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Tim Recker

lines on the record: 100
first: 2019-05-20
most recent: 2019-05-20
sittings or episodes: 1
sources: podcast

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“Would just go back to my formative experience working in Hong Kong for three years early in my career just to understand and appreciate having a global perspective. It was really fascinating for me to learn that, to understand my own bias and just read the US media and to read the local media and to see, like, are we talking about the same story? And just to really appreciate that. So just getting a global perspective early in your life, I think, is really valuable, particularly in investing.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Honestly, it's a holistic set. I think it's just more around values that they instilled in me. As a result, I know who I am and I have a strong set of values personally, and that's allowed me to have an investment approach that's principle-based. And it's also, if I had to pick, I guess, I would say they taught me honesty and always to do the right thing, even when it's not in your own interest. And that's worked out for me. I've never sort of had to self-advocate things that have always worked out for me.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Howard Marks has his periodic writings, obviously phenomenal. I was on spring break with my daughter last week and finished his most recent book. I think Howard is tremendously insightful”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably a lack of intellectual honesty. I think this job is really hard. And if you're not willing to be intellectually honest about what works and what doesn't and honestly, our first combat we did, we made really good money, but in hindsight, we missed some things. And if we were intellectually honest, I would say it was a bad investment decision. And so just going back and really understanding those issues.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Honestly, it's when people are selfish and they put themselves above the organization. We're a mission-driven organization here at Irvine. But even before being here, I grew up in an environment where you always do the right thing. And it frustrates me when people don't do that.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Squaw would be our home mountain, but honestly, we started going to Utah and the snow is so much better I'm a convert, so now it's Alta Snowbird”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I love skiing with my family. My kids were in the Squaw Valley ski team for a couple of years. We go to Utah for Christmas every year. It's just wonderful.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“The biggest challenge for us is really make sure we have the discipline around liquidity in the portfolio and being prepared to deal with a severe market disruption. And have we adequately planned for that? Are we correct in our assumptions in our own portfolio, what we think we have liquidity on? Do we really have liquidity on? I'm very worried about the knock-on effects on things where, just like we felt in the last crisis, where just because something was a high quality asset that was liquid, the price was more damaged than we anticipated, that could affect some of our assumptions. And so just have we done enough work to really understand all of that and be prepared?”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Honestly, I wake up every day. I love coming to work. So it's a privilege to have these jobs. It truly is. So there's not a lot that I don't like. Certainly, you know, managing people is the best and worst part of the job. Anytime that when things aren't going well on that front, that's always hard. When it's going well, it's great. But there's not much I don't like about my job.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have a separate account with one manager, just quite simple. They're a great manager. They've done a great job for us, and we let them have some flexibility in how they implement that, and we stay in close contact with them. We have liquidity parameters that we give them that they need to adhere to.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't feel half pregnant. Every asset plays a role in the portfolio. The bonds play a liquidity role, period. You have to have liquidity in the portfolio. We have unfunded commitments. And it's the one thing we can do from a risk profiling, really ourselves in trouble is not having adequate liquidity to address our portfolio. And so I spent a ton of time thinking about our liquidity. And that's just what we have access to. A lot of hard closed manager, even if I have access and we have separate accounts with managers that are hard closed, that if I took the money, I can't get it back in. Yes, I have daily liquidity. But if I take it, the future opportunity cost is tremendous. And so really understanding what your real liquidity is is really important. So the bonds play an important role in providing that liquidity for the portfolio”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, everything else you've talked about is this high conviction we're either in or we're out and we'll zero. We don't need European bonds. We don't need real estate. And then you get this like 6% bonds. And there's reasons to have bonds in a portfolio. Understand that.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Have 6% in fixed income today with a target of 10. And it's liquid, but is that enough? And I think it's also a question why I've talked about the investment committee about is are we willing to liquidate it 100% to play offense? I think most people think about it as, well, you constantly replenish, et cetera. And I think about it as things get in that environment where I talk about those very severe downturns, are you willing to liquidate that to play offense? And so those are the conversations we'll have with the investment committee. If the answer is no, then we'll need to raise a little more liquidity in other ways to have it available to play offense if we're willing to liquidate those bonds to play offense, then that provides that opportunity.