YouSaid · the spoken record

Jim Dunn

lines on the record: 103
first: 2017-09-04
most recent: 2017-09-04
sittings or episodes: 1
sources: podcast

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“I think the value of working at university is you get to see a lot of other stuff. What Wake Forest does really well is classics. And I've had that opportunity to sit in on classes in, for example, in Divinity. And I took a class called God in the New York Times. And basically our job was to find God in the New York Times. And it was basically a class full of Baptist students as well. So here I'm the only Roman Catholic in this class. And I learned a lot about being present and a different perspective. And I think that's one of the things that I didn't have until I came to Wake. And that's taught me to be a little more present and take advantage of when May Lou was on campus and teaching for her death, seeing ballet and seeing dance opportunities, which I never would have done otherwise. So I think that's the big thing is you take advantage and be present when you have opportunities in front of you.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“Great question. I'm not going to live 95, by the way, because just too many hard years in the 30s. But when I'm 65, I think the advice I would probably give to myself is, it goes back to that same be more present.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the big issue for me, again, being parent, is that it took me a while to figure out that my boys weren't me. They weren't like me. And it took me a couple years later to figure out that was a good thing. And I'm very proud of my boys and my wife and what they've been able to accomplish because, you know, for many years, I wasn't around. I was traveling. I was working along hours. I was really focused on my career. And I missed out on a lot of stuff. And they've turned out pretty good without my meddling. And now I'm trying to make sure I enjoy it and understand that I would have rather spent more time on the sidelines and less time in the office.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that comes through in that book. I always found over the course of my life you could look back at certain increments and say, boy, I wish I knew that. Or I wonder what I'm going to know five, ten years from now that I didn't today. What do you know today that you wish you knew 10 years ago?”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I found a lot of analogy to what he was doing, but a lot of it had to do with this hard work, the value of hard work, and the value of family. And I really enjoyed that book. I think people who read it were depressed about it and more about the current political environment and how Trump won the Appalachian vote. But I also think there's a lot to be said about kind of hard work and that value of not feeling sorry for yourself and not blaming the government. And I think that comes through in that book.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“I pulled out, but it's all earmarked and lined in. And I find it's pretty interesting from an investment perspective as well about how they look the world. But I think one of the books that I read recently was JD Vance's Hillbill Elegy. And, you know, being a lower middle class kid, my parents weren't addicted to drugs and we didn't live in Appalachia. But having grandparents who were immigrants and parents didn't go to college and living in Philadelphia, it's a different.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'll give you a ride In my bag right now, I have the undoing project by Michael Lewis, which I really enjoy. And it's become kind of.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“I haven't yet, just because my two boys, football, I just have committed to that. But with one as a junior in college and one in a late in high school, I'm going to perform 50.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“I certainly don't want to be goose. And yeah, but I grew up in Pasleena, Maryland in the shadow of the Naval Academy and grew up in the top gun. So now I'm thinking about my midlife crisis. Now I'm 44 years old. I'm 50. I want to have my pilot's license. And we have an airport nearby. It's a little airstrip called Smith Reynolds. And that's my goal. We've got a couple trustees who have planes too.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd like to be a pilot. You and I are similar in ages, and I kind of grew up with Tom Cruise. Top gun. Top gun, right? And I didn't want to be Tom Cruise.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, I didn't get my That's another good story. I think there's moments in your life, and as a parent, you really think about this because you want to make sure you provide these moments and they're good, not bad. But I remember a moment when my father gave my priorities, which I still had and my kids have as well. He said, son, here are your priorities. God, family, friends, school, and sports. That's it. And in that order. And that stuck with me for a long time. And my boys, if you stop them on the street and ask them what their priorities are, they better say God family friend school sport. And that's carried me through also, even when I think about Verger and what we do at Wake Forest, you know, we try to have a place where family comes first. So there's no clock. PTO is very valuable. And we try to go to kids' games and understand that we all travel a lot, but family comes first.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, uncontrolled bawling. And I have children, I understand, and I'm a Philadelphia fan. I understand. I've been there. But at that moment, the Shadenfreud was... I just said, you know, bad parenting, I'm sorry. Get in the back”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I'm in C1A, everyone has to walk by me. And some people give me a high five and congratulations. Some people are not. I got a couple whacks in the back of the head as they walk by, a couple bags in my lap. But about halfway through the flight, it backs up, and there's a 13-year-old girl who looks at me and looks at her mom, looks at me, and starts to cry.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“Next morning, and I got upgraded because I travel a lot and I sat and I was, I ran to the plane, sat in my seat, first on the plane, Villanova gear head to tow, and I'm going back to Charlotte. And I really hadn't thought much about it, and I'm sitting there. I'm still basking the glory of the Villanova victory. And the plane starts to fill up. And they're all Chapel Hill fans because they're all going back to Charlotte.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think. A hard one, too. I think my, I would like to say my boys' sporting events is what I really would really enjoy going to their events and they both play football at Williams College and one at the Christ School in Asheville. And I spend pretty much every weekend in the fall at their games because I can. And I think I did play sports at Villanova. And what I learned from being a goalkeeper at Villanova was that when you win, you had nothing to do with it as a goalkeeper. When you lose, it's all your fault. So I really can't point to those. But I think I would say the event that I went to recently was the Vilanova National Championship. It was kind of a lark last minute, but we had an absolute blast and we thought we saw the best shot in college basketball with four seconds left. And four seconds later, I saw the best shot in college basketball. But I think the funniest part of that story was that we partied way until late night. I got on the first thing smoke.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“Bringing them to Winston. And I think what we've also been successful, we haven't had much turnover. So it's been a pretty nice start.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I think we try to find people of our mold, which is sort of humble and hungry. And my why is really simple. My parents didn't go to college. My grandparents are immigrants. I went to the school in the province of others. I went on a Pell Grant, Staff Alone, Academic Athletic Scholarship. I get to help kids like me, middle class, lower middle class kids from great neighborhoods go to places like Wake Forest. And that's a great day. I get to send the elevator back down every day. So my why's real easy. We try to get everyone on our staff to have the same why. And they have their own why's. They're different. But if you're coming to Verger to be a stepping stone for the next job, probably not the right place for you. So building a team has been really focused on, one, getting the right culture and two, trying to find the right people on the bus. And we now have 13 people. It's been a great opportunity for us to try to understand where we can find talent. We haven't been successful in Wake Forest, Kennedy, but we've been successful in places like Boston and New York and Philadelphia.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“So the Golden Circle, we use it across everything manager research and how we hire. So the construct at a high level is it's sort of a concentric circles with bullseye and the outside circle is kind of what you are. I'm a Roman Catholic. I'm a Demica. I'm a Republican. I'm a deek. Really easy. Someone asks you what you are. You can get off the top of your head. And then when you ask how they get there or how they got there, it's usually hard work. No one ever says luck, by the way. It's always hard work in the right schools and so on. But you ask a hedge fund manager why they're a hedge fund manager. You get a lot of blank stares. They're really good at saying I'm a value with a catalyst and I went to Penn or Yale or Harvard, but they're not really good at saying why I'm a hedge fund manager. And you have some honest ones who say it's where the money is. That's a good answer. It's not the right answer.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“So Well, I think the reality is that Operational due diligence, you do it on yourself and you see, wow, we have a lot of issues we've got to work through. So we spent a lot of time working through that. I think what we've done is try to focus on we have some advantages in our culture. One is that we have equity to offer, which is a unique opportunity in an endowment space. The second thing is we have Winston-Salem. That's not great for everybody, but you can't replicate the energy on a college campus. I moved from Santa Monica to Winston-Salem. I had two young boys. To get in trouble in Santa Monica, it's the wrong place, wrong time. To get in trouble in Winston-Salem, you got to want to be in trouble. You've got to work at it. I'll know about it in 10 minutes. Raising kids in Winston-Salem is a great place to be. So I think that's the value for our, so we try to recruit people that have young kids and like the culture, like the golf, like the university, like we have to offer, like to go to football games and basketball games. And I think that's really the value. I think I go back to, we use a construct at Verger Simon Sinek.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“Now that we're Verger. So we've had this approach that it's kind of a three-legged stool. You got to have operations work. You got to have business development work and investor relations work and you have to have investments work. And the reality is you can have mediocre investments and still have a wildly successful business. And you know a lot of those guys who've raised a ton of money with average returns. You can have the greatest investment returns in the world and not raise a dime. But if you have operational mistake Game over.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think one of the great benefits of what we've done, and you've done this too, is that you get to see a lot of entrepreneurs. At the end of the day, all these manager entrepreneurs, and they all have cultures. And the Bridgewater culture is different than the Bear Stearns culture. And I've had the benefit of seeing all these cultures over my career, and I now get to pick the one I want to build for the one I want to work with. So that's been an extraordinary envied position. But I think the philosophy and culture we have is hire extraordinary people, set ambitious goals, focus on teamwork, and put the portfolio first. And I think you think about how we've done it, even we've built our office, it's a trading floor. We all sit together and it's collaborative. We don't have offices. There's no hierarchy. And I think what we've tried to do is build a team that can work together across multiple different factors. But I think when you look at an endowment, you're not usually worried about operations. You're not really worried about sales and marketing. And we've had to be.