“Sam’s an amazing investor with very clear thinking that he’s excellent at articulating; a curious, open mind; an ability to listen and change his views due to new compelling information, excellent mentoring skills and experience, great knowledge and experience across a wide range of asset classes, and a calm confident demeanor. He’s the engine of our diligence process, where he uses his targeted intuition and honed instincts to be both a relentless and dogged researcher and Constitutional contrarian. He’s not only a great communicator and investor, he’s a great partner in running our program at UC.”
—Karl Scheer, CIO, University of Cincinnati
Sam Ekis, CFA is the investment director at the University of Cincinnati, where he is responsible for the well-being of the endowment’s $1.2 billion portfolio, as well as working with the treasurer’s office to manage a $600 million operating pool of capital.
In his work, Ekis works with the chief investment officer in all aspects of overseeing the funds’ asset allocation, potential investments, and monitoring of existing investments. His current role is an extension of his previous experience, where he served on the investment staff at the University of Pittsburgh for eight years, helping the team manage its $2.9 billion endowment and $600 million operating portfolio. Ekis was an essential aspect of the team’s expansion of its private markets allocation, conducting due diligence, reviewing co-investments and secondary transactions, and sourcing and executing nearly 20 general partner relationships per year for private equity, venture capital, real estate, energy, and timber.
Prior to his role at Pitt, Ekis worked at Cambridge Associates as an investment performance analyst, evaluating and scoring the portfolios of endowments and other institutional investors. Ekis earns a ranking in this year’s NextGen series through a consistent career of portfolio expansion and maintaining positions with a high magnitude of fiduciary responsibility and proper care.
CIO: What did you think you understood before the COVID-19 crisis … and if, during the crisis you were proven wrong, what did you learn from it?
Ekis: I thought that Value would have provided more downside protection in the next downturn, whatever that turned out to be. Watching a relatively concentrated part of the market lead, prior to, through, and out of the downturn was surprising. It just goes to show how impossible forecasting is.
CIO: What took you by surprise? What worked?
Ekis: I was surprised by the rapidity of both the downturn and the recovery. I was also surprised at how smoothly we transitioned to working from home. Once I figured out where I could work that was the least disruptive to my wife and four young boys, productivity skyrocketed (At least it did for me; I’ve learned homeschooling is a far greater challenge than investing!) What worked for us was having extra cash on hand, as a result of being underweight hedge funds but still wanting some downside protection. We also had a wish list of legendary managers that we had been following or had under diligence and we reached out to remind them that we had a steady hand on our portfolio amid all the chaos and that we still wanted to partner with them. We also had a playbook from the GFC that we were able to get started on right away. An example was in the closed end fund space. Retail outflows create very large discounts and we were able to act quickly and switch passive exposure over to a closed-end fund portfolio where we had the same exposure at a large discount. That’s worked out well for us so far.
CIO: How would you build the portfolio differently now that you have gone through this massive accelerated shift in the market?
Ekis: Hedge funds have generally been a disappointment. Lackluster performance, succession issues, vehicle, and fee-structure changes have led to a large amount of work with little to show in the way of performance or downside protection. We have allowed redemptions, because of organizational changes, to reduce our overall exposure and carried a little more cash as a result. This worked well for us.
CIO: ESG has been a tidal wave force behind recent innovative investment framework in our industry. How do you see the ESG framework and effort be influenced by the recent event?
Ekis: It would be encouraging to see a more nuanced ESG framework going forward, but I think that it is more likely that energy’s recent poor performance will be used to market stronger ESG relative returns with relatively little change in the approach. Equity ownership comes with the right to vote proxies and influence companies. Negative screen ESG strategies rely on a relatively indirect relationship to affect change.
CIO: What’s your view on the “perfect storm” that is currently impacting the oil markets, and how will that change how you invest in upstream energy?
Ekis: I think that markets are likely to have overreacted (or are overreacting) as they often do. The world still needs lots of energy but at what price and in what form that comes to market is a big question. We favor managers that have enough breadth to pivot but we are also very mindful of the potential distraction that existing portfolio companies could be for established managers.
CIO: What’s your view on the fate of the Euro and the EU?
Ekis: I think eventually the EU will be too unwieldy of a construct to last. What time frame that plays out over is anyone’s guess.
CIO: What do you think will be the impact of COVID-19 on developing economies?
Ekis: I think these countries are likely to see significant prolonged impacts as they deal with their domestic response amid a changing global trade market. I do think that these countries and markets will prove resilient. We are sticking to our long-term asset allocation and allowing bottom-up manager selection to impact country weights to some degree rather than making overt top-down calls on markets given the level of uncertainty today.
CIO: What are the new creative/innovative strategies that you are researching right now?
Ekis: Most innovative ideas in the investment world scare me until they have had their share of shakeouts. Cryptocurrency is a good example of that. We know it is headed somewhere but we don’t know what that is or what the path looks like. This isn’t a risk we are willing to take with endowment capital.
One innovative “tweak” that is somewhat of a theme in our portfolio is technology-enabled sourcing in private equity managers. While most claim to have this, there are some with truly differentiated capabilities.
CIO: With the shakeout of industries currently going on—where do you see the most exciting opportunities over the coming years?
Ekis: I think consolidation among the many SaaS companies created over the last decade will be a strong and attractive trend over the coming years.
CIO: How is the quarantine affecting the way you view teams and working environments, such as work from home, meetings, etc.?
Ekis: Good communication is always important but it is especially important when a team isn’t interacting informally throughout the day where there are numerous opportunities to clarify points from a previous discussion. The quarantine also made it clear how much a daily commute takes out of the day.
CIO: What exercises have you found useful?
Ekis: Daily morning and afternoon meetings on Microsoft Teams to keep a sense of community with colleagues and to make sure we are working on the appropriate things. This has helped us be extremely productive and make some significant upgrades to our portfolio.
CIO: Who is the manager you don’t currently work with whose brain you’d most like to pick for an hour?
Ekis: Seth Klarman.
CIO: And in a fantasy scenario, if money was no obstacle, where in the world would that meeting take place?
Ekis: Now…probably on Zoom!
CIO: What asset class or investment troubles you most right now—and why?
Ekis: US Equity because it’s such a big part of our portfolio and therefore important to understand, and I feel that I’ve understood so little of how things work over the past several years (market concentration, low inflation despite massive monetary stimulus, a near instantaneous drawdown and recovery).
CIO: Name your four-member investment dream team for your own family office.
Ekis: Warren Buffet, David Tepper, Marc Andreessen, and Howard Marks.
CIO: Describe the weirdest interaction you’ve had with an asset manager.
Ekis: There have been a few. One manager decided to take care of an odd choice in personal grooming standards in the middle of an in-person meeting and then bailed on that decision when the eyes of everyone else in the room grew as wide as saucers.
CIO: What should be an investment trend, but isn’t (yet)?
Ekis: Private Equity managers paying for everything that is integral to their strategy rather than billing them to the fund or portfolio companies.
