Archive for the ‘Uncategorized’ Category

Minority Rapport: In Praise of Being Different by Mark Baumgartner

04 / 18 / 2019
by Charles Skorina | Comments are closed


Read More »

Skorina seeks CIO for $1.5 Billion portfolio

07 / 31 / 2018
by Charles Skorina | Comments are closed


Read More »

What does it cost to run an investment office?

04 / 01 / 2018
by Charles Skorina | Comments are closed

In early 2016 certain Congressional committees sent letters to 65 major private universities asking for information about their endowments.

It was worded as a polite request, but it came from people who could, for instance, compel the endowments to adopt a strict spending rate (like private foundations) instead of the more flexible regime they currently enjoy as "charities."  Needless to say, the schools all coughed up the information forthwith.

Apparently, this data-dump just went into filing cabinets, and neither the schools nor Congress have been eager to share those reports with the general public.  But our clients (nonprofit boards and "Wall Street" asset managers) find this information useful, so we scrounged up copies of 15 of the responding letters from various sources.  The other 50 schools have kept theirs out of sight.

We were especially curious to see what the schools had to say about endowment management costs, which has always been a cloudy issue for us.

Commonfund agrees.  In a 2015 study they opined that:

...unlike other factors that affect investment returns, such as asset allocation and the many types of operational and investment risk, costs are almost certainly the least well understood.

See: Commonfund Institute: Understanding the cost of Investment Management (October 2005).

As we said in our OCIO report, the perceived cost of managing the endowment is a major factor in the decision to outsource, or not to.

It's not the only factor, but a big one.  But how can a board make that decision if they don't know whether they're spending more or less than their peers?  And, whether outsourcing will actually save them any money?

Investment returns can be benchmarked to the second decimal place, but the costs of managing those investments are harder to come by.

So, we've done our own analysis of the cost data reported by those 15 schools.  It has some limitations, but we seem to be the only ones to have ransacked these letters.

 



Read More »

Scott Wilson steps up: Washington U lands a prime Chief Investment Officer

09 / 14 / 2017
by Charles Skorina | Comments are closed

Scott Wilson steps up 

Washington University lands a prime Chief Investment Officer

Washington University in St. Louis has landed a splendid new chief investment officer for its $8 billion endowment: Scott L. Wilson of Grinnell College.

The hire was announced last week and conducted by WUSL's interim CIO and search committee chair Eric Upin.

Mr. Upin is a highly qualified CIO in his own right.  He's a Harvard MBA, former CIO of the Stanford endowment and, more recently, a senior partner and CIO at outsourcer Makena. (Check out Makena's standing in our updated OCIO list, coming next week!)

Mr. Wilson served for more than seven years at the $1.9 billion (FY 17) Grinnell College endowment in Iowa, including three years as CIO.  He's a Grinnell grad, and was working toward an MS in financial mathematics from the University of Chicago when he was transferred to Tokyo.

Before joining Grinnell he held a series of hands-on bond- and derivatives-trading jobs, including a long tour in Tokyo working for Bank of America and Barclay's Capital.  And every summer he likes to get away from it all by retreating to his cabin somewhere up a mountain side in a remote part of Alaska.

He arrives in St. Louis with the global perspective needed at a major endowment in this era.  We know, for instance, that he has been shifting equity money into ex-U.S. markets since 2014, including establishing a foothold in sub-Saharan Africa (through private-equity deals), where many have feared to tread.

Kim Walker departed St. Louis in December after a 10-year tour as founding CIO at the WU Investment Management Company.  She had no announced destination, and hasn't yet surfaced anywhere else.

For Mr. Wilson, who's still only 41, this is a big step up.  He's moving from the 63rd-largest to the 16th-largest endowment per our latest SEER rankings.  And he will undoubtedly see a commensurate jump in pay.

Our SEER numbers show Mr. Wilson with total comp of $562,117 in 2014, the latest period available.  Ms. Walker got $891,871 in the same period (which is a bit on the low side for a Top 20 endowment).  We would expect him to get a package totaling close to $2 million as he comes aboard this Fall.

See SEER pay rankings: http://www.charlesskorina.com/?p=4922

Five-year annualized performance for the two funds has been similar: 5.4 percent at Grinnell and 5.6 percent at WUSL.  But their allocations have been significantly different.

See SEER performance rankings: http://www.charlesskorina.com/?p=4828

Grinnell is heavier in equities than most big endowments, including WUSL.  That equity exposure worked for them in FY2015, when Grinnell returned a big 20.4 percent, ahead of all the Ivys, and tied with University of Minnesota for the best performance among Top 100 endowments.  Mr. Wilson has been lightening that equities bucket over the last two years, shifting more into alternatives, but it still stands at about 40 percent as of FY2016.

Mr. Wilson has also eschewed macro hedge funds at Grinnell, because it creates portfolio construction issues which make it very difficult for the investment office to return its cost of capital.  This may or may not be reflected in the WUSL allocations going forward.

Like most big endowments, both WUSL and Grinnell posted losses in FY2016, but Grinnell has come roaring back in FY 2017 with a return close to 19%, bringing their five-year return to an impressive 10%.  As we see from their target allocation below, Grinnell has been high in equities when it counted and low in real assets when the pickings were slim.



Read More »

Harvard Crimson: Harvard Management Company to Lay Off Half Its Staff

01 / 26 / 2017
by Charles Skorina | Comments are closed

1-26-17 Harvard Crimson: Harvard Management Company to Lay Off Half Its Staff

http://www.thecrimson.com/article/2017/1/26/hmc-layoff-staff/



Read More »