Vladimir Jelisavcic is the Chief Investment Officer at Bowery Investment Management, and the Founder of Cherokee Acquisitions. Prior to founding Cherokee Acquisitions, he was the Principal & Co-Portfolio Manager at Longacre Fund Management, and also served as the VP of Distressed Claims and Loans at Bear Stearns. Cherokee Acquisitions was a generous sponsor of the 2018 NYU Entrepreneurs Festival and we spoke with Vladimir to learn more about his experience, lessons, and vision as a financial entrepreneur.
NYU Entrepreneurial Institute: Can you tell us a little bit about your journey as a financial entrepreneur?
Vladimir Jelisavcic: I graduated from NYU (BPA ‘87) with an accounting degree. After graduation I started working at Deloitte doing taxes. I really like tax. I think of accounting work much the same way I think of coding, like accounting records is a set code and we have to interpret its logic.
After a few years of working I got into law school at University of Iowa College of Law. During the huge recession around 1990, major corporations were either financially teetering or outright filing for bankruptcy. I realized that I wanted to understand how a corporate balance sheet actually works. Rather than take an advisory or consulting role, I wanted to do it myself.
Lots of famous entrepreneurs dropped out of school but I wasn’t so brave! So I finished law school and landed my dream job at Bear Stearns in 1993. At the time it was a powerhouse trading firm, particularly in trading debt. Bear was such an electrifying place, like it was the hub of activity. The leadership team treated their employees well and saw themselves and everyone there as an intrapreneur. Just like that, I got a desk, computer, phone, and they’re like, “You’ll be trading distressed debt. Figure it out.”
I met some of the most important people in my life there, like my two friends there who were also attorneys. A few years later the three of us felt like we were ready to do our own thing so we started our own hedge fund called Longacre Fund Management. Each of us wrote a check totaling $1 million, which we used to attract third party capital. We built the fund to $3 billion in about 9 years. Eventually we sold a minority stake of the management company to Goldman Sachs’ Peterhill group.
Institute: How did the Great Recession around 2008 impact you and your business?
Vladimir: After the financial crisis, everything changed. We couldn’t serve our partners as well in the new shifted market. In 2009 we started incubating Bowery Investment Management out of Longacre, and in 2012, Bowery was born as its own management company.
Separately, I also founded Cherokee Acquisitions, which is a family office/proprietary investing firm. Cherokee doesn’t have any third party capital and is run on 100% proprietary capital. This was such a nice change, a breath of fresh air to be able to make investments without the distractions of managing third party capital. This, for me, felt like I was coming back full circle, back to the joy of investing that brought me into this industry in the first place.
Institute: What are the areas that Cherokee Acquisitions work in?
Vladimir: Cherokee has three business lines. The first is in distressed debt, which is a cyclical business and well-suited for proprietary investment firms. It’s a common and fundamental mistake to have long-term, non cyclical capital committed for a cyclical strategy. And because distressed debt is good for folks to get into during good episodes, and then walk away from when it’s not good, it’s a luxury to be able to work in that space.
The second business started a few years ago and is in physical oil and gas assets. The federal government allows private entities or individuals to own underground real estate (literally everything in the ground). So we own minerals in places that have hot shale oil/gas. The trick is to find the right minerals and sell at the right price. Oil and gas companies come and extract resources that they then resell, and we receive royalties for their sales at about 20% of their earnings.
The third business focuses on venture capital funding for early-stage startups working in the blockchain space. We’re working with one company now that we’re really excited about: Panda Pilot. Panda Pilot is a passive investing and analytics company that empowers investors to create strategies on how they want to invest in crypto. It uses a fun interface that educates users on different crypto assets, then applies research-based capital market techniques to recommend how they should build their portfolio. They will be launching their product in a couple of weeks – you should try it out!
Institute: Do you see social impact investing fitting into the work that you do? If so, how?
Vladimir: Great question. The blockchain world is basically Internet 3.0. The early promise of Internet 1.0 was decentralized peer to peer relationships, which got co-opted by giant tech firms that dominate Internet 2.0. You have Facebook who controls all data that you make available on their platform, which they then analyze and resell to turn a profit. Users never see any of that money. And I think that’s wrong.
Right now I think we don’t really understand the true value of personal data. Blockchain offers a powerful structure that enables direct relationships, removing intermediaries and letting people understand the value of their own data and privacy. They are able to find ways to interact with peers directly rather than through gatekeepers like Facebook.
I’m excited about the Brave browser, which has a strong ad and cookie blocker so that advertisers cannot penetrate. Within Brave, if an advertiser wants you to see a commercial, Brave users will need to be paid to watch it. Brave’s concept is mediated through BATs (Basic Attention Tokens), so if the reverse happens, and the consumer chooses to watch an educational video on YouTube, for example, the consumer can pay for this content with BATs. There can be a whole market developed based on this model.
Institute: What advice do you have for aspiring financial entrepreneurs?
Vladimir: I would say spend a great deal of time focusing on blockchain, period. Really study any aspect of it, there’s just so much potential. To me it’s the most important invention/innovation since Internet 1.0 twenty-five years ago. Over time, it’ll affect virtually all of finance. Go study it or work for any blockchain-focused company.
Institute: What book would you recommend to those interested in finance or FinTech?
Vladimir: I would recommend a book called Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction. It’s gives a great overview without too much theory, and is very accessible, fun, and enjoyable. It’s what I’m reading now!