In this issue: Skorina’s Ultimate Outsourcer list, version 2.01 – the Top 50 + 2 Interview with Srini Pulavarti – UCLA’s new CIO Money Management: The gift that keeps on giving. Parting shot – Is it the end of the day yet? New Search: Director of Investments for a family office in Omaha: I’m looking for a Director of Investments for a professional single-family office in Omaha, Nebraska with AUM in the $500 million to $1 billion range. This is a new position reporting to the family office head/chief investment officer. The director of investments will assist with all parts of the investment process: asset allocation, investment analysis, due diligence and monitoring of a variety of asset classes. The diversified portfolio includes private equity, real estate, public equity, fixed income and hedge funds. Please respond by e-mail to skorina@sbcglobal.net with reference to “family office position” in the subject header. Wait…did he say “Omaha?” Yes, a great heartland city you can actually afford to live in. Mr. Buffett likes it just fine, and you might, too. Last year Kiplinger’s magazine rated it the number-one most-affordable city in the country. See: http://www.kiplinger.com/magazine/archives/best-value-cities-2011-omaha.html How affordable? You can buy a brand-new, 3,800-square-foot four-bedroom, three-bath house in a western suburb (an easy 20-minute commute from downtown) for $275 thousand. Is that because Omaha’s a crumbling urban nightmare where nobody wants to live (like some places we won’t name)? Au contraire. Omaha is booming. Unemployment is 4.8%; the lowest in the country! Crime is low, too; and the schools are excellent. It’s only the 42nd-largest city in the U.S., but over the last couple of decades it has become one of the Midwest’s vibrant cultural hubs. Arts venues, good music, and outstanding, no-apologies restaurants have been sprouting up in downtown Omaha for years. No, you don’t…
Endowment Performance 2023: You never see them coming
I worried about so many things during my life, but the really tough hits I never saw coming. — Anonymous Our 2023 endowment performance report features ten-year investment returns for one hundred thirty-eight US and eight Canadian institutions, the latest available. In addition, we include one-year returns for 2023, 2022, 2021 along with AUM, as of their respective fiscal year-ends. NACUBO and Commonfund released their annual endowment study two weeks ago chock full of facts and figures. Chief among them, the 688 participating U.S. college and university endowments and affiliated foundations returned 7.7 percent, net of fees, for fiscal 2023. Trailing 10-year returns averaged 7.2 percent. NACUBO noted that “Historically, institutions with larger endowments often have secured better one-year investment results than those with relatively smaller endowments. The reverse occurred in FY23, owing to smaller institutions’ substantially larger allocations to publicly traded securities.” All this is nice to know, but in our line of work, acquiring talent and capabilities for institutional and family office clients, we like hard data on the individuals who drive the investment decisions. Returns may be historical, but they are useful cues to an investor’s process and discipline. As it turns out, of the 688 institutions in the NACUBO study, including 138 endowments over one billion AUM and 77 between $500 million and a billion, only about a third have an internal chief investment officer or designated investment head, mostly those in the above mentioned half a billion and up categories. These are the ones that catch our eye. The rest use OCIOs, investment committees and consultants, RIAs, brokers, and well-meaning volunteers. The lay of the land Institutional investors had a lot on their minds the last few years: Covid and a market crash in 2020, meme stocks and valuation- frenzy in 2021, war and rates…
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Endowment Performance 2023: League Tables —————————————- OCIO Update, Summer 2023: Holding On OCIO Guide 2022: Jon Hirtle, Last Man Standing OCIOs: Your New Best Friends
It Takes Guts
The cautious seldom err or write great poetry. – Howard Marks’ favorite fortune cookie, Dare to Be Great II J.P. Morgan Chase is king of the realm these days, but during my time at Chemical Bank there were other big dogs on the “Street.” The neoclassical, money-minting, “House of Morgan” sat kitty-corner to our headquarters at 20 Pine. Next door, David Rockefeller’s baronial fiefdom, the sixty-story, glass and steel slab, One Chase Manhattan Plaza, towered over Chemical’s pre-war high-rise and Jean Dubuffet’s tangled abstract, Group of Four Trees, flipping us off from the courtyard. And uptown, Manufacturers Hanover lent to the corporate elite from their Park Avenue perch, eyeing with distain Chemical’s middle-market rabble. While high above the fray, Walter B. Wriston’s Citicorp lorded it over us all. But in the end, Chemical smelled blood, devoured their unwary prey, and for desert had its way with the Morgan name. If you can’t beat them, eat them. J.P. would understand. That thing called “edge” Mark LaMonica, Director of Product Management at Morningstar, describes the elusive, hard to define attribute called “edge” as better information, analytics, or behavior. But no one in the investment industry ever built a great business without another edge we call “guts,” the confidence and courage to take a chance. With vast, industry-wide reserves of talent and resources, the odds of any single firm vaulting organically over the competition are slim to none without disruptive technology, blockbuster products, or an unbeatable track record. But, disruptive technologies and blockbuster products – computers or ETFs – come around maybe once every fifty years, as Angelo Calvello points out in Institutional Investor. And, while consistent, multi-decade investment superiority isn’t impossible, it’s exceedingly rare. Promises kept Jon Hirtle, executive chairman of OCIO firm Hirtle Callaghan considers investment management a mission and describes…
We’ve come a long way, baby
History doesn’t repeat itself, but it often rhymes. – Mark Twain? My grandmother, born in 1896, used to describe recessions as panics – economic brushfires stoked by a bank collapse or two and lurid headlines of panicked customers storming the ramparts, window jumpers, and families in ruins. The newspapers had a field day flogging the latest hearsay and then it all blew over, but rumors and innuendo were never good for business and banks were always suspect. It wasn’t until the countrywide “Bankers Panic” of October 1907, triggered by a massively leveraged attempt to corner United Copper Company stock, that political and business sentiment finally coalesced around legislation leading to the Federal Reserve Act of 1913. As an aside, the right to vote “without regard to sex,” otherwise known as the 19th amendment, passed final muster on August 18, 1920. And it was not long after that my grandmother accepted a steady teaching position at Michigan Agricultural College (aka Michigan State University) and cast her first ever vote for Calvin Coolidge in the 1924 presidential election. Progress in fits and starts, but progress, nevertheless. Bygone family conversations came to mind as I scanned the headlines last week. Labor market healthy. Don’t be so sure. Stock market shaky. What to do? Rates? Who knows. And beware a looming venture capital apocalypse. Retreads, recycled, reprinted. But, inevitably, far from that madding crowd, each new generation of investors and entrepreneurs has something inventive in mind, quietly creating those next big things, building a better tomorrow. In our line of work, acquiring talent and capabilities for institutional and family office clients, we see a steady flow of quality candidates, OCIO mandates, and appealing acquisition opportunities. 2024 is looking good. Recruit, consult, connect. We’re here for you. – Charles Skorina *Images: The 1907 Crisis in…