M&A Days, Fiscal Year-end Confusion, 100 Benchmarks to Remember

08 / 05 / 2020
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by Charles Skorina | Comments are closed

In this issue

  • 2020 Fiscal year-end Conundrum
  • Our OCIO and RIA M&A mandates
  • 100 Benchmarks to Remember

 

Most nonprofit funds – endowments, foundations, health systems, etc. – close their books for the fiscal year on June 30 and release preliminary performance results soon thereafter.

Timing is everything

For the last decade, public and private market investments have moved pretty much in sync, rising and falling like two riders on a tandem bike.

Before the COVID-19 crisis – or “the great cull” as my Australian friends call it – those preliminary investment returns reported to boards and the press were reasonably accurate reflections of the portfolio’s trendline for the previous twelve-months.

Not this year.

Here’s the problem.  Public market results are computed and consolidated by investment custodians and reported to their clients usually within a month of the fiscal close, but private market valuations take much longer.

There is at least a three-month lag before the private market investments are valued, marked, and reported to their investors who, in turn, consolidate the data into their financial reports.

Most investment teams will not know their June 30th private investment performance until September 30th or later.  In some cases, much later.

As a result, the fiscal year-end performance data released to the media later this fall by endowments, foundations and other diversified, multi-asset funds won’t tell us much.

The statements will reflect June 30th public market marks (up nicely) but March 31st private market valuations (down and dated), a recipe for confusion.

Furthermore, adding March lows to the spring rally could make for unhappy boards and donors.  And heaven forbid the time spent explaining to reporters why performance really wasn’t so bad.

So here’s the conundrum.  Should investment offices flush the news right away?  Get it all out there and enjoy a better 2021?

Or should they hold off until every last mark is settled?  Be slow rather than sorry?

We’ll see.

But for the record, most family offices and nonprofit investors have done ok this year.

So, kudos to the chief investment officers and staffs.

[See our one and five-year performance chart for 2019 below, listing one hundred endowments.  We publish it as a reference and reminder of what returns in a normal year looked like.]

It’s a cold cruel world

Lamentably, the schools, health systems, museums, and cultural institutions the CIOs work for are in deep trouble.

Tuition, government aid, donor gifts, room and board revenue, and visitor and patient revenue have all collapsed.

Staff and pay cuts have hit many of the well-known institutions we work with and more are in the works.

The Pay Study we published a few weeks ago on one hundred chief investment officers incorporated the most recent comprehensive public data available, December 2017.

But we expect pay cuts as high as twenty percent from our baseline comp for some investment teams as institutional budgets implode.

We’re in the Mergers and Acquisitions Business

In our world, the world of recruiting and consulting for Wall Street money managers, nonprofits, and family offices, the big news is M&A.

Searches for CIOs and senior investment executives may have slowed due to travel restrictions and Zoom-only interviewing (the hunts for new CIOs at University of Southern California and Australia’s Future Fund are notable exceptions), but in money management the deals keep on coming.

Asset managers, including OCIOs and RIAs, are hungry for scale and market share.  And with organic growth increasing at a snail’s pace, old fashion M&A is king.

We’ve made the case for years that a growing book of business is a sure-fire measure of client satisfaction and the best defense against the unexpected.

Not to mention increasing career opportunities for staff, monetizing sweat equity, and preparing for succession – over half of RIAs and OCIOs, by the way, do not have a succession plan in place.

The desire of many OCIO and RIA firms to remain independent is understandable.

But, we live in an unpredictable world and we believe our client’s goal to add financial muscle, build distribution, enhance investment capabilities, and develop bench strength through a robust acquisition program is the right way to proceed.

We have mandates from our clients to build and buy.

So if your firm is one of the two-hundred we have contacted so far this year (with 600 more on our target list) please keep our client’s proposition in mind and give us a call.

We’re well underway.

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Endowment Performance

June 30, 2019

Endowment Performance 2019
One and Five-year returns for FY 6-30-19
Charles Skorina & Co.

Rnk

Institutions

Pres / CEO / CIO

AUM FY19 $bn

1-yr Rtn %

5-yr Rtn %

Endowments
over $1bn

     Women CIOs     in red

1

 Harvard U

Narvekar, Nirmal

40.90

6.50

5.87

2

 UTIMCO
*U Texas &Texasx A&M

Harris, Britt

34.10

5.00

6.20

3

 Yale U

Swensen, David F.