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“We get a lot of opportunities. We probably only do one a year. So we get quite a few. Some of them, the reality is we're humble enough to know that if we get the call, we're not the first call. So we have to really be, know the manager, understand where we fall in the cap structure, understand where we fall in the call structure. If we get a call from a broker on this fund or a secondary or something like that, we know we're not the first call. I remember Bruce Zimmerman called me and said, I'm selling this part of my portfolio, you Timco, are you interested? I said, who'd you call first? And I said, why are you selling it? Why do I own something you're selling, Bruce? And he laughed. He said, you know, you're right. So I think that's the issue for us is that we know where we fit in the hierarchy and we have to be very careful who we'll do deals with. So I think from the standpoint of, I think in all these deals for us, it's transactional, right? So when we get to transactional, we get worried. I think when we look at the street and they want to do a deal with.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, that's interesting, and credit seems to be a good place to be. So we did that. And we got out a year later, that's what it said in the term, we could do that. But it was a great way not only to get credit exposure for us, which we didn't have any, but also get out of the other three funds. The real trade was get out of the brick fund and the other funds that we were gated in. By the way, people are still gated in those funds.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. So the Vester says, the first one to get out. Are you interested in taking them out? Because we like you. We have a good relationship with you. And they want to get out. We want to help them, but we can't do that because of our terms and our documents. We had a fund to funded and they were gated. And they came to me and said, look, we can't get you out. And I said, well, I want to be in your credit fund. And he said, we don't have a credit fund. I said, if you start one, I will fund it and you can put that money I have in my other funds in the credit fund. And he said, well, I really can't. I'm like, on page 250 of your document, he says, you can do that.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“To go people say, we don't have 12 people to put on a stock and say, go look at the balance sheet, go meet with the management team. That's not what we're going to do well on. So I think from our standpoint, we've done five or six co-investments, I would say four of them have done very, very well. We've done a mining co-investment this year. It was a double gold mine. So those are examples of what we've done. I think it's something that we looked to do, but we're not looking to do it to lower our fee structure or to get more exposure. We're looking to be opportunistic, and we really look for the hairier, the better. The more stressed, the better. We don't want to stress assets to stress sellers. And a lot of them happen to be endowments.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“We owned an agricultural manager whom we had vested in Fund One and Fund two and we were focused on this ag space. We had some on the staff that knew agriculture had a degree in agricultural finance from Cornell. And I said, let's go find some farms. And that's a good example of where we've done co-investments. We're typically”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think we have done Coinvest, but it's hard for us. So we're not doing Co-invest in equity positions. We have one, but more likely we'll co-invest in a CLO or a CDO, and we'll do it alongside the manager. We've also done co-invest in things like agriculture. So we try to find things that for us, we loved distressed investors, not distressed assets. So we try to find investors who have issues, and we can be that capital. So agriculture is a good one. So we haven't owned this almond farm in Australia. 25-year investment, 8% yield. We got a little bump when we bought at a discount. But who can own a 25-year investment? Very few investors. We have the benefit of time. We can own anything.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of the things you mentioned, you're talking about the LBIE example of being overly concentrated in an idea. Experience has been that when you have a large group of managers, it's actually hard to get concentration and best ideas. So how have you gone about thinking about what's the appropriate size? And in the instances where you're kind of overly diversified because you are in all these different factors and 55, 65 different managers, do you look at co-invest? Do you try to find ways of getting at larger sizes of best ideas?”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“But, you know, Christine's really talented, but she doesn't know what's going on and spreads in the volatility curve and skew and spread and smile. So I think from her's perspective, she's learning a lot, but we have someone we use to give us the trading, use their desk. And when they do it, we do it cheaper. We do it as part of their desk. Now we have full discretion, so we can give them ideas as well. But for us, it's a nice way to be able to get access to this and do it in a very cost-efficient manner and do it with a partner we really value.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“Ideas we went and said, How can we leverage these relationships we have with trustees, with managers? And I think that was a big driver for us is we couldn't build it internally. We don't have the ability to hedge.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's a unique part. So when I got to Wake Forest in 2009, we had this sort of long beta portfolio. And I went and said, okay, we went a hedge. So I called, I had just left Wiltshire and I had negotiated every new ISDA because you had to. So I went to Sock Jen and Goldman Sachs, Morgan Stanley and said, look, I want a new ISDA. I just negotiated for four weeks with Wilshire. I went with the same terms. And they laughed at me. You're not Wilshire anymore. You're a hospital. You have a university with tuition. You're not going to get the same terms. We'll let you post collateral every day. We'll post once a year and we'll do it in New York and you it in Greensboro. That's not going to work. So we went back and we went to one of our partners and said, how do we do this? And a manager who we trust had said, here's how we do it. And we asked, can we help? Can we use your balance sheet? Can we use your trading desk? Can we use your collateral to manage this portfolio? And they said, sure, why not? Now that's become a big business for them. They've got hundreds of billions of dollars. We were the first. So I think that was one of the...”