Episode 17: From $50B Private Bank CEO to Founding TriLinc Global | Gloria Nelund on How Private Credit and Impact Investing Align|Why SMBs are the Future of Growth in Emerging Markets
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Gloria Nelund saw that there’s an over a six trillion dollar gap in financing for businesses in developing economies and she said, “Hold my … coffee. I have a private credit firm to build.”
Her 10-year track record of making a difference through TriLinc without sacrificing profit proves that you don't have to give up investment returns to do good.
That’s why Stacy is thrilled to sit down with Gloria to discuss:
Her backstory – how watching her father invest shaped her approach
Her big pivot – why she quit her job in a matter of 24 hours to pursue more purpose
Why qualitative due diligence is vital in ESG investing
The power of authenticity in weathering market dips
You’ll walk away from this episode feeling inspired, knowing that it’s possible to garner massive success in the financial industry with heart.
More about Gloria:
Gloria, founder of TriLinc in 2008, boasts over 40 years of executive management experience in multi-billion-dollar financial institutions. Formerly the CEO of Deutsche Bank's U.S. Private Wealth Management Division, she held fiduciary responsibility for over $50 billion in assets, including $20 billion in emerging markets and credit instruments. At TriLinc, Gloria leads high-level strategy and growth initiatives, leveraging her deep expertise in investment product creation, sales, and distribution.
Apart from her impressive professional career, Gloria has a fun and adventurous side. She absolutely loves water activities like jumping, diving, and flipping off objects into the water.
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Resources mentioned in this episode:
Books: Halftime by Bob P. Buford, It Worked for Me: In Life and Leadership by Colin Powell
Transcript
Below is an AI-generated transcript and therefore it may contain errors.
Gloria Nelund: [00:00:00] So when we invest in these companies, we actually do get involved in their company, which is unusual for a lender. But remember when I said earlier, we're like a bank, it's really probably like the banks were in the 60s and 70s, where if you had a small community bank or even a regional bank, they knew you.
Gloria Nelund: As a business owner, they worked with you. You know, so if there were problems and you had to delay or you couldn't make a payment, they didn't just turn you over to the collection group and say, okay, we're done with you. They worked with you to try to, you know, make it work for everyone. And particularly in the last three years with the pandemic, that has been really important.
Gloria Nelund: So out of our 90. Some companies. We only had one that we had to put in liquidation. Now, we had quite a few that we had to restructure and some are still underperforming. So they're not out of the woods yet. However, we had, like I said, 1 that just wasn't going to make it right. And if you look at. [00:01:00] Any other private lenders or banks, they didn't have that same success.
Gloria Nelund: And so I would say, you know, the, the amount of time that we've been doing this and the track record we've built proving that we can generate. market rate returns.
Stacy Havener: Hey, my name is Stacey Havener. I'm obsessed with startups, stories, and sales. Storytelling has fueled my success as a female founder in the toughest boys club, Wall Street.
Stacy Havener: I've raised over 8 billion that has led to 30 billion in follow on assets for investment boutiques. You could say against the odds. Yeah. Understatement. I share stories of the people behind the portfolios while teaching you how to use story to shape outcomes. It's real talk here. Money, authenticity, growth, setbacks, sales, and marketing are all topics we discuss.
Stacy Havener: Think of this as the capital raising class you wish you had in [00:02:00] college mixed with happy hour, pull up a seat, grab your notebook and get ready to be inspired and challenged while you learn. This is the billion dollar backstory podcast.
Stacy Havener: Great stories often have an unlikely hero, someone who comes from humble beginnings, who didn't set out to go on big adventures, but those big adventures find them anyway. You know, like the daughter of an entrepreneur in a small town who wanted to be a teacher, but ends up being CEO of a 50 billion German private bank.
Stacy Havener: This is the story of Gloria Nelan. The founder of TriLink Global, a private credit investment boutique that specializes in small to mid sized businesses in the emerging markets. Gloria's story is unexpected. Her journey is [00:03:00] far from traditional, but like many of us, she questions along the way, her bigger purpose.
Stacy Havener: Sometimes, what we are looking for has been with us the whole time. Gloria is exactly where she is meant to be, impacting positive change through the purpose and power of capital, fueling economic growth with entrepreneurs just like her dad. Yeah. How's that for cool? Grab your popcorn, my friends. It's time to meet Gloria.
Stacy Havener: Gloria, thank you so much for being here. This is a true honor. We've become friends and I'm so thrilled to invite my friends of the podcast to meet you. So thank you so much for being here. Thanks for having me. Okay, so We're going to start with my favorite thing. It's always my favorite thing, which is backstory, hence the name of the podcast, but [00:04:00] since I know your backstory, this is really my favorite part of this episode right now because it's such a fabulous backstory.
Stacy Havener: Can you tell us a little bit about your journey to get to where you are today?
Gloria Nelund: Yeah, sure. So I actually, I grew up in Ohio and I grew up in the 60s and 70s when women really didn't have much career, except for if you wanted to go to college and have a career, you could like be a nurse or a school teacher.
Gloria Nelund: But there really weren't women doing much more than that. And so, You know, I just like a good Midwestern girl thought, well, then I'll just be a school teacher and that's really all I ever thought about doing until I went to college and back then you didn't do student teaching until you were in your final year and I did my first day of student teaching and.
Gloria Nelund: Came home in tears, literally. And I told my mom, this is not going to work. And my mom basically said, Oh, honey, you have to, it's your [00:05:00] first day. You got to stick it out. So on my last day of student teaching, I came home much more resolved and said, mom, this is definitely not going to work. I need a new plan.
Gloria Nelund: And luckily for me, my best friend's mom worked at a bank in Ohio. And basically, the bank that she worked at actually was, um, had a trust company and had an investment firm. And when I met with her, she said, well, have you ever considered a career in finance? And I was like, Oh, no, I don't really know what that would look like.
Gloria Nelund: And she said, well, look, you're, you're so smart. You're good at math. You know, you're so. If you're interested in things, I really think you'd like it. So my first job was typing stock certificates and balancing shareholder records before DTC. And when you put stock certificates in the typewriter and type them out, and I found that I absolutely loved finance.
