Capital Allocators – Inside the Institutional Investment Industry

Kip McDaniel is the Chief Content Officer and Editorial Director at Institutional Investor. Prior to joining II a year ago, Kip spent seven years as the Founding Editor and Editor-in-Chief of CIO Magazine, a media platform that led him to interview 2,000 Chief Investment Officers across every type of asset base around the world. Kip is a graduate of Harvard College, received a Master's at Cambridge University, and was an elite crew rower, culminating in bringing home bronze medals for Team Canada in two World Championships. Kip is inordinately well-liked in the community, and I had a hunch I would learn a lot from getting his perspective on the people who make capital allocation happen. Suffice it to say, I wasn't disappointed. Our conversation starts with an inside look at Chief Investment Officers – how Kip finds them, ranks them, and discovers what makes them tick. Over the back half of the discussion, we turn to the lessons he's learned about investment success, incentives, fads, and issues that permeate capital allocation. Kip's modus operandi is story-telling, and this conversation is chock full of good ones. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Dan Schorr is the founder of Vice Cream, an early stage company that is bringing back unapologetic indulgence to the ice cream industry. After graduating from Tufts University, Dan turned his passion for running into a career working with consumer brands, including Power Bar, Saucony, and PepsiCo. Following two unexpected life events, he turned his focus towards developing a brand of his own. Our conversation tracks Dan's path and walks through his start-up story. His energy is infectious and his road traveled has great parallels with investing and lessons for managing a business. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Tom DeLong is a renown expert in organizational behavior, leadership, and human development of high performance professionals, the so called "soft skills" often dismissed in the asset management business. After starting an academic career under the wing of Stephen Covey, Tom found himself recruited by John Mack to work alongside him to develop a positive culture at Morgan Stanley. After eight years in the trenches, he returned to academia as a professor at Harvard Business School, where he has remained the past twenty years. Unlike most of us, Tom's resume and achievements are unusually difficult to locate online or elsewhere. It was a sign of things to come in our fascinating conversation, which is simultaneously a master class in authentic leadership and a live case study in self-exploration with Tom as his own protagonist. Tom is exactly the type of person he has studied, and strives to be the type of leader he promotes. We discuss the meaning of work, the importance of feedback, the ways high performing professionals derail themselves, the difference between your image and your essence, the omnipresence of insecurity in high achievers, and some techniques to foster deeper conversation in relationships. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Adam Blitz is the CEO and Chief Investment Officer of Evanston Capital Management, a $4.5 billion hedge fund of funds manager with a decade and a half of experience managing hedge fund portfolios. Adam joined Evanston at its inception in 2002 and leads investment research and portfolio management. Previously, he worked in the Prime Brokerage area and Asset Management Division of Goldman Sachs and served as head trader at AQR. Adam earned a B.S. in Economics at the Wharton School. Our conversation dives in the hedge fund category of investing, covering how a leading allocator in the space thinks about strategic asset allocation, portfolio construction, risk management, manager research, decision making, and monitoring managers. Adam's perspective on the evolution in how allocators perceive hedge funds and the resulting unattractiveness of the "average hedge fund" today resonate strongly with how I've viewed this widely discussed and recently scrutinized corner of the markets. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Tom Russo is the Managing Member of Gardner Russo & Gardner, where he manages $11 billion in a long only, global value strategy. Tom buys the stock of global consumer businesses with great brands and holds them for a really long time. He looks for businesses with a capacity to reinvest free cash flow and a capacity to suffer through short-term pain in order to achieve long-term gain. Tom started his investment career at the Sequoia Fund in New York, where he worked from 1984 to 1988. His first partnership, Semper Vic Partners, has compounded at 14.6% per year for 33 years, besting the S&P 500 by 3.6% per annum. Tom is a graduate of Dartmouth College (B.A., 1977), and Stanford Business and Law Schools (JD/MBA, 1984). He has served on Dean's Advisory Council for Stanford Law School, Dartmouth College's President's Leadership Council, and the Advisory Board for the Heilbrunn Center for Graham & Dodd Investing at Columbia Business School, as well as on the boards of the Winston Churchill Foundation of the U.S., Facing History and Ourselves, and Storm King Art Center. Our conversation covers how Tom created an investment strategy by personalizing early lessons from Warren Buffett, the capacity to re-invest, the capacity to suffer, and what it takes to own a stock for decades. Tom's time horizon and fortitude as an investor parallels those of institutions with permanent capital. Listeners will get a fresh perspective on what it means to be a long-term investor 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 3:20 – How the spark got lit for Tom to become a value investor 3:54 – The Sharpe Ratio 6:26 – Family and personal background 8:03 – Move to consumer brands 12:06 – Key tenants to investing in consumer brands 12:26 – Family controlled 14:04 - Capacity to reinvest 15:17 - Capacity to suffer 19:10 – Portfolio turnover and the investment in Heineken 22:46 – Position sizing when portfolio turnover is so low 25:08 – Opportunity costs and behavioral finance 28:58 – Benefits of insider insights 31:02 – The capacity of Tom's investors to suffer 34:00 – What is happening today with the investor base and their capacity to suffer 36:07 – The structure of Tom's strategy vs. a more a diversified portfolio 37:28 – Sitting on investment committees 38:02 – Comparing Tom's decision-making process to Warren Buffett's 40:29 – Case study of Wells Fargo 44:21 – Does reputational damage impact the ability to reinvest 47:04 – Tom's research process and the importance of listening 49:46 – How Tom keeps track of nuggets in everyday conversations 51:00 – Closing questions