30.30

5.70

8.78

4

 Stanford U

Wallace, Robert

29.60

6.50

7.40

5

 Princeton U

Golden, Andrew

26.10

6.20

9.20

6

 Massachusetts Institute of Tech

Alexander, Seth

17.44

8.80

10.00

7

 U of Pennsylvania

Ammon, Peter H.

14.70

6.50

7.80

8

 U of Notre Dame

Malpass, Scott C.

13.80

7.20

7.98

9

 U of California Regents

Bachher, Jagdeep S.

13.40

8.20

6.80

10

 U of Michigan

Lundberg, Erik L.

12.40

6.40

6.50

11

 Columbia U

Holland, Peter

10.95

3.80

6.53

12

 Northwestern
*fiscal yr Aug 31

McLean, William H.

10.80

2.50

5.70

13

 U of Virginia

Durden, Robert

9.60

5.80

7.08

14

 Washington U, St. Louis

Wilson, Scott

8.90

7.40

6.00

15

 Duke U

Triplett, Neal F.

8.60

6.90

6.70

16

 U of Chicago

Schmid, Mark

8.50

6.90

6.70

17

 Emory U

Pulavarti, Srinivas “Srini”

7.87

9.05

6.03

18

 Cornell U

Miranda, Ken

7.30

5.30

5.50

19

 U of N. Carolina, Chapel Hill & Fdns

King, Jonathan

6.57

7.70

7.70

20

 Rice U

Thacker, Allison K.

6.48

7.57

7.55

21

 Vanderbilt U

Hall, Anders W.

6.30

6.70

5.80

22

 U of Southern Calif

Mazzocco, Lisa

5.73

4.70

5.60

23

 Dartmouth College

Ruth, Alice A.

5.70

7.50

7.99

24

 Ohio State U

Lane, John C.

5.30

1.20

4.60

25

 Brown U

Dietz, Jane A.

4.20

12.40

8.50

26

 U of Washington

Ferguson, Keith

3.60

5.80

6.70

27

 UCLA Fdn

Barton, Justin

3.40

3.68

6.24

28

 U Wisconsin Fdn

Van Cleave, Julie

3.30

4.79

5.38

29

 Pennsylvania State U

Cullen, Joe
*start 9-2019

3.11

7.70

6.00

30

 Michigan State U

Zecher, Phil

3.03

7.90

6.60

31

 California Institute of Technology *Jun30 data

Richland, Scott H.

2.97

9.10

7.30

32

 Williams College

Chilton, Colette D.

2.90

9.60

9.10

33

 U Illinois Fdn

Ellison, Ellen J.

2.81

2.60

5.20

34

 Purdue U & Research Fdn

Cooper, David

2.65

5.50

4.67

35

 Boston College
*fiscal yr May 31

Zona, John J.

2.60

4.80

6.20

36

 U of Rochester

Phillips, Douglas W.

2.60

6.30

6.20

37

 U Minnesota Fdns

Gorence, Doug

2.50

9.20

6.70

38

 Amherst College

Johnson, Letitia

2.40

7.24

6.75

39

 Indiana U & Fdn

Stratten, Gary A.

2.35

5.50

5.40

40

 Pomona College

Wallace, Dave

2.30

6.50

5.60

41

 Rockefeller U

Falls, Amy C.

2.29

8.50

7.70

42

 Wellesley College

Kuenstner, Deborah Foye

2.17

7.20

7.10

43

 Swarthmore College

Amstutz, Mark C.

2.14

7.20

6.80

44

 Texas A&M U Fdns

Wall, Benjamin K.

2.09

5.50

5.34

45

 Carnegie Mellon U

Kennedy, Charles (Chuck) A.

2.00

7.90

7.70

46

 Tufts U

Dungan, Sally M. (dec.)

1.98

4.00

6.26

47

 Case Western
Reserve U

Milanich, Tim R.

1.87

5.90

5.70

48

 UC San Francisco

Harkins, David

1.84

4.50

4.79

49

 U of Florida Fdn

Reeser, William S.

1.80

7.00

5.50

50

 GeorgiaTech

Pellegrino, Brian H.

1.78

5.10

5.30

51

 U of Missouri

Richards, Thomas “Tom” F.

1.74

5.70

6.00

52

 Bowdoin College

Volent, Paula

1.74

10.90

10.20

53

 U of Nebraska Fdn

Neale, Brian

1.70

2.10

4.00

54

 Southern Methodist U *Jun30 data

Dahiya, Rakesh

1.67

3.50

5.00

55

 Kansas U Endowment Assoc.