Gloria Nelund: I mean, I loved everything about it, so I just kept getting promoted. And [00:06:00] ultimately, then I got recruited out to California in 1984. From there, I was recruited by Security Pacific Bank, and from there, again, I just kept getting promoted, and by 1991, I was the CEO of a subsidiary of Security Pacific, one of their institutional asset management subsidiaries, then B of A bought Security Pacific, and I ended up as the CEO of Bank of America Capital Management.
Gloria Nelund: We're about a 35 billion global asset manager, and as I said, I really loved finance, especially investing, and Then Nations Bank bought B of A and I just thought, Oh my gosh, I'm so tired of all of these acquisitions and tired of big banks. So I thought, well, I will somehow become an entrepreneur. And I should also mention here that my dad was a very successful entrepreneur.
Gloria Nelund: Fortunately, he's dead, but he started about 17 different businesses when I was [00:07:00] growing up and Later in life, I learned that I, what I learned about investing, a lot of it came from just watching my dad and his success, which we'll come back to. But so anyway, I decided, okay, I'll try to be an entrepreneur, but I didn't have an idea.
Gloria Nelund: And so I ran a few ideas by people and just nothing, you know, like seemed like it was right. So I thought, well, I'll join a smaller firm and help them grow their asset management business. And so I did that. And in less than a year, they got acquired by Deutsche Bank. And so I thought, okay, so much for that.
Gloria Nelund: But fortunately, in the merger process, then I was asked to be the CEO of Deutsche Bank's private wealth management division for North America. And it was actually a really great opportunity, partly because Deutsche Bank at that time was just a finance, I mean, a fabulous organization. I had a [00:08:00] great boss who was German.
Gloria Nelund: But the job that I was taking over, I really felt like, well, I can't make it worse because we were losing 130 million a year. We had all kinds of regulatory issues. And so I just thought, well, you, you can only make this better. Right? So I brought in a new management team, brought in a consultant. And in three and a half years had orchestrated the most successful turnaround ever of a division at Deutsche Bank.
Gloria Nelund: And it was wonderful. And I, I really loved the job. I loved, you know, like I said, I love my boss and the company. I forgot to mention, I was also commuting from LA to New York. So yeah, Monday through Friday. And, you know, you, you do all that work to turn around a business and, you know, you're. I'm tired. I can say, yeah.
Gloria Nelund: And in April of 2005, we got our first quarter results and we were making the 25 percent profit margin that it [00:09:00] was our target. And so I took my management team to the Yale club to celebrate and walking back to my apartment that night. I thought, wow. Is this it? You know, I had so much enthusiasm for going into it and everything, but it's one of those things where, you know, through the night I kept thinking about it, like, is it just that, you know, when you work really hard for something, there's a letdown?
Gloria Nelund: Is it just that? But I just couldn't shake it. And when I was walking out the door, I was flying to Florida that day just for the day to visit our office there. And there was a book on my coffee table that my brother in law had given me years ago or years before called Halftime. And I picked that up, you know, I was looking for inspiration and I picked up that book, read it on my way to Florida and I came back to New York that night and thought, that's it, I need a halftime and so the whole idea of about halftime really is, you know, stopping and taking [00:10:00] a look at how you've spent the first half of your life and then being more deliberate about It's sort of what you do in a football game.
Gloria Nelund: And so I just thought, wow, that makes so much sense to me. So that night I hopped on a plane, I flew to London and quit my job the next day. And now what's really funny is in the book, he tells you, but whatever you do. Like, figure out a plan before you quit your job.
Stacy Havener: I And then you're like, I'm going to do the opposite.
Stacy Havener: I'm going to do the opposite.
Gloria Nelund: Because I knew me, and I was like, I love my job so much and I want to work so hard at it that I won't do it, right? I won't take the break. And I gave them, obviously, plenty of time. I stayed till the end of the year. And I thought, okay, I'm going to retire. And, uh, I will find a way for my life to have meaning.
Gloria Nelund: So I thought, well, I'll become a philanthropist and that will do it. [00:11:00] And I did a lot of, you know, like other things, Bible studies and all these things to try to say, what's my purpose in life. And I now call it my two year wilderness journey because for two years, I really felt like I was searching so hard for, you know, what's my purpose.
Gloria Nelund: And I'm traveling around the world. getting involved in causes I care about, but yet I really felt like I am not made to be this person. Like it just, it didn't feel right. And everywhere I went, I couldn't help but see investment opportunity. And so finally in 2007, a couple of things all lined up at the same time.
Gloria Nelund: One was, I was invited to this think tank discussion group in London. Our topic was, how do you use capitalism to solve social problems? And I just thought, oh, that's it, right? That was my proverbial light bulb. But then I also had to shake this feeling I had that I, that my life didn't have [00:12:00] meaning. And about like five different people reached out to me in the space of two weeks, people from all different times in my life.
Gloria Nelund: And they all reached out in one different ways to say what a difference I had made in their life. And I thought, well, wait a minute. Maybe I really was living out my purpose, right? Maybe business was my mission. And it was just that I was making a difference in other ways, right? Instead of with my work.
Gloria Nelund: So then that freed me to go, okay, but now maybe I can make a difference with my work. And that is the impetus for starting Trilink. It took a couple of years, but I really thought, you know, I know that businesses matter when it comes to making a difference in the way the world is going to be, you know, in the future, obviously, environmental issues, social issues, all of the things that we now [00:13:00] deal with right from the impact and ESG perspective.
Gloria Nelund: A lot of them can be influenced by companies, whether they're small or big, but the companies have to know that that's what's important. And so I just thought, you know what, I'm going to prove that you can do both, that you can hold companies accountable, get them engaged in, you know, creating a positive impact, doing good things and generate a market rate return.
Gloria Nelund: There's no reason there has to be a trade off. And so from the beginning, that was the idea behind starting and now. 12 years later, we've done that. It's been very exciting.
Stacy Havener: It's such a great backstory. And I, I love so many threads of that. The book piece is just so honest and real. That need for a halftime and feeling.
Stacy Havener: Like, because you're in finance and there's all this money and all these people are so successful that somehow your work doesn't have [00:14:00] meaning. And I get that. I really do. And I'm sure a lot of people listening who are in this industry are going to get that as well. So I just really appreciate you sharing that with us with such candor.
