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Kimberly Sargent

lines on the record: 81
first: 2023-08-14
most recent: 2023-08-14
sittings or episodes: 1
sources: podcast

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“Think two areas where we have a lot of exposure in the portfolio are emerging markets and then smaller private equity funds to areas that I think tend to be pretty inefficient. For better or for worse, we've had 40 to 50 percent of our public equity portfolio in EM over time, which as we all know from a beta perspective that has not been a good bet. I mean, we kind of have just gone through this lost decade. But both on a 10 and a 15-year basis are emerging market public equities have outperformed our developed market. So there's real alpha there. And we think we have been able to partner with managers who can find it. And so I think it's a really appealing asset class. And if we get the beta on top of the alpha in the future, that won't be a really good thing. Small buyouts is another example since the GFC, large buyouts have done really well, surprisingly well. So maybe you can look back and say.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“The strategy side, let's talk about inefficient markets, right? It's a great phrase. Think about it. How would you define as you look at your portfolio where you think managers are participating in so-called inefficient markets?”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“Strategy is the second leg of the stool. You really want to find someone who's maybe one rowboat fishing in a big pond as opposed to a number of boats in the pond. And it's a small pond. So it really helps to have inefficient markets. And we can talk more about that. And then structure. It's really about alignment of interest. Have they designed the structure of their team and their fund to take advantage of the opportunity that they're going after? Are they aligned with you in terms of their incentives?”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's definitely not a science to it. I think it's more of an art, and you learn through practice the types of questions and discussions that will lead you there. We do a lot of case studies just to understand the depth of someone's research, you can tell the difference between someone who's gone really deep to understand something and someone who's skimming the surface. We talk about mistakes, what they've learned from mistakes. We ask, what is your biggest learning? what things haven't gone well. We focus on that just as much as what has gone well.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“Are intellectually curious and lifelong learners who have a lot of intellectual honesty and try to learn from their mistakes. And then just integrity and transparency.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“I sometimes think of manager selection as the three-legged stool where if you don't have any one of the three legs it falls down and those legs are people strategy and structure. On the people side, I really like finding people who have almost an unhealthy obsession with investing, a real passion for it and real hustle around it, but just like they were born to do this. I think there's a lot of people who do investing as a job, but I like partnering with people who really have a passion for it. And I look for people who are really able to generate investment insights to collect different or better information than others. And then sometimes they have the same information as everyone else, but they just put the pieces of the puzzle together in a different way. They understand what matters. The best investors can do both of those things, actually. And then I think people who are”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you focus on investing with great people, having great long-term partnerships, what are the characteristics of those people that fit into the managers you'd like to partner with for the long term?”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“First thing we wanted to do was build out the hedge fund portfolio because the simple portfolio that we inherited was very equity oriented. And we knew the privates would take a long time. So step one was diversified through hedge funds. And then gradually we built out the private side of the portfolio with some great hires.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, well, it was a really interesting time to be doing that because the financial crisis hit pretty much right away. And a lot of really compelling investment managers that have been closed to new capital all of a sudden opened. And we had a chance to build relationships with them. So it actually, the buildout happened much more quickly than I think John and I were expecting it to. There was also a secondary market that opened on the private side. So we were able to jumpstart building the private portfolio that way.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's another interesting thing about foundations the goal is less to outperform other foundations. We have a lot of large foundations with whom we're working pretty closely on the grant making side issues, climate, social justice, whatever it is. It's great for me if the Hewlett Foundation performs well. And that's just something nice about being in the foundation world. I'm less interested in being different and outperforming and more interested in just adhering to my own investment principles.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“As you build up a portfolio from where you started, how do you create the idea that to outperform or you need to be different from people and yet in order to have the sourcing, you need to be sharing information with other people?”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a lot of word of mouth, a lot of asking investors I respected who else they liked, who should I talk to if it's in the private markets, who's someone on a board that you think adds a ton of value. I learned to have quid pro quo relationship with peer LPs. Now you can't do that with everyone because you got to keep some secrets, but learn to share ideas with people who are sharing ideas with me in a way that I don't think we did at Yale.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“To learn how to figure out who was launching, how to figure out where the talent was. And so there was just a whole muscle around that that I think we had to build.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“You're back at 99. So with the foundation, you lose 10, you spend five, you're at 85, then you gain 10% and you spend five again. And you're in the 80s. You've lost 11, 12% of your endowment over the course of two years, and the market hasn't even moved that much. So you have this massive denominator effect that can occur in the foundation portfolio, which is why you see a lot of foundations holding 10, 15% less in private assets than a lot of university endowments. The liquidity management of it has been very different. The other thing I would say is different is sourcing, at least from Yale. When I was at Yale, people who were launching a fund came by. They wanted that anchor check from Yale. You didn't have to look too hard to find them. They came to you at a smaller endowment on the outside.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“First thing I would say is liquidity management for a foundation is a really different exercise. So if you think of university endowments, a lot of them, especially the prominent ones, have money coming in the door from alumni that either partially or nearly fully covers their payout to the university. So there's not a big net liability there. You can take a lot more illiquidity. With a foundation, you've got five to six percent coming out each year. There's no money coming in the door. So your portfolio needs to both cover that payout, but also the internal plumbing of your capital calls and everything like that. That may not sound like a big deal, but if you think about the math, if you start with $100 million endowment and you lose 10% and you're a university endowment, and let's just say for the sake of art.