Name the most noticeable generational divide in investment style between sub-40-year-old investors and baby boomers.
I think coming of age in the unique ’60s and ’70s helped give baby boomers independence and ability to take risk. Fortunately, many investors under 40 have had great mentors. I certainly have during my 10 years at UTIMCO—both our retired Deputy CIO Cathy Iberg and our CIO Bruce Zimmerman.
Your least favorite part of being an asset owner is...?
Aggressive marketers.
The manager you don’t currently work with whose brain you’d most like to pick for an hour is...?
Paul Singer at Elliott Management. I like to study long-standing organizations and would want to understand how it has sustained its performance and culture.
... and where would that meeting take place?
Probably not Argentina.
Describe the weirdest interaction you’ve had with an asset manager.
When a hedge fund manager said he’d tell me anything except for what was in the portfolio. Another time, a manager cancelled a meeting when we were in their lobby because we had met earlier that year.
What asset class or investment troubles you most right now—and why?
Negative yields will literally turn the time value of money principle upside down, and many institutions will struggle to achieve their return targets. I worry more about a deflationary feedback loop than inflation.
Name your favorite food and drink.
New York strip steak, medium rare. I also find the bread and wine during Mass the most fulfilling.
What’s the wildest institutional portfolio you’ve seen?
Yale. It has maintained significant concentration. It truly is unconventional success.
Name a cultural aspect of asset management that gets under your skin.
Managers with excessive income streams from management fees.
Donald Trump is ________.
Grandiloquent and divisive.
Name your four-member investment dream team for your own family office.
Cohesion and trust are critical when building an investment team. I would bring Cathy Iberg out of retirement. Depending on the objectives and risk profile of the family, the others would be a combination of professionals not associated and formerly associated with UTIMCO.
What’s the biggest investment or career misstep you’ve made?
In our first year making co-investments, I didn’t advocate hard enough for the Alibaba convertible preferred stock and we passed.
What should be an investment trend, but isn’t (yet)?
Moving incentive compensation of hedge funds to a new structure called Fund Alignment Rights that works like corporate stock options referencing the fund’s net asset value. It’s a win-win because limited partners can have multi-year cumulative performance periods. And general partners can remain invested in their fund on a pre-tax, tax-deferred basis up to 20 years. All of the Big Four accounting firms are evaluating it, and one law firm has issued a “should” level opinion. We hope to be a first mover and expect the industry to adopt it over time.