Stacy Havener: We'll be back in a moment after a word from our premier brand partner, Ultimis Fund Solutions.
Gloria Nelund: Since our founding in 1989, we believe that alternative investments are integral part of client portfolios. Unfortunately, delivering high quality hedge funds and private market exposures has always been a challenge for the wealth management industry. These type of alternative investments introduce unique challenges related to taxes, qualifications, paperwork, and reporting.
Gloria Nelund: As a result, high net worth investors tend to be significantly under allocated to both hedge funds and private markets relative to institutional
Stacy Havener: investors. That's Stephanie Lang, chief investment officer from Homer Berg, an 11 [00:15:00] billion RIA headquartered in Atlanta, Georgia, that serves over 2, 700 clients in 46 states.
Stacy Havener: You can tell they believe in helping high net worth clients access hedge funds. And other alternative investments. They're equally as passionate about broadening that access for all their clients, not just qualified purchasers or a select group of accredited investors. Meet Nick Darsh from Ultimis with some backstory.
Stacy Havener: Hall McBurgh
Gloria Nelund: created a 3C1 fund in January 1999 to provide their high net worth and institutional investors with ready access to a diversified portfolio of hedge funds. As interest in the fund grew and the constraint of the hundred investor rule loomed. HB began exploring ways to continue expanding the investor pool without negatively affecting existing shareholders.
Stacy Havener: We'll hear more about the creative fund [00:16:00] conversion work that made it possible later in the show. Now back to the program. I want to come back to, you mentioned that your dad was an entrepreneur and I want to weave that in. to the work you do at Trilink. So tell us what does Trilink do and how does that tie back to the entrepreneur?
Gloria Nelund: So at Trilink, we are a global private credit firm, basically focused on providing capital to small midsize businesses globally that are one committed to sustainable business practices. And two are also committed to creating a positive impact in the world. And basically the kinds of businesses that we are supporting.
Gloria Nelund: So we provide loans to them. Like think of us like a bank, right? But better than a bank, uh, like a smaller [00:17:00] regional bank. One that's not going to implode,
Stacy Havener: right? Yeah,
Gloria Nelund: exactly. And. Basically, we target companies that are like, how about anywhere from 10 to 350 employees? So it's up to 500, but our average is about 350.
Gloria Nelund: And these are businesses much like the businesses here in the U. S. and much like my dad's businesses that he started. And I mentioned that, you know, a lot of what I learned about investing, I hadn't realized I learned from watching my dad. And, you know, if you really think about it, most investing, like 90 percent of investing involves a company.
Gloria Nelund: And even from their beginning, right? It's, you could do venture capital or you could do early stage, you know, private equity, or you could do debt. Like we're doing, you loan to them. Then if they become a public company, you're buying their stock or you're buying their credit with their bonds, which is credit.
Gloria Nelund: And so if you just think about, you know, the whole capital market system, a lot of it involves companies. [00:18:00] All those companies have a beginning. They all started somewhere, right? And as I watched my dad, it's very practical. I would see that my dad Treated all of his stakeholders really well. He always shared equity with his other, you know, employees.
Gloria Nelund: He treated the employees like family. All of his suppliers, like we felt like they were family. And he basically, every time he would have some kind of success, like he'd have an exit, then he would do something for the community. Like he would build, he built a swimming pool. He built a park and you saw he really gave back and then lo and behold.
Gloria Nelund: Every time he started a new company, everybody wanted to support him, right? And I look at that and go, well, that's just a great model, right? For businesses. And so if you can find those companies when you're investing, they're going to make better investments in the long run. And so we basically find companies like that.
Gloria Nelund: around the world through our network, [00:19:00] and we make loans to them. And then basically they're paying interest. And so that interest we pay out to our investors. And that's also how we generate a return is they pay off the loans. And then we, you know, return capital. So it's actually really simple, even though whenever we tell our story, everybody goes, Oh, that's complicated.
Gloria Nelund: I'm like, no, it's really simple. It's really
Stacy Havener: simple. Well, you're just, you're unpacking there really hit on the simplicity of it. And I think in part because you got us to peg against the idea of your dad as an entrepreneur, building a business and involving everyone in that business for their benefit, including the community.
Stacy Havener: And if I were, and, and And that is simple at its core. It doesn't mean it's easy, by the way, right, but it's simple. And I remember in just previous conversations I've had with you because, and I want to talk about where these companies are, because I think that's probably also [00:20:00] where people get. The complexity bias coming in, but your thesis is that these S.
Stacy Havener: M. B. E. S. are what builds an economy. And so can you talk about the countries in which this is happening? Is this the U. S. Or is this somewhere else?
Gloria Nelund: So, our focus historically has been primarily in developing economies, which is a higher end subset of emerging markets. So it's the countries where they are poised to become an advanced economy, but they really need more capital markets.
Gloria Nelund: So they need more access to capital, which is really what this whole strategy is about is where. So, after the financial crisis, banks left everything except their home market, right? And these companies were already starved for capital. But then after the financial crisis, it got worse. And now, after COVID, it's gotten even worse.
Gloria Nelund: And so, there's an over a 6 trillion gap in financing for these types of businesses [00:21:00] in these select developing economies. And so, we actually do our analysis first on where is the country stable? Is there? rule of law. Can you perfect liens and property rights and things like that? And then is the economy growing?
Gloria Nelund: And also, is there access for you as a foreign investor? Can you get your money in and out? Like China and India are examples of, you know, great. developing economies, but you can't, as a foreign investor, get money in or out easily. So we don't invest there. And historically, that was our focus. And then during COVID, actually, the U.
Gloria Nelund: S. came into focus because there suddenly were communities where there was the same need that banks had pulled out. And so we started doing some U. S. investments in 2021. And so I would say, now we're a little more global than we used to be. And, you know, if there's the right opportunity, we're definitely [00:22:00] going to source the opportunities that fit our mandate, that do what we're trying to do from an impact perspective.
Gloria Nelund: But primarily
Stacy Havener: it's non U. S. Primarily. Yeah. Yeah. That's great. And, and it's a good dovetail, actually. Into another thing I want to talk about, which listeners to this podcast, if you've listened to some of my friends, Dan McCalskis, that podcast, or even Simon Evan Cook, you know, there's these are more on the allocator side.
