Capital Allocators – Inside the Institutional Investment Industry

Larry Mestel is the Founder and Co-CEO of Primary Wave, one of the largest independent full-service entertainment companies. Primary Wave Publishing, the music division Larry oversees, acquires and develops the rights to iconic song titles and works with iconic artists. He has bought assets that include big name hits from Kurt Cobain, Smokey Robinson, Steven Tyler, John Lennon, Def Leppard, Hall & Oates and CeeLo Green. Prior to founding Primary Wave in 2006, Larry spent twenty years in the music industry, serving as COO and GM of Virgin Records, EVP and GM at Arista Records, and COO of Island Entertainment Group. Our conversation discusses the business of investing in music publishing rights, including Primary Wave's target market, due diligence practices, unique approach to growing revenue streams, and transactions. As you might imagine, the music business has plenty of great stories, and Larry shares a few of his gems. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Dr. Ashby Monk is the Executive and Research Director of the Stanford University Global Projects Center. He is also a Senior Research Associate at the University of Oxford, a Senior Advisor to the Chief Investment Officer of the University of California, and the co-founder of Long Game. Ashby advises sovereign wealth funds and large pension funds, and is involved with a bunch of fin tech companies, all of which attempt to create innovative solutions to fixing the financial future for individuals, pensions and countries in the years ahead. Our conversation starts with Ashby's early work experience and path through academia, and flows into an exploration of next generation, lower cost approaches to active management for large asset owners. We touch on investing in public equity, private equity, venture capital, and hedge funds using examples from the Canadian and Australian pensions, New Zealand Super Fund, and University of California endowment. Lastly, we discuss Long Game, an innovative company seeking to improve personal savings in the U.S. Ashby is a passion-driven, creative thinker who rightfully has the ear of some of the most important pools of capital in the world. His ideas will change the way you think about allocating capital. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Jason Klein is the Senior Vice President and CIO at Memorial Sloan-Kettering Cancer Center, where he oversees the hospital's $4.5 billion in long-term investment assets. Jason has spent the last decade and a half overseeing endowment pools – 9 at MSKCC and 5 at the Museum of Modern Art. Jason got his start in the investment business learning the tools of private equity, and had training as an investment banker, management consultant, and lawyer. Our conversation starts with the distinctive features that drive the investment structure for Memorial Sloan Kettering and flows through core beliefs, asset allocation frameworks and manager selection. Aspects of his due diligence process, including 30 questions and pre-mortem analysis, offer new arrows to an allocator's quiver to those in previous conversations. Jason's curiosity and eagerness to ask questions provides a terrific structure for applying capital allocation to a distinctive pool of capital. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

In this discussion, Ellen Ellison, the Chief Investment Officer of the University of Illinois Foundation, shares her journey from theater aspirations to leading a $1.7 billion investment program. She details the challenges of starting an endowment from scratch, emphasizing governance and timing in a volatile market. A highlight is her insights into agriculture investing, focusing on high-tech innovations and sustainability. Ellen also explores the potential in Japanese equities and shares personal reflections on sports and leadership, illustrating the importance of curiosity and adaptability.

David Barrett is the founder of David Barrett Partners, a leading executive search firm focused exclusively on buy-side asset management. Prior to founding DBP in 2005, he spent 19 years in the search business, including long stints at Russell Reynolds Associates and Heidrick and Struggles. He began his career as a self-professed failed equity research analyst in the early 1980s. David is a graduate of Yale University and Columbia University Business School. In just the last two years, David's firm has completed searches for the Chief Investment Officer positions at Harvard University, Dartmouth College, University of Texas Investment Management Company, TIFF, and the Cystic Fibrosis Foundation, each a multi-billion dollar pool of assets. Our conversation explores the search process for senior asset allocators, including the business of search, the interview process, governance structures, and trends. Anyone with a thought to navigating their career will pick up nuggets of insight throughout the conversation. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Scott Malpass is the esteemed Vice President and CIO of Notre Dame, where he oversees the University's $12 billion endowment. Scott earned his B.A. and M.B.A. degrees at Notre Dame, and returned to South Bend at the ripe age of 26 following a brief stint on Wall Street. His track record for almost 30 years, as defined by both performance and impact, place him indisputably in rare company at the very top of the field. Among his many accolades, Scott received Institutional Investor's Endowment Manager of the Year award, NACUBO's Rodney H. Adams Award, and CIO Magazine's Lifetime Achievement Award. He has taught students at Notre Dame since 1995 and among other directorships and advisory councils, he serves on the Boards of the Vatican Bank, Vanguard, and TIFF, and previously served on the Investment Advisory Committee for Major League Baseball. In 2014, Scott became part of the founding group for Catholic Investment Services, Inc., a not-for-profit offering top tier investment solutions to Catholic organizations nationally. Our conversation is a full-blown master class on endowment management, including the benefits of a long tenured team, asset allocation frameworks, passive management, preparing for dislocations, the state of venture capital, sourcing, monitoring and exiting managers, incremental process improvements, professional and personal development, and education and alignment across constituencies. It's hard not to be in awe of Scott's combination of humility, experience, and success. For more episodes go to CapitalAllocatorsPodcast.com/Podcast Write a review on iTunes Follow Ted on twitter at @tseides Join Ted's mailing list at CapitalAllocatorsPodcast.com Show Notes 3:26 – How Scott got started at Notre Dame 6:22 – Why tenure of the staff is so long on Scott's team 8:26 – How did he handle bad hires among such a tight knit team 9:37 – Committee makeup 11:18 – How the continuity and depth of institutional knowledge allowed them to make better decisions 12:51 – Their first single asset real estate investment 14:21 – What is the best use of time for the investment team, managing a direct investment or researching new managers 15:07 – Core investment beliefs from Scott's past that drive the portfolio 17:28 – Core investment beliefs that drive the portfolio today 20:43 – How does Scott think about portfolio construction techniques 22:49 – Factors they like to tilt towards 23:36 – Any concerns about the focus on active managers in a world that is moving towards passive 26:02 – How much of the US investing market should be indexed-based 27:37 – The baseline that Scott has to consider when making investment decisions 29:43 – Their focus on emerging and middle markets, particularly Europe 34:01 – Pricing in the venture capital markets today 36:31 – Implications of all of this new money moving into private market investing 37:40 – Do private equity owners make better decisions for businesses 39:52 – Scott's manager selection process 41:44 – How much time does Scott spend with managers before making a decision to invest with them 43:14 – Jim Dunn podcast episode 44:04 – What has Scott learned about the behaviors of making that final decision on a manager 45:39 – Mistakes that Scott has learned from and corrected over the years 49:36 – Creative ways to monitor managers in the portfolio 52:08 – Scott sharing how special the managers in the portfolio are to them 54:49 – How would Scott think about an investment portfolio of $1,000,000,000 of cash 56:57 – Benefits and drawbacks of direct vs co-investments 59:43 – Biggest current subject of debate on an investment topic in the office 1:01:47 – Lessons from their annual offsite meetings 1:04:31 – Biggest concerns about the markets today and over the next 10 years 1:07:52 – Closing Questions

