Introducing SAM GALLO, University System of Maryland Foundation’s new CIO:

05 / 28 / 2012
by Charles Skorina | Comments are closed

Sam Gallo, new CIO at University System of Maryland Foundation

In May I successfully concluded a search for a new chief investment officer for the University System of Maryland Foundation with the appointment of Samuel N. Gallo, CPA, CAIA, BS in finance and BS in accounting from the University of Illinois, 1999.

Leonard Raley, the president of the foundation, and David Saunders, the chairman of the investment committee (and co-founder of K-2, one of the industry’s largest fund of hedge funds) were instrumental in defining and driving the search.

I recruited Mr. Gallo from the New York City office of PricewaterhouseCoopers (PwC), where he was a Managing Director working with leading hedge fund and private equity asset managers as well as institutional investors on industry best practices.

He started as an equity analyst with Arthur Andersen then, in 2002, he jumped into trading fixed income, equity futures and options, using his own money; a gutsy move for a young guy with a family.  There were three more years as a trader for a proprietary trading group in Chicago, and a year at a multi-strat hedge fund before moving into consulting in 2008, first with Ennis Knupp, then with PricewaterhouseCooper.

At Ennis Knupp his biggest client was the U.S. Treasury, where he helped Secretary Henry Paulson with their 2008/2009 financial relief programs.

In a prescient move in January (when Sam was already on our short list), Money Management Intelligence, a publication of Institutional Investor, gave Sam one of its Rising Star awards.  They cited his consulting work for PwC, including testimony at the Department of Labor on the characteristics of hedge funds and private equity investments.

It’s good to be able to find someone like Sam Gallo; what’s less good is disappointing so many other outstanding candidates.  I want to sincerely thank every one of them for the time and energy they spent in helping us through the process.

How to find a CIO:

Our initial screen for the USM position included several hundred sitting CIOs.  Many of them expressed interest in the position, and a number made it into the final rounds.

There are some 200 public pensions, 100 endowments, 60 union plans, and 85 foundations in the U.S. who employ a CIO or equivalent.  Add the various other tax-exempts, not to mention hundreds of corporate plans, and you have over 1,000 people.  Most of them make less than $300 thousand and are interested in moving up.  We didn’t hear from all of them, but it sometimes seemed as if we did.

We also looked at hundreds of senior portfolio managers and traders at pensions, hedge funds, long-only firms, private equity funds, and investment banks.  And we talked to many consultants.

We started with more than 700 queries and resumes and soon winnowed them down to about 50 who met the basic criteria.  Then the hard part commenced, trying, as always, to quantify and rank qualities that are not easily quantifiable or rank-able.

This assignment, like all my work, could only be effectively executed because I thoroughly know the territory.  Over three decades I have assembled a custom database of contacts, compensation figures, resumes and relevant industry information, all tailored to the special needs of boards of trustees and CIOs of endowments, foundations, pension plans, and the heads of hedge funds and large money management firms.  This furnishes the context I need before I ever pick up a phone to speak to a candidate.

I have evolved a recruiting methodology which centers on several rounds of extended, open-ended dialogue with candidates about the specific issues pertinent to the job.  Each round is documented and the next round is re-focused based on feedback from the client.  It’s not the fastest way to do things, but it leads to the best outcome.

The questions I start with don’t have right or wrong answers.  Good answers usually begin with: “It depends on….”  Eventually you get past a candidate’s talking points and start to understand his or her thinking process.

The people I recruit are investment managers, and managers must be decision-makers.  I must be able to tell my client that a candidate can cut through the fog of data and opinion to arrive at a firm, actionable conclusion.  Then I need to know that he or she can communicate that conclusion clearly, and defend it against criticism.

When I can bring candidates like that to my client, I know I’ve done my job well.

Sam Gallo is that kind of candidate, and I congratulate him on his appointment.