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Give you pause. And so we can only do that because we have alignment with the full investment committee. But if we have that access on venture, why should I do real estate? Now, we recognize that creates a mismatch around inflation protection, et cetera, but I don't think most institutions are actually putting real estate in for inflation protection purposes. They might think that. I don't think the true risk is actually that. And so, and on real assets, the same thing. All privates compete. And we talk about with the committee is we do have some clear risk because of the type of concentrations that we have and we have mismatches like that where we could have challenges. But I do believe that it's a question of a time frame that you're measuring and not if you take a long enough horizon, I think it's actually fine.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Very little. This goes back to mismatches. So real estate, one of the things that I disagree with some of my peers on is I think a lot of endowments have real estate because they think about it as inflation protection. I think it's real estate and it's not really real estate and the true context because it's usually opportunistic real estate, which once your opportunistic real estate, you're just private equity. And so if that's the case, then just call it what it is and let's let it compete for the best return. And so for us, what we think about is if we go a liquid, what's the maximum return profile we can get for that illiquid unit? And for us, and given our location here in the Bay Area, going back to one of our competitive advantages, that generally tends to be venture. And then the question, my historical view has always been, you do as much venture as you can get good access to. This certainly tests my theory on that because the amount of access that we have is quite good. And it puts me into sort of risk limits that at a total portfolio parameter.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Some of the things you didn't talk about, you don't have them in the portfolio, they're not that important. There's a little bit of bonds, which you mentioned, 10%. What about real estate and real assets?”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Private equity teams, their greatest frustration was I can't get the CIO to agree to do this. And fortunately, I come from that background. So I'm usually the one actually advocating to do it. And I think that creates a lot of flexibility for us. When I came in, we were overallocated on privates and we ended up selling our lowest performing on a future expected value, our lowest performing value.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the few markets that's still inefficient is the secondary market on privates relative to how capital flows, et cetera. And so I think if you have a more insightful understanding of how that market works, you can actually create opportunity for yourself. So I think during a downturn, yes, they'll trade at a greater discount than they trade today, but actually think that because a lot of those buyers, their only job is to buy privates. They don't really care what's going on in the rest of the world. And so you can actually sell privates in a period of dislocation potentially and turn around and go buy liquid assets that are actually a more attractive price. And so now that I'm looking at it, the poor flesh from a holistic point of view and having that framework, we very much think there's a part of our private portfolio that we would actually sell if we saw a big enough opportunity. And so it's just a question of reprioritizing your assets and pursuing what you think can generate the best returns going forward. And I think a lot of CEOs don't come from a private equity background and are not comfortable with selling.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“As many of those quality assets in your private book to perform at the level that you expect them to perform and not just sort of saying, well, it's a legacy asset. I'll let it run off at some point. Well, a lot of times it takes a long time to run off. And that can build up, and I call it the lead layer. And so we've eliminated that lead layer here even in the first two years. I went and sold a good chunk of privates to create more liquidity. And I think in a downturn, we actually, I've got classified a few more of the legacy assets that we actually think are productive, but not as productive as our best managers, but that in a downturn, we would actually sell those.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“We are pretty light on liquidity relative to probably where we should be because the opportunity cost has been so high, but we're actually having a conversation in October with our investment committee around that to really hone in on what we think about that and run a lot of scenarios on the portfolio. Do we have enough liquidity to get through? Of course we do. But do we have enough liquidity to play aggressive offense at the level that we need to is the question. And so part of it is I don't view privates as illiquid. I'm actually one of the things I did early in my career is I sold secondaries back when the only people that sold secondaries were distressed financial institutions. I viewed it as a way to liberate the portfolio, if you will. So there is an edge that we have. I think one is just my view on privates. I'm a big believer in eliminating the noise. A lot of people just take their legacy investments and just hold them. And I'm a big believer in selling them, cleaning them up, getting concentrated, getting as many of your high performing assets. I call it your productivity ratio.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“trough. And I think that that works until it doesn't, until it gets so severe that the capital is scared to come in. And in which case, it will actually be quite brutal. So I think we'll actually see more 2008, 2009, maybe not in that context. But I think we'll see longer cycles between really big downs. But when we have those downs, they can be quite severe. And I think that will create opportunities for us. And the question for us is, how do we maintain enough liquidity? And the opportunity cost of maintaining that liquidity while you wait. And so that's the art of portfolio construction. And those are conversations we're having, which is what is the optimal amount of liquidity.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Unfortunately, it's a pretty tough environment. I wouldn't say there's a whole lot that we're excited about. There's so much capital in the system that it just washes away opportunities so fast. And so we find it difficult to find really areas where I'll say have an edge or excited to invest. So what we're really excited about is just finding those special people that just have an uncanny ability to generate excess returns to great stockpicking with long-term horizon. And so it's just how do we concentrate more money with those managers? That said, I do think that there will be opportunities because I'm a big believer that there's so much capital in the system that when there's sort of short-term dislocations, et cetera, they're going to be fairly shallow until they're extreme. And because money moves in very quickly to solve the problem, it actually artificially holds the bottom higher than it should be.