Use Illiquidity Budget Opportunistically

What actually creates sustainable alpha in endowment portfolios and why do most investors mistake activity for edge? In this episode, I talk with Larry Kochard about building investment programs that endure across cycles. Drawing on his experience as CIO at Georgetown and the University of Virginia and later at Makena Capital, Larry explains why preparation before crises matters more than heroics during them, how governance and stakeholder buy-in reduce behavioral mistakes, and where real alpha still exists in increasingly efficient markets. We unpack liquidity discipline, rebalancing under stress, manager sizing, and why “people are upstream of everything.”

Highlights:

• Preparing for downturns before they happen
• Why governance and buy-in reduce behavioral errors
• Rebalancing when it feels hardest
• Liquidity as the prerequisite to capturing great vintages
• Where alpha still exists—and where it doesn’t
• Size as the enemy of returns (and when exceptions apply)
• Underwriting people as the allocator’s true edge
• Playing to institutional strengths without overconcentration
• Passive as a smart default until real edge is built
• Why patience beats activity over decades

Guest Bio:

Larry Kochard is a veteran institutional investor and educator with decades of experience building and leading endowment-style portfolios. He served as CIO of Georgetown University, CEO and CIO of the University of Virginia Investment Management Company, and CIO and Partner at Makena Capital Management. Larry has taught institutional investing at UVA and Georgetown for many years and is widely recognized for his work on governance, portfolio construction, and long-term investing discipline. He holds a Ph.D. in Economics from the University of Virginia and is a CFA charterholder.

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Disclaimer:

This podcast is for informational purposes only and does not constitute investment, financial, legal, or tax advice. Nothing in this episode should be interpreted as an offer to buy or sell any securities or to participate in any investment strategy. All opinions expressed by the host and guests are their own and do not represent the views of Weisburd Capital. Participants may hold positions or have financial interests in the companies, funds, or investments discussed. Any references to specific investments are for illustrative purposes only. Investing involves risk, including the potential loss of capital. Past performance is not indicative of future results, and any forward-looking statements are subject to risks and uncertainties. Any third-party data or opinions have not been independently verified. Listeners should conduct their own research and consult their own advisors before making any investment decisions.

(0:00) Introduction to Larry Kochard's career and experience at Georgetown (1:06) Crafting a new investment policy and advice from industry leaders (2:35) Rooted thesis and long term investing approach (4:00) Sustainability in investment programs (5:27) Managing endowments during financial crises (11:24) Preparing for and reacting to crises (13:08) Self-fulfilling prophecy in returns and sources of alpha (19:01) Mental model for picking managers and scaling challenges (21:52) Size as the enemy of returns and manager evaluation (24:05) Team management and multi-product offerings (27:32) Structural alpha and underwriting people (29:18) Institutional investment strategies and edge (34:14) Balancing strengths and allocation risks (37:10) Patience and pattern recognition in manager selection (40:14) Strategy communication and managing expectations (41:40) Co-investing, direct investing, and real estate portfolios (48:32) Borrowing against illiquid portfolios (50:46) Future of endowment investing and TPA model (55:42) Integrating best practices and personal advice (57:42) The importance of people, collaboration, and leadership (58:51) Closing remarks