Jim Dunn is the CEO and CIO of Verger Capital Management, an Outsourced CIO business whose anchor client is Wake Forest University. Prior to forming Verger, he served as CIO of Wake Forest for five years. That transition from a sole client to an OCIO business, is a fascinating part of our conversation. Before joining Wake, Jim traveled the world as CIO of Wilshire Associates, where among other things he experienced the best story of a manager getting their foot in the door that I've ever heard. He got his start in the business trading death spiral convertible bonds at a now defunct hedge fund and got introduced to manager selection at Investorforce. Our conversation starts with Jim's career path, and covers a full range issues in allocating capital. We discuss defining risk tolerance, a factor-based approach to asset allocation, separating talent from luck in manager selection, the politics of endowment management, challenges using internal management, and culture. If you listen carefully, you'll hear a few one-liners. Jim is chock full of gems and life lessons. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Dan Egan is the Director of Behavioral Finance and Investing at Betterment, the market leading robo-advisor overseeing $10 billion in assets. Dan has spent his career applying behavioral finance principals to help individuals make better financial and investment decisions. Prior to joining Betterment in its early years, Dan spent six years as a Behavioral Finance Specialist for Barclays Wealth Management. He is a graduate of Boston University and the London School of Economics and lectures at New York University, the London Business School, and the London School of Economics. Our conversation discusses how Dan has created evidence-based tools that improve outcomes for individual investors, ranging across tax-loss harvesting, rebalancing, client reporting, mental accounting, commitment mechanisms, and communication during turbulent market times. As he spoke, Dan had head my head spinning thinking about how institutions and individuals alike could implement quantitative tools in their investment processes to avoid known behavioral pitfalls during critical market moments. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Chatri Sityodtong is the Founder and Chairman of ONE Championship, Asia's largest sports media property. Chatri started his career as many listening to this show have: he graduated from Tufts University, worked at Fidelity Investments and Bain Consulting, attended Harvard Business School, took a run at a technology start-up, and then spent a decade working at hedge funds, culminating in launching his own fund, Izara Capital, that grew to $500 million in assets. But Chatri's story is vastly different from any stereotype he may appear on paper. Despite a comfortable life growing up, his family lost everything in the Asian financial crisis. A decade later, despite his financial success, Chatri felt an emptiness and loneliness at the top that he couldn't shake. Instead of pushing on, he returned investor capital and moved back to Asia. From there, he followed his passion for Muay Thai fighting and began building a budding sports empire. Our conversation tells Chatri's story, replete with lessons about entrepreneurship, investing, hard work, and the warrior spirit. For those who wonder if a career in the financial markets is the only thing they know, Chatri's path suggests a different and fulfilling way forward. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Richard Lawrence is the Chairman and Executive Director of The Overlook Group, a $5 billion investment organization focused on Asian equities that Richard founded in 1991. Over the past quarter-century, Overlook developed and implemented disciplined investment and business philosophies that interconnected to drive extraordinary results for its partners. Overlook has compounded capital at an annualized 14.5%, outperforming its benchmark by an insane 9% per annum. But that's not all, as Richard would proudly tell you himself, the capital weighted return of the average investor in Overlook is nearly identical to the time weighted return over any period of time – a rare feat in the money management industry. Indeed, today's asset base is the result of $4 billion of investment gains on top of $1 billion in contributed capital. Our conversation starts with a look at investing in Asia in Overlook's early days and walks through the particulars of the approach Richard takes to investing and running his business, including attractive investment attributes, management integrity, portfolio construction, selling discipline, and China Yangtze Power - the only stock the firm supersized in an SPV in its history. We discuss Overlook's long-held cap on subscriptions and periodic reductions in its management fee, two business philosophies that Richard believes have been key drivers of Overlook's success. If you enjoyed my conversation with Tom Russo, you won't want to miss this one with Richard. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides