry keeps shrinking their time horizons… our wedge continues to grow.” (B, 48:29–49:02)

14. Forward-Looking Contrarian Opportunities

[49:29–52:54]

• Skeptical on Indexes: “Whatever percentage I had there 10 years ago, I might want less today.”
• Outlook: Sees sectors and regions that can become pockets of value, particularly as flows shift and institutional allocations revert.
• Private Markets Caution: Concerned that fees and capital flows have compressed future return streams in LBO, PE, and private credit—but sees room for top quartile managers and new long-only, low-fee entrants.

Notable Quotes

• On Finding Value:
  “The best deals aren’t those unsellable teal crocodile loafers at the Designer Outlet on Black Friday… it’s scarce few great assets that come on sale very seldomly that you gotta jump at when you see.” (B, 00:22 / 08:24)

• On Comp Structure:
  “You get your base salary, wait all year for your bonus… it creates a really acute, sharp focus on whenever the bonus season is. We wanted to push people away from that.” (B, 24:58)

• On Market Evolution:
  “Part of it is passive made the world more efficient… but part of it is really the opportunity set. I basically think mega cap technology killed a lot of the active management world.” (B, 36:41)

• On Long-Term Orientation as Edge:
  “If all the capital is seeking hedge funds because they saw this talent intensity of research… the key was, could you bring that intensity of research to this [long-only] structure?” (B, 16:36)

• On Firm Culture:
  “If Alec and I do our jobs well, [Eagle] will be a terrific firm when we leave one day.” (B, 18:44) “It’s pretty special—I get to learn all day long and work with really talented people. I think I have the best job in the world.” (B, 48:29)

Timestamped Memorable Moments

• The Garfield Folder Arbitrage (Childhood Story): [07:56]
• Transition Rationale from Hedge Funds to Long Only: [13:08–15:46]
• Counter-Positioning: Salaries, Not Bonuses for Analysts: [24:39–26:21]
• Market Retrospective on Efficiency and Opportunity: [36:09–41:54]
• Sector Case Studies for Contrarian Value: [42:02–44:50]
• Launching an Active ETF: [46:42–47:30]
• Reflection on Building a Resilient Team and Firm: [47:30–49:29]

Personal Insights and Rapid-Fire Closing

[52:54–58:15]

• Romantic Comedies: “I’ll die on the Hill that romantic comedies are criminally underrated… I’ve never seen one I don’t like. They’re mood enhancing.” (B, 53:01)
• Biggest Professional Influences: His entrepreneur father, Eagle founder Ravenel Curry, and especially Alec Henry:
  “He’s brilliant, very sharp…if you surround yourself with somebody like Alec, it can’t help but bend you in a good direction.” (B, 53:37–54:26)
• Greatest Joy: “Putting my daughters to bed… I think I’ll always remember the bedtimes, and I hope they do too.” (B, 54:58)
• Reflections on Life’s Path: Unexpected outcomes—gratitude for family, stability, and “the lollapalooza” of marrying early and partnering with Jennifer.

Final Takeaways

• Eagle’s Edge: Combination of hedge-fund-quality research with long duration, concentrated conviction, and a differentiated talent model.
• Market Outlook: Increasing short-termism and capital flows may be creating new inefficiencies for disciplined, patient allocators.
• Personal Philosophy: Lifelong curiosity, gratitude, and a belief in doing hard things—professionally and personally—for the right reasons.

This summary highlights the foundational strategy and culture of Eagle Capital, Adrian Meli’s evolution as an investor, and timely reflections on the shifting landscape of public equity investing for institutional allocators.