Stacy Havener: One of the things allocators say is it's really difficult when you talk to an asset manager to get them to define their edge because they would say. And they have said, go listen to the podcast, that, you know, everybody kind of says the same thing. It's like all these truisms and all these kind of platitudes and cliches, and no one really gets to the heart of what makes them different, what makes them special.
Stacy Havener: And I would argue that a lot of what you've said already probably contributes to [00:23:00] that differentiation and that edge. But I want to give you a chance to kind of think about that and talk about that. We can talk about it together. Like, what would you say your edge
Gloria Nelund: is? So I would say that we now have a 10 year track record doing exactly this.
Gloria Nelund: So what this is, right, is private credit for impact, where you don't have to give up investment return to do good. And we actually haven't found very many people who do that. And so, especially we haven't found very many people who do it well, right? And at the level. Of involvement where we do it. So when we invest in these companies, we actually do get involved in their company, which is unusual for a lender.
Gloria Nelund: But remember when I said earlier, we're like a bank. It's really probably like the banks were in the 60s and 70s, where if you had a small community bank or even a regional bank, they knew you. As a business owner, they worked with you, you know, [00:24:00] so if there were problems and you had to delay or you couldn't make a payment, they didn't just turn you over to the collection group and say, okay, we're done with you.
Gloria Nelund: They worked with you to try to, you know, make it work for everyone. And particularly in the last three years with the pandemic, that has been really important. So out of our 90 some companies, we only had one that we had to put in liquidation. Now, we had quite a few that we had to restructure and some are still underperforming.
Gloria Nelund: So they're not out of the woods yet. However, we had. Like I said, one that just wasn't going to make it right. And if you look at any other private lenders or banks, they didn't have that same success. And so I would say, you know, the, the amount of time that we've been doing this and the track record we've built.
Gloria Nelund: Proving that we can generate market rate returns at a time when private credit is coming in [00:25:00] finally coming into vision for certain allocators and impact is finally becoming something that people care about because they realize that it does not have to be concessionary, right? It's all about accountability.
Gloria Nelund: And that's where we shine.
Stacy Havener: Yes, that's so well said. And I would even so I'm a big yes. And yes. So yes. And what you said about being willing to work with these companies as a lender, I think makes everyone pause. That to me is an edge statement. Because typically you would think, okay, well, if you're a company, And you need capital and you need strategic guidance or advisory or whatever, then venture or private equity is the way you go, because then there's their equity partners.
Stacy Havener: They're going to help you grow your business. They have a network of [00:26:00] people that they can bring in, et cetera. So that to me. You know, that, that idea of partnering and helping and being a strategic participant in the business is very much something you see on the equity side. I rarely hear that on the credit side.
Stacy Havener: I think that's true. I think that's where your edge comes in. Can you give us an example, like, is there a company, even if you can't name them, just an example of this whole thing, how it works, that'd be great. I'll give you
Gloria Nelund: like two quick ones, but one actually was early on in our fund life, like in the first year, actually was one of the first ones we did.
Gloria Nelund: And within a year, their first principal payment was due. And basically they called us and said, look, we're not going to be able to make that payment because our equipment got delayed. So it's a diaper manufacturer in Peru, and they had a, the ability to create. Adult diapers. So they were they were filling a specific niche in Peru and they [00:27:00] were trying to help solve infant mortality.
Gloria Nelund: That was their business model to begin with by creating affordable disposable diapers that they distributed through pharmacies in rural areas. And then they were asked by the same pharmacy, could you do adult diapers? And so we loaned them the money to buy the equipment to meet the contract to do adult diapers.
Gloria Nelund: And they called us to say their equipment was delayed. And so the contracts were behind. And so they weren't going to be able to make the payment. And so the first thing we did was, you know, like three people from our team hopped on a plane, flew to Peru, met with them. And One, we were trying to confirm.
Gloria Nelund: Was that really true? Right? And yes, in fact, it was for the time we got there. The equipment was there, but it wasn't get assembled. But then we had to go meet with the pharmacy to say, are you going to still meet these contracts? Um, because now they're delayed on delivering and So, yes, they were, we helped renegotiate those and based on being able to [00:28:00] confirm everything, then we restructured the loan so that it could pay.
Gloria Nelund: And it was a very successful loan in the portfolio. It's almost paid off now. And then we also had a couple during the pandemic where basically, in fact, we had probably three with a really similar story where. Trading heavily impacted their global trade. So we have a tire manufacturer basically in Turkey that their biggest client is VW and they make these certain kind of alloy wheels.
Gloria Nelund: Well, they were impacted because they couldn't get supplies, right? And then they weren't able to ship. And so everything, it really disrupted their business, right? And so basically we did a similar thing. Now we couldn't get there, but we had some partners on the ground locally who were able to meet with them.
Gloria Nelund: We're able to verify everything, run new models, and we were able to restructure their loan. Now they got hit [00:29:00] again when Putin invaded Ukraine. Again, now, and not because they didn't have business there, but they did get supplies from there. And so then they had to find new suppliers. And, uh, but once again, we were able to work with them and get everything back on track.
Gloria Nelund: And they're, you know, performing loan. So, wow,
Stacy Havener: great stories. Thank you for sharing that. I think it kind of brings it to life to see the types of businesses and how you're able to help the fact that you jumped on a plane. So that was great. Thanks for, for doing that. Another thing that I think a lot of boutiques have to fight against, especially by the way, in credit, which is, you know, the bigs dominate, the bigs get the asset flows, the bigs get the deal flow, the big, they get everything, right?
Stacy Havener: And that's an industry problem, but you hear it a lot with credit. That Like, okay, you could be be a boutique equity manager, but there's really no boutique credit managers, and that's kind of a story that's been told in many different [00:30:00] elements in the credit markets. How does that sit with you? Do you find that to be true?
Stacy Havener: Do you find yourself competing with the bigs in what you do?
Gloria Nelund: Okay, so I'm glad you asked that question because. We absolutely do see it on the inflow investor side. So we compete with those guys all the time for money going into private credit, right? Where we do not compete with them and do not see them is on the lending side.