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the things we look at is do our managers have gender equality policies? It's hard to invest in private equity when you ask that question, but it's something that you have to do because, again, it's not our money. And it doesn't mean we won't invest in someone who doesn't have a policy. But if there's two managers and they're equal and one doesn't and one doesn't, we're going to hire the one with a gender equity policy. And then that leads us to women-owned private equity, forerunner, great investment. Kirsten Green, great investor. Warbury Parker, Dollar Shave Club. But that was led by looking at gender equity policies and trying to find women-owned investors. So I think that manager research process has been driven not only by what we think is the best way to drive alpha, but also what fits in the context of this endowment world where you have different constituents have different issues.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we've always said we want to be part of the solution, not the problem. So we want students to come in and proxy vote. We want to give them an opportunity to actually do the work. If you don't like what's going on with these stocks, don't do the work. You have a voice. If you divest, you don't have a voice. We have partnered with our sustainability office, and we have a full-time intern, Emily Clare, who comes in and basically looks at our entire portfolio and says, let's look at our agricultural portfolio. Do the workers have rights? That wasn't on our checklist of due diligence we started. For us, this is better due diligence. Go and check and see if they get breaks. Do they have good dorms? Do they have bathrooms in the fields? We want to own those farms. And by the way, they happen to do better. So the coal stuff, the divestment issues, I do think Canon League that a lot of endowments have been silent on some of these social issues on campus, and they shouldn't have been. They have a voice. They should say some things about what's going on in these places.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. I think on the life settlement one, it's gotten better. So I agree with you. And it used to be viaticals. And when we started looking at it a couple years ago, decade ago, and it was hide securities, H-Y-D-E. Hope you die early, right? That was the idea there. That's not the case anymore. To your point, the insurance companies, if you do the math, you wouldn't buy insurance. But the cataclysmic issue that happens, you want to have it. But the math doesn't work. You could do it your own. You could basically create your own insurance product if you were smart enough about it. So you wouldn't buy insurance if you did the math, you wouldn't do it. But everyone does. So I think there is something about having this sort of disintermediation of taking care of that end of life and where we are now with the economy and so on. There's opportunities there. I think it's really hard to go and say, I'm going to buy this from this person who's in hospice. That's hard. I think for university, it's more difficult for things like divestment of coal, for example.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“How do you think about that conversation with students, right? So, do you ignore it because you say the headline just sounds too bad, or if there's really something underneath that's a better story, do you decide, hey, you know, the opportunity is interesting, we should go through the effort to explain this the right way so that the student newspaper doesn't tell people we're stealing money from aging people who are about to die.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. Let's dive in just that question with life settlements because I had an interesting conversation with a friend about it. That was a business that I always looked at and said this reeks of Wall Street Journal front page. You just stole money from the family who passed away. And a friend of mine who's in the business said that's just not how it works, that insurance companies collect some ungodly amount of money from unpaid life insurance claims when people die. And so all you're doing, we know there's a pension crisis in the country. We know that people as they age are short of cash. All you're doing is providing them a lifeline. I don't know what the answer is. I haven't done the real work on it.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“The value is for us, we want to be proud of every manager in the portfolio. We don't want them to be on the Wall Street Journal.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“And get out when we get out. So I think that's the value of our manager research process. I think the other thing is for us at a university, there are certain managers we can't invest in. I think one of the areas that we've really struggled is activism. There's value in activism. It's kind of hard to model for us, but there's value there. But think about it from our perspective as an endowment, if you give an activist money and we get our money from our donors. And some of our donors sit on publicly traded companies and their CEOs. And they give us a million dollars for the endowment. And all of a sudden we take that money, give it to an activist manager who wants that CEO fire. That's a bad day for me. So the politics are important. So we really don't look at activism that well. There are other areas, life settlements. It's really hard to explain to students. And we kind of believe it's not our money. So we want to give the students the access. We have a very large intern program. We meet with students all the time.