Clarke, James, SVP Inv, Treasurer

1.61

5.60

5.50

56

 Lehigh U

Agatone, Kristin

1.60

7.70

6.20

57

 U of Iowa

Bethea, Jim

1.58

3.40

5.40

58

 U of Kentucky

Shupp, Todd

1.57

5.50

4.50

59

 Rutgers U

MacDonald, Jason

1.48

5.20

5.90

60

 U of Minnesota OIB

Mason, Stuart

1.48

8.30

6.60

61

 Tulane U

Jeremy T, Crigler

1.45

5.40

7.20

62

 U of Cincinnati

Scheer, Karl L.

1.45

5.30

5.10

63

 U Sys Maryland Fdn

Gallo, Samuel N.

1.41

7.10

6.10

64

 NC State U & Fdns

George, Libby Dir Inv

1.40

7.30

7.60

65

 U of Oklahoma

Johnson, Bradley J.

1.37

7.01

6.69

66

 Wake Forest U

Dunn, James J. OCIO – Verger

1.37

5.40

4.90

67

 U of Colorado Fdn

OCIO – Agility (Perella Weinberg)

1.36

6.51

6.51

68

 Virginia Tech Fdn

Ward, Dan

1.36

3.40

5.50

69

 U of Tennessee

Mecherle, Rip

1.36

3.30

3.90

70

 Baylor College of Medicine

Walker, William D.

1.30

5.80

6.30

71

 Texas Tech U

Barrett, Tim

1.30

0.18

4.87

72

 U of Utah

Shear, Jonathan

1.23

4.00

4.50

73

 U of Arkansas, Fayetteville

Ferguson, Vickie, Dir Inv *OCIO Cambridge

1.22

5.90

6.50

74

 U Georgia & Fdns

Bull, Jason

1.13

4.50

5.10

75

 Middlebury College

OCIO – Investure

1.10

7.90

6.58

76

 Wesleyan U

Martin, Anne

1.08

4.30

7.00

77

U of Arizona & Fdn

Barker, Craig

1.08

4.00

4.10

78

 U of Miami

Maynard, Charmel, VP Inv & Treas

1.05

5.25

4.78

79

College of William & Mary

Hiestand, Brian

1.02

5.40

5.60

80

Oklahoma State U Fdn *Sept1 became MEMCO

Tidwell, Ryan

1.00

4.80

5.80

Endowments
$500 – $1bn

 –

81

Rochester Institute of Technology 

Watters, James

0.945

6.00

6.39

82

Oberlin College   

Yang, Jun

0.925

8.00

6.50

83

U Massachusetts Fdn 

Gibbons, Jonathan

0.908

6.70

4.50

84

Carleton College   

Deshler, Kelsey

0.892

3.20

5.20

85

Pepperdine U   

Pippin, Jeff

0.887

6.80

5.70

86

Davidson College   

Jacobson, Raymond A.

0.881

8.00

7.70

87

Denison U   

Browne, Kathleen

0.880

8.80

6.48

88

Colby College   

O’Donnell, Hugh J.

0.870

8.50

6.60

89

Claremont McKenna College  

Floyd, James

0.865

6.10

5.43

90

Lafayette College   

Bohrer, Joseph S.

0.832

3.70

4.71

91

Drexel U   

Ulozas, Catherine

0.814

6.90

6.80

92

UC San Diego Fdn 

Shaver, Marlene, CFO

0.792

7.10

6.00

93

Clemson U Fdn  

Alexander, John

0.775

6.90

6.40

94

Villanova U   

McAndrew, Shane

0.767

5.70

5.40

95

Macalester College
*FY Mar31

Martin, Gary D.

0.763

5.30

5.30

96

Furman U   

Kapoor, Kris

0.694

3.30

4.80

97

Lebanese American U

Grosner, David

0.543

4.10

5.20

98

U of Wyoming Fdn

Treick, Philip CIO

0.536

5.70

4.80

99

Haverford College

Casel, Michael H.

0.527

5.40

4.59

100

Washington State U

committee & Mercer

0.515

4.20

5.10

 –

 

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The Skorina Letter

Each issue explores how the world’s most accomplished asset managers think and invest.  Original content includes profiles and interviews with industry veterans and research on compensation and investment performance.

Our insights and commentary come from our clients – board members, CEOs, chief investment officers – and the global investment community within which we work as executive search professionals.

Institutional investors operate at the crossroads of capital, talent, and ideas, shepherding over seventy trillion dollars in global assets.  It’s a constantly evolving spectacle and The Skorina Letter gives readers a ringside seat.

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