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it was immediately clear that John and I shared an investment philosophy, and it was very much rooted in the philosophy at Yale. Long-term investing, concentrated, deep manager relationships, look for talent, try not to be too top-down, not trading around. So that was great from the start to have that investment philosophy. I definitely learned over time that managing a portfolio for a foundation is a very different cup of tea than for an endowment.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“There were five line items in the portfolio, a few index funds, and a lot of HP stock. The foundation didn't have an investments team until the very end of 2007, early 2008, when I joined. So it was a startup investments team. Historically, the foundation had held Hewlett-Packard stock, eventually post the compact merger, ended up gradually selling out of HP, but still had a large amount of it and diversifying into index funds while they tried to figure out how to hire an investments team and start an investments function. It was really a blank slate. There were two people on the investments team when I joined, John Mailing, the first CIO, and his assistant Lena and me. So it was blank slate, start from scratch.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“I had a little detour to McKinsey in San Francisco. I loved the people, didn't love the work, and all of that just made me convinced that I was destined for investing. I really missed it”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“Just how difficult it was to get things done in a large company. The politics around that, the number of people you had to get on board solidified my desire to work on small teams.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I decided between my two years of business school to do something completely different from what I'd ever done. And I took a job in operations at a big company, Home Depot, to see what working at a big company was like. It was very eye-opening.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I'm a California girl, born and raised in San Francisco, and I'd spent eight years on the East Coast, seven of them in New Haven. I loved working at Yale, but it was a lonely time for me. I remember on the first day working at the investment's office, there was something really cool going on on the Capital Markets desk. I said, I'm going to learn this. This is so cool. And I really spent a lot of my time in the evenings. I would go to the library, I'd read the CFA books on the weekends. I would go to coffee shops. I'd read investments books. I think I read Dave's pioneering portfolio management and underlined and highlighted three times. And I was all about learning in that moment, but the people I knew from undergrad had graduated. And it was wonderful. But I was wanting to get back to California. And when you're young, you want to explore. You want to see what else is out there, experiment a little bit. So that was my thought for going back to business school.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“To me, the Yale motto was really about maintaining this equity orientation in the portfolio. But then also diversifying into asset classes, which at the time were alternative and were inefficient enough that if you really selected the best managers, they could outperform. And then the third piece of it was really focusing on talent and trying to find the best managers around the globe. This model really still holds true today, although I remember seeing some analysis that suggested that half of the value that Yale had added over time relative to peer endowments was from asset allocation and half was manager selection. And my guess is if you fast forward, there's going to be more of that from manager selection over time because so many people have just copied this asset allocation model.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“He was really able to tune out the noise, take a long term perspective on things, develop an independent point of view. He was a religious rebalancer. He wanted to go against the grain and buy what others were selling and sell what others were buying.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“They may or may not agree with me, but it's probably better for them to have information about how peas are thinking and what their concerns are over time. And hopefully that's helpful to them. The other was how much he spent time mentoring and training young people. I don't know that a lot of people know that about him, but he really just tried to give back, pay it forward. That's something that I've always tried to do as well. The third thing I'd point to is just he's a very values-driven person. I think working for a mission driven organization was very important to him, either because he surrounded himself with these people or he had an influence on these people. A lot of the people that he's mentored and trained over time have gone on to work for mission-driven organizations. So that is the legacy from my time with him. And then finally, I would just say his patience and contrarianism as an investor.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so there are a lot. There are some that are very specific to David and then others that are more about Yale and the model there. David really taught me that investing is a business about people and relationships. I know there's a quantitative aspect to it and you do a lot of modeling, but you can have the best models in the world. And if you're not partnered with the most talented investors on Earth, you're leaving a lot on the table. And so he really viewed his partners from a human perspective. He really tried to develop and maintain great long-term relationships with them. I saw him really tell them what he thought. If he had concerns, he would voice them. I think he did this out of respect for them. I've always tried to mimic that. Just if ever I have to part ways with a partner, I don't want the reasons to be a surprise.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was an analyst, so I was there for three years doing various parts of the analyst job. I focused a little bit of my time on foreign equities. So got that international exposure. But I was also Dave's research assistant for his second book. The first book was The Yale Model is Great. And the second book was Don't Try It at Home. So he had me chasing down all different kinds of data. I would go to the”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“Was David and Dean, Seth Alexander was there, Rob Wallace, Randy Kim, Alan Foreman, Tim Sullivan, lots of names that a lot of people know.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“Was lucky I was working with a trust and estates lawyer. And part of what he was doing with families, with financial planning. I think I had taken one econ class failed during undergrad finance was not on my radar at all, but I thought this is kind of interesting. I'd really like to check this out. By the grace of people doing me favors, someone ended up introducing me to David Swinson. And he hired me and he took a chance on me. And here I am.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I enrolled in law school like many coming out of undergrad. And it took a year off and worked in New York at a law firm. So it was a paralegal. It was my first job. I pretty quickly decided that that work wasn't for me and made a pivot to finance.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was a history major, and I didn't totally know what I wanted to do, but I had this vision that I wanted to become a judge, which my friends are going to laugh because I'm pretty judgmental. So maybe that would have been a”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source
“Guest on today's show is Kim Sargent, the Chief Investment Officer of the Packard Foundation, where she oversees $10 billion. Kim is a well-respected member of the Yale diaspora, having started her career under David Swenson. Our conversation covers Kim's time at Yale, some lessons learned from David, and her application of those lessons and a lot more at Packard over 15 years. Kim shares thoughts on a range of assay classes and closes by explaining why her role is the best job in the world.”
2023-08-14 · Capital Allocators · Kimberly Sargent – Passion and Mission at the Packard Foundation (EP.333) · IDENTIFIED FROM THE TRANSCRIPT · source