Sam Gallo and Endowment of the Year winner, the University System of Maryland Foundation

Each year Institutional Investor Magazine hosts a Hedge Fund Industry Awards dinner. This year’s gala was held on April 27^th and celebrated superior portfolio construction and manager selection.

Among the notables, the event featured two outstanding investment heads we just happened to have recruited in the past.

Jon Glidden, director of pensions at Delta Airlines received II’s Allocator Lifetime Achievement Award and Sam Gallo, chief investment officer at the University System of Maryland Foundation accepted II’s endowment of the year honor.

Our warmest congratulations to both winners.

We managed to catch up with Mr. Gallo during a recent conference in Charleston, SC and asked him how he built an elite, award-winning investment program, what to look for in a successful CIO candidate, and what fresh challenges lay ahead.

The Endowment Elite, A conversation with Sam Gallo

Skorina: Sam, it was almost eleven years ago that I first called you about the University System of Maryland Foundation (USMF) CIO position and look where you are now.

First, you received an endowment of the year award from Institutional Investor, then you celebrated ten years as the university’s chief investment officer. Congratulations!

You don’t have the usual up-through-the-nonprofit-ranks background of a typical endowment CIO, would you take a moment to give us your highlights.

[Note: The USMF consists of twenty-plus schools with combined total assets of about $2.2bn.]

Gallo: Thank you for the kind words, Charles. Briefly. I began my career as a valuation modeler, pivoted to trader and portfolio manager, then moved to several investment and operational consulting roles, and finally on to my current position as an endowment CIO.

The last, of course, is thanks to your call so long ago.

Skorina: Your mission when you joined USMF in 2012 was to invest smartly for the future, build a team and investment strategy, and develop a commercially oriented white-glove client service model.  Ten years later you receive the Endowment of the Year award from Institutional Investor.

Let’s dive right in and ask the money question, how did you do it?

Gallo:  That’s a big one Charles and complex, but here goes.  The key to success for any nonprofit fund begins with the Board and Investment Committee.

Boards want and expect a “world-class investment program.”  But to achieve this goal, they must be willing to provide the resources and governance structure to flourish.

What boards put into it, is what boards get out of it.  It’s that simple.

Think Profit Center

Skorina:  Ok. But what does that mean?  If a foundation, endowment, or pension fund wants an elite program, what does it take to build one?

Gallo: Let’s start by talking about our golden rule, which is, all decisions are linked and have consequences, so think and plan ahead.  Be smart, be strategic. It matters.

Boards and administrations trip up when they view their investment offices as cost-centers.  We are not cost centers.  We make money for our schools.

Investment offices should be viewed as what they really are, essential profit-generating business divisions of the larger institution.

These offices should be nurtured, resourced, and report directly to the CEO, just like any other critically important revenue generating division.

Six Signposts on the Road to Riches