Gloria Nelund: Because since they're the bigs, right? They can't afford to do the size of deals that we're doing. And so what happens is, as they get bigger and bigger, they move up market. And so they're, most of them are way above even middle market commercial, right? So they're doing loans in the 50, a hundred million dollars range.
Gloria Nelund: We're doing loans in the million, 5 million, $8 million, right? And so we really don't see them on the deal side, [00:31:00] but we do see them on the, you know, attracting capital side and. It's one of the reasons, you know, that we love you so much, Stacy, is you help everybody focus in on like, what's your edge, what's your message, what's your story, because we feel like we have a great story.
Gloria Nelund: And if somebody really wants to invest in private credit. The ability to not just make an impact, but the ability to control the variables to get a return are much greater in that lower, you know, where we play under low middle market, because we don't have competition, first of all, so we get really strong credit covenants, like loan covenants.
Gloria Nelund: We also get both. We require cash flows and assets, so we have really strong collateral. And so I look at it and go from a real risk return perspective, we don't have a lot of competition. [00:32:00] And so it's about telling that story better and about getting that message to investors so that they see we feel a very different niche for them than.
Gloria Nelund: all of these big players who mostly are in the US. If they're doing anything outside the US, it's typically in sovereign bonds. It's not real private lending. And so when you're in real private lending, you get the benefit of non correlation and you know, there's a lot of, like I said, risk benefits that you get.
Gloria Nelund: And so we, we do compete, but we need to get better at telling our story. I
Stacy Havener: love that. And not just because you're like story is the answer, because of course I agree with that, but I think what's so interesting about it is there's a perception for a lot of allocators as it relates to credit. Again, I think perpetuated by the narrative that the bigs tell that, you know, there's sort of one game in town for credit.
Stacy Havener: Bigger is better, not just on fund size, like the PIMCO and, you know, JP Morgan has some [00:33:00] huge, like those big funds that that's the only way to access the credit markets. I think there's this perception that niche only applies to equity. That quote, small cap only applies to equity. That alpha really only applies to equity.
Stacy Havener: And the reality is all of that lives in the credit markets to just no one's talking about it. And so size of fund, of course, impacts what someone can invest in. Of course it does. That doesn't matter if it's equity or credit or whatever. And somehow that narrative that's so special in the equity market, small cap, alpha, all this stuff, never made it to the credit market.
Stacy Havener: And yet it's so there. Gets lost. Yeah. You are so right. I'm glad we're talking about it because it's something I'm passionate about. I mean, that niche, that [00:34:00] space in the market that gets overlooked by the bigs, that doesn't mean that there's not real opportunity there. Yes. And good for you for leaning
Gloria Nelund: it.
Gloria Nelund: And there is so much opportunity, right? It's and we're seeing it even more now coming out of the pandemic. Like, companies are starved for credit. And, you know, they really need and these are good companies. These are companies that made it through the pandemic. So they're, you know, strong companies that need capital to grow.
Gloria Nelund: Well,
Stacy Havener: and as you said, with the 6 trillion lending gap, that must be exacerbated with what's happened to the banks.
Gloria Nelund: Right.
Stacy Havener: Absolutely. Yeah. So, well, you're doing work that matters and, and, you know, I'm cheering for you. Let's talk a little about qualitative due diligence. And normally here, I talk a lot about Sort of allocators doing due diligence on asset managers.
Stacy Havener: But what I think is interesting for our conversation, Gloria, is that I wonder how it applies for [00:35:00] you. So when you're looking at companies, how does qualitative due diligence play into it alongside that quantitative due diligence? Like, are you meeting with founders and teams, et
Gloria Nelund: cetera? Yes, absolutely. And it does matter.
Gloria Nelund: It's interesting because when we were creating the business model that we have, one of the really important things was, well, we said, we can't be a fund of funds because you're too disconnected. Plus there's double fees and there's no tax, you know, it's not efficient. And so it was, well, how do we. Find the companies in the markets where we want to be without having people all over the world.
Gloria Nelund: Right? And so that's we came up with this business model. That's very partner focused. And so we have partners all over the world who help us find the companies. But we always said, but we have to get to know them. So, yes, they can help us find them, but we've got to do our own due diligence. [00:36:00] We have to meet with their founders, their senior people.
Gloria Nelund: We have to visit Yeah. Yeah. their company, see them physically. And before COVID, we would get out to all of our borrowers at least once a year on a, like a rotating basis post COVID obviously, or during COVID that wasn't happening. So we had partners who could get to them, but post COVID, we've been getting back out there again to visit them because we think it's absolutely critical, right?
Gloria Nelund: If you think about it, like there are two issues with somebody repaying their debt. One is ability and the other is will, right? So can they, we can find out from their financial statements, we can monitor all that, right? But will they is a totally different issue. And so you're only going to know that by assessing those qualitative factors, right?
Gloria Nelund: And in credit, I think it's one of the most important things you can assess.
Stacy Havener: So fascinating, because again, I would argue that the [00:37:00] narrative that's been woven around the credit market is it's really about the numbers. Like, when you talk to credit investors, they'll say, well, this is math. Right. Right? Like, what I'm going to earn is math.
Stacy Havener: Right. And you don't really hear credit. Managers say, Oh, yeah, no, I go and meet with my my founders and my companies, you know, so I think that is really
Gloria Nelund: interesting. Yeah. And I would say one of the reasons that is, and people don't dig deep enough to realize it is that because a lot of the bigs, right, we were talking about their credit is often in public companies, even if they do a private financing of a public company.
Gloria Nelund: Public companies are going to, it is about the numbers, right? Totally. It's really when you get into private finance that the qualitative matters, but that's still a huge part of the market. And, but it doesn't get talked about because of who's doing it. That's
Stacy Havener: right. Great nuance. And [00:38:00] by the way, the other thing we often talk about in this whole big and boutique dichotomy is that there's a place for both.
Stacy Havener: Oh, yes, there's a place for both. Like, people think of, you know, so one of the things that investors might say is, look, I hear you, Stacy and Gloria, I hear what you're saying about all this unique stuff in the credit markets. But like, I don't use fixed income to generate alpha. This is my safe allocation.