A few months ago an idea came to me to share some conversations with great capital allocators that I've been fortunate to know from my time in the business. I lined up my first three guests, and didn't know what would happen from there. Taking this journey without goals or expectations was new for me, and it's been a ton of fun. My first unexpected surprise in podcasting came from the answers to one of my closing questions. That question is : what is your favorite thing to do that's a complete waste of time. My own time consuming vice is pretty harmless, but I was curious what others would reveal in answer to the same question. As you'll hear, some of my guests followed my lead, but most quickly came upon an important life lesson. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Chris Douvos is Managing Director at Venture Investment Associates, a fund that invests $1B in commitments to venture capital funds. Chris is responsible for the management of relationships with the funds' managers and the identification and development of new manager relationships. He is the author of an entertaining blog about venture capital entitled SuperLP – Adventures in Investing, available at SuperLP.com. Prior to joining VIA, Chris spent seven years co-heading the private equity program at The Investment Fund For Foundations, or TIFF. In this role, he was responsible for another $1 billion in new capital commitments. Before joining TIFF, Chris worked on Princeton University's endowment team. He started his career as a strategy consultant at Monitor Company. He is a graduate of Yale University and the Yale School of Management. Our conversation starts with Chris' path to venture capital, through strategy consulting, investment banking and an endowment investment office. We talk about perception and reality in venture investing, exciting areas of future innovation, and the nuts and bolts of research, portfolio construction and decision making when running a portfolio of venture funds. When Chris pulls off his suit, the red undershirt of the Super LP remains. He's a charismatic guy with great insight into how the venture capital game is played and draws many parallels from venture to investing in general. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Andy Golden, President of Princeton University's Investment Management Company, shares insights on transforming PRINCO from $3B to $22.5B in assets. He discusses his unique career shift from photography to finance, emphasizing the critical role of collaboration and long-term perspectives. Golden delves into strategic asset allocation and the evolution of evaluating investment managers, especially during challenging times. He highlights the importance of nurturing internal talent, balancing data with intuition, and offers valuable life lessons relevant to the current market landscape.

Mario Therrien is Senior Vice President of External Portfolio Management at Canadian asset manager Caisse de dépôt et placement du Québec (CDP). CDP oversees $270 billion Canadian ($200B in USD) for the pension funds in the province of Quebec. Mario joined CDP in the early 1990s after completing his Masters degree in Finance and has worked there ever since. Mario started out at CDP managing a tactical asset allocation strategy, created an internal global macro hedge fund, and later built and managed the team responsible for investments in external public market funds. Starting from scratch, CDP oversees $20B of external manager allocations today. Mario's team serves as CDP's 'window to the world' of markets, strategies, and managers across the globe. Our conversation dives into the 'Canadian pension model' which has gained prominence in recent years for the strong performance by funds north of the U.S. border. The model incorporates internal management, risk control, partnership, and collaboration. Drawing on a quarter century of experience, Mario shares his window into this little-known world of investment success. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides

Larry Kochard is the CEO and CIO of the University of Virginia Investment Management Company (UVIMCO), where he provides leadership, connectivity to the University, and responsibility for the University's $8.5 billion long-term investment pool. Before joining UVIMCO in 2011, he served as Georgetown University's first in-house CIO. Prior to that, he was Managing Director of Equity and Hedge Fund investments for the Virginia Retirement System. From 1997-2004, Larry was an adjunct, and later full-time, professor at Virginia's McIntire School of Commerce. He spent his formative professional years in debt capital markets at Goldman Sachs, and corporate finance at Fannie Mae and DuPont. Larry received his B.A. in Economics from William & Mary, an MBA from the University of Rochester, and an MA and PhD in Economics from the University of Virginia. Our conversation covers tricky issues involving the internal management of portfolios alongside external manager allocations, UVIMCO's five core principals, and the consideration of absolute and relative metrics in asset allocation and performance. Our deep dive on UVIMCO's core principals and asset allocation provides an inside look at the subtleties required to maintain seemingly simple tenants. I'm quite sure everyone that touches the University of Virginia will come away thrilled that Larry is the steward of their capital. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides