Nebraska’s Chief Investor Discusses His Conservative Approach to Alternative Investors

The Nebraska Investment Council (NIC) has approved a pacing plan for its private equity portfolio spanning the next several years, and State Investor Officer Michael Walden-Newman told CIO he couldn’t be happier with his team’s conservative strategy for private markets fund managers.

The $16 billion NIC forecasted to commit $150 million each year in private markets until 2025 to help maintain the portfolio’s 5% target towards private equity investments. The pacing plan for 2019 commitments largely involved increasing existing commitments to private equity managers following buyouts/growth and special situation strategies; Green Equity VIII ($50 million), Wynnchurch V ($50 million), and Dover Street X ($50 million).

After joining the NIC, Walden-Newman increased the minimum commitment size to private markets managers to $50 million from $30 million, with the primary reason being to limit the amount of private markets managers the council has commitments to.

“I don’t want a farmer to call from a town in Nebraska and ask me about one of our private equity managers, and not be able to recall off the top of my head what that manager does to a fellow Nebraskan,” Walden-Newman said. “If we get a portfolio that’s too big, I’m afraid that can happen.

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“I want meaningful relationships, and a significant size to keep the number of managers down. We’re a very conservative investor, particularly when it comes to alternative investors.”

He also discussed the council’s approach to new or emerging markets managers, saying his team is only comfortable doing business with experienced investors.

“The NIC is not the investor for seed money, or emerging managers, instead we prefer a solid track record, with managers who have a proven ability to replicate their expertise over several funds,” Walden-Newman said. “You’re not likely to see us in a fund 1, maybe not even a fund 2, but a fund 3 or 4 could work.

“It’s just a better way to run a program with a small staff like ours.”

The NIC has made approximately $1.5 billion commitments to date across 53 different investments, according to a report.

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April brings new challenges for Tony Bagwell when he becomes chief investment officer of the Cook Children’s Health Care System, the Fort Worth, Texas-based organization confirmed.

This is part of a spate of new CIO hires lately at health institutions.

“We are pleased to announce that after a months-long nationwide search, Cook Children’s Health Care System has filled the position for chief investment officer (CIO),” Cook spokesperson Kim Brown told CIO in an emailed statement. “Tony Bagwell of Columbia Investment Management Company in New York City will join our organization in April as senior vice president, CIO at Cook Children’s.”

Bagwell is leaving Columbia (assets: $2 billion) after a 17-year stay at the $11 billion university endowment, where he rose to managing director. Healthcare isn’t just a new sector for him, it’s also his first CIO job.

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Patrick O’Connor, Cook’s previous CIO, departed in August for long-only equity firm Bay Capital, taking then-deputy CIO Apurva Mehta with him.

Bagwell’s exit is the second big loss of a key executive at Columbia recently. Harvard in November poached then-chief operating officer Sanjeev Daga. His hire marks the fifth new health care CIO to be named in the past year. He follows Jenny Chan (Children’s Hospital of Philadelphia), Niel Nag (Children’s Healthcare of Atlanta), Jim Bell (Boston Care Group), and Kieth Nelson (Texas Children’s Hospital). They all were brought in from the outside, except for Nelson, who was promoted internally.

Bagwell could not be reached for comment.

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