Stacy Havener: This is where like, I just want to clip a coupon or whatever. I don't even know. Do people say that anymore? But anyway, like that, that whole thing, I'm dating myself.
Gloria Nelund: But I
Stacy Havener: liked that you said it. Well, thanks. I mean, And so I get that. I get that, as I'm sure you do. There's a place for different types of strategies.
Stacy Havener: There's a place for bigs and boutiques. They can all live in the same portfolio. I think what's important for you and for boutiques in general to realize is that's probably not the investor for you. [00:39:00] Yes, you're right. It's the investor that you are. It's not. If they're doing it for safety, if they're doing it for steady, you know, clipping coupon type of income because they're retired, maybe this isn't for them.
Stacy Havener: And guess what? That's okay. That's okay. We'll be back in a moment after a word from our premier brand partner, Ultimis Fund Solutions.
Gloria Nelund: When we first launched our internal fund to funds as a limited partnership. It was a great option for us to be able to provide a hundred of our accredited and qualified purchaser clients with access to a diversified portfolio of hedge fund strategies. However, fast forward to 2016, our firm had grown to manage over 4 billion and serve over a thousand clients of various sizes, accreditations, and tax situations.
Gloria Nelund: We still firmly believe that high quality hedge fund exposure is important to client portfolios. It provides stability to [00:40:00] client portfolios and generates a return stream that was not available in public and equity and fixed income markets. Unfortunately, the 3C1 structure with its slot limitations, high minimums, and K1 reporting was no longer ideal solution for our growing.
Gloria Nelund: and complex client base. We looked at various alternative options with third party hedge fund managers, liquid hedge mutual funds, but also discovered that we had an opportunity to register our fund with the SEC, preserve its extensive track record, and solve all of the issues that the 3C1 structure was creating for our business and clients.
Gloria Nelund: That's when we teamed up with Ultimis to begin the process of registering our legacy fund.
Stacy Havener: I want to stay on qualitative a [00:41:00] little bit because on the flip side now, so we talked about your qualitative due diligence of companies, I want to talk about Sort of the qualitative as it pertains to you and you as the face of your business and you as a fund manager And it you know, if story is kind of my my jam Authenticity is kind of right there with it and it's challenging It's challenging to put yourself out there and I just wonder how that journey has been for you as somebody in a In a male dominated industry for most of your career in a segment of the market that I would argue is even more male dominated, the credit markets and just how, how has that authenticity journey been for you?
Gloria Nelund: You know, it's interesting because being authentic is something that I highly value. And it's something that, right or wrong, I assess when I first meet someone, right? Like, do I think they're [00:42:00] being authentic and genuine? And it's also something that, like, when people meet me or talk about me or get to know me, it's the thing they're always, I'm going to say, surprised by.
Gloria Nelund: Yeah. And I look at it and go, well, I'm going to credit growing up in Ohio and having really great parents, like, you know, and having that really nice grounding, but I look at it and go, I value it so much that I would never, ever compromise that. And I look at it and go. And in fact, I can tell you about a conversation I even had today that was interesting.
Gloria Nelund: So one of our partners over the last eight months, we've had some challenges on different things. One was a deal related. One was just how they were getting paid related, but one was on some other work they were doing for us. And I'm not usually involved in, you know, that level, but in these cases I was and my experience left me feeling.[00:43:00]
Gloria Nelund: Like unhappy with them and yesterday was having a conversation with someone else about they were talking about them and saying they're doing this and this and this and I recognized in myself that, oh, wow, I have an issue with them and I didn't realize it, you know, until I had this reaction. And so last night I reached out and said, okay, could we have a call tomorrow?
Gloria Nelund: I want to talk to you about something. And so I literally started the call with, you know, Hey, I recognized yesterday that I have an issue with you guys and I did enough like soul searching to figure out where it's coming from. And I want to share that with you so that we can talk about it because I do value our relationship and I do want to get past this because I didn't realize how much it was impacting me.
Gloria Nelund: Thank you. And one of them said, Oh, my gosh, I've never ever had anybody say that to me. But I really appreciate it because we value it as well. And we ended up having just a great talk and [00:44:00] cleared it all up. And, but it's really funny because, you know, I look at that and go, yeah, I, again, I value that so much, but it's so rare.
Gloria Nelund: And I don't know. I just wish it wasn't.
Stacy Havener: Yes. And I think, you know, you actually talked about it even in a different context, which is as a leader of your business. And so one of the things they say about authenticity, by the way, just to give you an extra high five on what you did there is that your team good We'll learn authenticity by how you show up.
Stacy Havener: They learn vulnerability by how you are vulnerable. So if you talked it and said, you know, authenticity is really important to me, but you never did it. They're not going to. Follow suit. But what you did there was you, you talked about it and then you, you were about it and they saw that, which means they will [00:45:00] follow suit because it is very scary to be vulnerable and to be authentic and to show different sides of ourselves in a business that really prioritizes and values, you know, cutthroat numbers, cutthroat numbers.
Stacy Havener: no nonsense, all those things. You can, again, going back to the and comment, you can be both. You can be serious. You can be a serious business person. You can believe in numbers. You can also be kind and authentic and vulnerable and nice and funny and all the things that we value as people, you know? So that was a great example.
Stacy Havener: Thank you for sharing that.
Gloria Nelund: And one other thing that I just thought of when you were saying that is another thing that has been really important in the last three years in particular is accessibility. And so, you know, it was a tough three years for everybody. And last year was a really tough year for.
Gloria Nelund: Literally all [00:46:00] financial advisors and their clients, right? Because it was terrible markets and we were going through a tough time as well. But we decided, well, wait, that's the time we need to communicate the most. And so we already were doing a lot of communication, but we started these things called gratitude hours and we're reaching out to all of our advisors and saying, look, we'll talk to your clients, you know, because we know that it's hard on you and, you know, we can help share in that pain.
Gloria Nelund: Um, And we'll talk to them. And so we've gotten like lots of very positive feedback on the level of communication. But I have actually had an investor who was talking to one of our relationship people and She said she was really upset about something. It was really more of a operational mistake by our placement or by our transfer agent.
Gloria Nelund: And we were trying to help her through it and everything. And our relationship person called me and said, Hey, would [00:47:00] you be willing to call her? And I was like, Well, yes, of course. So I called her, you know, I apologize. I had a really good talk with her. And And Later, I heard from, through our relationship person that she was bragging about at a cocktail party, being able to talk to the CEO who called her and basically, you know, apologized and walked her through everything.
Gloria Nelund: And I thought, okay, that's part of just, you know, being available to people and being authentic and showing up.
Stacy Havener: I love that no one can see me, but I just like threw my hands in the air and like did like I was like running in place a little dance. You know, here's why I love that. Not just that you were willing to do it, but that you got the feedback loop of how special that is.
Stacy Havener: So at Havener, we had something with our clients where we would call a magic portfolio manager call. I love that. Okay. And so we would say to our clients, we're going to give you a couple names each [00:48:00] week and we want you to just call them out of the blue. No assistant reaching out to schedule time, none of that.
Stacy Havener: Like just pick up the good old telephone and call them, right? I kid you not. People will like fall out of their chair when they receive that phone call because it's so rare. Right? And also remember for a boutique, the investor that you that you need that you want is an early adopter. And They do it for different reasons.
Stacy Havener: They invest for different reasons. They invest because of that access, because of that relationship, because they can brag at the cocktail party that Gloria called me. I mean, she just called me. She, I talked to her. She's my friend. How amazing is that? That is people do business with people all day long.
Stacy Havener: I'm so proud of you for doing that. That's amazing. What a story. I almost want to end there. It's so. It's so good. All right. Well, let's do one more and then I want to ask you some [00:49:00] questions. Some kind of like a little bit more fun, a little bit of a fun twist on things. But one of the things I wanted to ask you, and it's such a tired question.
Stacy Havener: I don't usually ask it because it's It's like so cliche, but here I want to, because you are, you know, a female led firm. You've been around this business for a long time. And what advice do you have for the next gen? You know, if, if a female portfolio manager called you and said, I want to start my own firm, what would you say to her also?
Stacy Havener: Hi, waving, waving to you. I mean, I've been here for a while, but just like, what's the advice.
Gloria Nelund: Yeah, I would say I have two things that come to mind. One is be resilient. It's not easy to do it. And I mean, I, whether you're male or female, it's not easy, right? You know that. But I think as a female, we start to lose confidence when things don't [00:50:00] go well time and time and time again.
Gloria Nelund: And you have to find a way to keep up that confidence and whatever that takes, right? You need to have it because you got to go in knowing it's going to be hard and you've got to have that resilience and you've just got to keep, keep at it. Like, you know, just one of the benefits that I have is. I am a really stubborn person and so, so I make sure that I solve problems that I get to the end because I, I'm never going to give up.
Gloria Nelund: So I think that helped me, but I, I really, there were times when I had to like lean back on old practices of, okay, I've got to, you know, build my confidence again. And I think it's harder for women. Like I, I. I just think that's a natural thing for us. And then the second thing I would say is, and maybe it fits in with the first one of, have a really strong support system because we do need that [00:51:00] as well, right?
Gloria Nelund: And it is lonely at the top, again, as you know, and you. You don't realize how much you need that emotional support, like all the time, right? I have an amazing husband who's tremendously supportive, but I also do have a couple of really close friends and I do lean on them because there are times when you just like you just want to talk about something other than business and totally, you know, you need to have people who you can do that with.
Gloria Nelund: Besides your family,
Stacy Havener: but fabulous advice, fabulous advice, and they protect your confidence. Is really something I resonate with that a lot because throughout the day you can have moments where your confidence gets. I mean, we're talking like before lunch, you could be like, what am I even doing? Yeah, you know?
Stacy Havener: Well, that is great. So high five on that. I also am taking notes on it too, because even when you've [00:52:00] been around for a long time, That part doesn't really get
Gloria Nelund: easier. It doesn't. And it's funny, you know, there's that, there's a whole study on imposter syndrome. And I think for women, I've always thought that only women had it.
Gloria Nelund: And then I was in a CEO group with a bunch of very successful men, including John Mackey, Whole Foods CEO, who said they suffered from that. at different times in their career. And I was like, really? And I think they're just better at powering through it and not, you know, either faking it till you make it or just not showing it.
Gloria Nelund: But even though you experienced that, it doesn't mean it has to become you, right? You don't have to let it take over. And you need to find those ways to reinvigorate yourself and, and Give yourself that confidence again, right? And you just have to know yourself to know that's a trigger that, you know, that's where I'm at.
Gloria Nelund: That's why I'm feeling this way and I got to get out of it. I can't stay here long.
Stacy Havener: So true. I'm in a business coaching group and that's what they [00:53:00] say. It's like you'll go into the gap and the trick is not to prevent yourself from going into the gap. It's how fast can you get yourself out? And I love that.
Stacy Havener: Okay, Gloria, this is so much fun. I want to do a little bit. It's not rapid fire per se, but just questions that are inspired by Proust's questionnaire, which the concept being that there are certain questions you can ask someone that are a window into who they are. So it kind of goes back to that authenticity.
Stacy Havener: So if you're ready, I'm going to start with, okay, I'm going to start with one. I wonder if this is going to be something you've already talked about, but what book inspires you?
Gloria Nelund: Oh, wow. Well, the Bible is one that is most inspiring to me. I read it every day and I rely on it for grounding and principles and how you treat people.
Gloria Nelund: But I do also read a lot of other business books. And Zig Ziglar is one of my all time [00:54:00] favorite, uh, speakers. And I said this to somebody recently and they laughed at me, but I still have his CDs in my car because I have a car that has CDs. So, I mean, that has a CD player, but he died before anything went digital.
Gloria Nelund: And so you can only get it on like something older. Um, I still read books and I, I read them over and over again. He has one CU at the top that it's just got some really great practical things. And so whenever I need a confidence boost, I actually put a CDs in. That's what I started to say. The other thing is, so I'd love to read, but I mostly read like business books or I really love autobiographies because they're, Like you can learn so much about people and so I read them about leaders typically and Colin Powell's autobiography was so good.
Gloria Nelund: It's old now, but I will tell you it's so inspiring. Like what a, what a [00:55:00] wonderful man and with great leadership principles.