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“The difference between Mercer and Wilshire's managed research, I don't think it's that valuable, asset allocation for the most part, everyone uses the same modern portfolio theory. And then portfolio construction, if you're small, you're buying hedge funds off the rack. You really can't do much. So we try to think about what we can do differently. And I think from our perspective, trying to find managers who are early stage. So we are a day one investor. We've seated managers in the past. try to do things from a separate account from portfolio construction where you actually own the assets and we can give them broad swath, do anything you want in this portfolio. Just give us the exposures and we have the position so we can run them through the model and then have that never panic. But if you're going to panic, be the first to panic. Have the hedge so we can, if we have a problem, we can put more color on and basically DK trades, take a manager out from an exposure perspective. So we have the ability to go in if we don't like this exposure. We'll take it off.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“And say, give us your best ideas. We're very fortunate. We've got a West Coast manager who I really like, Scott Minard at Guggenheim, who I think is a Bon Savant. And we basically let him go and do what he wants to do. So I think that's one of the things we try to focus on is separate talent from luck. I think the dirty secret, I think in endowment and asset management, is that everyone focuses on their manager research process or asset allocation portfolio construction. In my mind, those are table stakes.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's a little more for us, a little bit different. I think our job is to basically separate talent from luck. And we want to find managers basically we can do more than one thing with. So you find us more with multistrat managers or managers that have multiple products. Because if we're going to do all this work we do and background checks and all the stuff we have to do for a $25 million biotech long only manager, that's not a real good use of our time. We have 13 people and it's really just not, it's too niche for us. And it only gives us one exposure in the model. So we find ourselves really trying to focus on trying to find managers that can do more than one thing for us. And it could be a separate account. It could be an overlay. It could be other things, other products. But you find that with only 60 relationships, 65 relationships, we have managers that do a lot of different things for us. Another thing we try to do is also try to find best idea accounts. So we have a couple separate accounts where we just give them a broad.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“So let's get into the core part of what's going to drive it, which is the manager selection process. So let's just start with how do you think about what you're looking for in kind of the kind of manager in the portfolio? I mean, you started with a group of managers. So does it start with, hey, are model's telling us we like value now? Let's do a hunt for where we think value is most attractive in the world. Yeah.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's not very dynamic. It's basically once a year. And I wouldn't say it's the Ronco model, so I didn't forget it, but it's definitely one thing we look at. The risk model overlay on top of that, trying to understand the risks of the portfolio and where the manager risks are, is more active. That's sort of a quarterly monthly value look at. We have a tactical overlay, which is the hedge, and that's every day. So the real asset allocation work is done once a year.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“But we got there totally different ways. So I think from our standpoint, we're okay with that because volatility matters to us because, again, financial aid is what we use to pay. And to go to one student this year and say, hey, we've had a couple bad years, but we'll make it up a couple years now, and we're going to cut your payout from a $5,000 loan. Now it's a $1,000 loan. That hurts.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“And how we get there, it's a little bit different too, right? So I think what we find is that we have a lot less volatility. So you think about, and I don't know whether returns are going to come in this year, but they're still being calculated. But my impression is that I'll use West Coast UCLA last year was up down four. And this year they're up 14, 10% over two years. We were up one. Now we'll be up eight. So eight and a half. So we'll be at the same number. We'll be at 10.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we try to break it into equities, credit, real assets, and then absolutely return. And I think when you look at that portfolio that way, we can break it down into the traditional asset classes with energy. We can give them that number. But you think about it, you go back and say, how many endowments are less than 20% in US equities? There are very few that have that exposure. We have more emerging markets of frontier than the portfolio than we do there. I think when we look at the alternative mix, we're in line. I think we're about a third alternative is probably lower than some of the Ivy League schools, but for the most part of a school of our size, we fall right in that sweet spot. The way we implement it is totally different. And again, the frustration I have is that we have this different view, a different portfolio, but we have similar returns.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“Totally different. Grange Associate calls us and says, Okay, give us the buckets. We don't look at the world that way. And they get very frustrated with us.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then when the Cambridge Associates of the World come to you and say, well, here are the buckets. And of course, those look like U.S. Equities, International Equities, Emerging Market Equities, Hedge Funds, private equity. After you run through the model, do you end up looking roughly similar to other endowments? Those.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's basically we call it grapes from wine. Reverse optimization. And again, it's a blurry lens. It's not perfect. But nor is modern portfolio theory efficient market.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a vile target, but for the most part, again, you go back, the model says this, and then you have to put the manager data back into it.”
2017-09-04 · Capital Allocators · Jim Dunn – Protect, Perform, Provide (Capital Allocators, EP.24) · IDENTIFIED FROM THE TRANSCRIPT · source