Stacy Havener: These are so great. Also, any millennial who's listening to this is like, hmm, Zig Ziglar and
Gloria Nelund: So that where it came up was I was doing some mentoring with one of our team members and they said, well, when you get down, how do you pick yourself back up?
Gloria Nelund: And I said, to be honest, I have my Zig Ziglar tape CDs in my car and I turn them on and instantly it like takes me back and I go, yes, that's right. I can do it. And they're like, CDs. I said, well, I could have told you it was like a podcast or something, but he never made any. So,
Stacy Havener: I mean, Hey, you know, this, this is real life here.
Stacy Havener: Uh, okay. So going from books to places, what place inspires you? What's your
Gloria Nelund: happy place? Maui. Maui. Yes. I can. It's one of the few places I can just instantly relax. [00:56:00] Like I walk off the plane, you can smell the flowers and I just instantly am relaxed there. And it's just a fabulous place to, to, to take a vacation, right?
Gloria Nelund: Like to go recharge.
Stacy Havener: Yeah. Yeah. I love that. Okay. Little bit of a different angle now. So You are going to give a presentation, a talk at a big stadium. Fun? Okay. Yep. It's filled with, you know, thousands of Gloria and TriLink fans. What song do they play? As you walk out to take the stage.
Gloria Nelund: Okay. One of the two Gloria songs.
Stacy Havener: That's awesome. Now everyone's like, Dang, I need a song named after me. That's right. That is so [00:57:00] good. Oh my gosh, I love that. Okay. Next question. What profession, other than your own, would you like to attempt?
Gloria Nelund: Okay, this will seem really weird, but, and I only want to do it for like a night. No, maybe a week. I want to be a bartender.
Gloria Nelund: Um, because... I, I think like people who go to bars are really interesting. And so, first of all, I think just making fun cocktails would be fun, but then getting to talk to all those people and you don't have to, like, it's not going to be a long term relationship, right? It's just going to be a fun conversation about who they are and why they're there.
Gloria Nelund: And so I always thought it would be so fun. Like
Stacy Havener: I said, maybe a week. Yeah. Are you going to, like, throw the bottles? I would love to be able to do that. Yeah. Totally. And I swear, bartenders probably should all have honorary doctorates in some sort of, like, you [00:58:00] know, psychology or something. Yes. Yes. That's it.
Stacy Havener: Okay. Flip side. What profession would you not like to do?
Gloria Nelund: Oh, definitely not be a school teacher. I say that.
Stacy Havener: So
Gloria Nelund: that hasn't changed. That has not changed. And I would say it is, um, emphasized by the fact that my youngest sister is a school teacher. No way. Yes. Although high school. And she said right now it's the worst profession in the world. Oh yeah. You know, now COVID made it really bad for a couple of years, but education in our country, right, is not valued.
Gloria Nelund: And so the way teachers get treated, the way parents don't care about their kids and what's going on, they're not involved. And it would just be awful to be a school teacher these days. And they're so underappreciated, but yet they're so important. And I just, it's frustrating. [00:59:00]
Stacy Havener: That's really true, sadly, sad, but true.
Stacy Havener: And you know, it's very interesting that you say that because of course I know that you do a ton of mentoring and all these things. So it's not that you don't want to help the next generation. It's more about the profession. And I think that's, you know, that's,
Gloria Nelund: in fact, I do a lot of guest lecturing universities and things, which I love to do,
Stacy Havener: but yeah, totally.
Stacy Havener: It is very different. That is, that's a whole nother podcast. Okay. Last but not least, what do you want people to say about you after you've retired or left the industry?
Gloria Nelund: I think that I always did what I said I was going to do that it gets back to the idea of being authentic and that she really cared about people and cared about the business and what we did.
Gloria Nelund: And yeah, I [01:00:00] want that to be obvious.
Stacy Havener: I love that. I think it is. It is for me. I know it is for everyone on your team, and I'm sure it is for our listeners that you care. I do. How, how, how crazy a credit manager who cares. There you go. There's a tagline. Gloria, thank you so much for being here. It's always a pleasure to talk with you.
Stacy Havener: You too. You've been gracious with your time and we appreciate you and we're cheering. Thank you, Stacey. If you know a fund manager or a founder in the investment world with a great story, drop a note to Stacey at StaceyHavener. com and tell me about it. Till next time, I'm Stacey Havener. Thanks for listening.
Stacy Havener: And now a final word from our premier brand partner, Ultimis Fund Solutions.
Gloria Nelund: The conversion of Omric Berg's LP into an integral fund empowered them to grow the fund from 90 million to over 200 million. And expand the reach from [01:01:00] 100 investors to nearly 700 new investors and continues to grow today by pursuing the conversion, a homework Berg was able to lower minimums to 25, 000 welcome accredited investors.
Gloria Nelund: In addition to qualified purchasers, the entire conversion process was highly efficient because homework Berg chose to partner with ultimates and other partners with a proven track record in this type of structure to structure product transition. The headlines are often too focused on new interval funds from pedigreed providers, this new fund from this cool big firm, et cetera.
Gloria Nelund: Maximizing a fund's potential through a conversion can be powerful too, as we see in the story of Hallmark Berg. Traditional Investment Management and Alternative Investment Management Are converging more retail investors are demanding access to non correlated strategies in a liquid asset classes to compliment or supplement public markets exposure interval and tender offer funds offer managers a flexible wrapper that combines many of the benefits of both 1940 act and private fund [01:02:00] structures.
Gloria Nelund: Interest in these products has increased significantly in the past decade, and we anticipate the volume of both new launches and structure conversions to continue well into the future.
Gloria Nelund: This podcast is for informational purposes
Stacy Havener: only and should not be relied upon as a basis for investment decisions. The information is not an offer, solicitation, or recommendation of any of the funds, services, or products, or to adopt any investment
Gloria Nelund: strategy.
Stacy Havener: Investment values may fluctuate and past performance is not a guide to future performance.
Gloria Nelund: All opinions expressed by guests on the show are solely their own opinion and do not necessarily reflect those at their firm. Manager's
Stacy Havener: appearance on the show does not constitute an endorsement by Stacey Havener
Gloria Nelund: or Havener Capital Partners.
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