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Again, most endowments foundations tend to not utilize a lot of quant managers. We have d'Artaux with one. I would like not to talk of who it is, but they actually are using machine learning where the machines actually build the algorithms versus most quants, the people build the algorithms. And a lot of times you just get momentum and various things. And so we have not been as interested in just traditional quant managers, although we have had the conversation, it may actually be beneficial from a portfolio construction point of view to have one. The manager we chose to pick is actually, I think, quite differentiated. And it's a bit of our asymmetric return profile structure that if they get it right, it's going to be a home run. If they don't, it's not the end of the world.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Really, just becomes who can provide that at the lowest opportunity cost because generally speaking, they're not meeting our return threshold that we ideally would like at a portfolio level. And so we're making that trade-off to have those two objectives. And so it's just a question of who can achieve that.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have biases against certain hedge funds, so we don't like global macro. We think very few people possess the ability to pick market cycles, et cetera. So we just don't do very much of it. And we don't think we possess that skill. So we very much believe in just picking managers that do a great job of picking great companies. And the companies tend to do a better job of actually responding to the economy and all the different environments. We definitely like some credit in terms of the stress credit. We like long shard equities, even though it's been a tough environment. We do think with the right missile managers, you can do well. This goes into like, are they really hedge fund or not? We have some, I'll call them opportunistic managers. They're about basically picking long equities with some other bells and whistles added to them. I think we definitely have conviction and we like those. The issue becomes liquidity. What we really need out of the hedge fund portfolio for a subset of it is liquidity and really uncorrelated returns. And so then.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hedge funds are complicated. Some of our managers are willing to share more information than others. While you lack certain information, you benefit from others. I think what I really love about the privates and about publics equities is it's really about companies. Do you really understand companies? And I think they actually, in my view, are actually quite similar in terms of your ability to select, et cetera. Whereas hedge funds is a much more complicated universe. And it's not really an asset class. It's just a set of investment strategies. They have so much flexibility. It's less about just their ability to pick companies per se. You're looking at process and really the quality of the senior people and your conviction and their decision making about the body.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“And this is still an active thought process. Fascinating. Okay. Let's turn a little bit to hedge funds, where if you walk through a similar research lens, you often don't have the volume of information that you do in the public equity world.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“And do we believe that they've learned from those decisions and are not going to repeat that and are they going to more align with some of the historical performance and decision making that allowed that? And so that's just a judgment on the team. And you never know. But my experience has been if you're deeply questioning it more times than not you regret not pulling the trigger. But the difficulty is knowing when to step in. And my view is if you're going to stay in, you don't just stay in, you double down. So if you've done the work and you agree to stay in and they're underperforming, then you got to add more money because that means you have the conviction. And this.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is where it helps to have a team that all have strong investment judgment and we all can sit around and have different lenses. I've hired people with different backgrounds. I intentionally build a team with alcoholic cognitive diversity in their thinking. And so that leads to, I think, a really different set of views on the look forward. So someone that I have an individual in my team that worked for a hedge fund, I have someone that comes from a private equity background, but someone from the publics. And so everyone having a different lens on things and their own perspective I think gives us different views on it. And it's not clear. And that's the beauty of investing. It's art in some ways, right? And if it's a science, everybody can just do it and do it well. We have to rely on all of our investment judgment to decide, is it worth giving them the chance to perform and turn it around? It was clearly more some lack of judgment was a part of the reason they underperformed it. We can isolate the decisions, but they've certainly been a very strong firm.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think you have to rely on just judgment. I mean, this is where most of the skills and investments you can teach, but investment judgment is one I'm not sure is something you can teach.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Clear after that process. When you get to that point in time, so you're there now with this particular manager, you feel like you have all the information. It's not really conclusive of what the right outcome is in terms of alpha. How do you make the decision?”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“But then it comes down to okay, we got the information now it's judgment on our part to try and have a view of what we think will be the right outcome going forward. And so we all as a team talk about it and agree on what we're going to track or whether we're going to pull the trigger to step away from the manager. It is a group decision.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Whole team is involved in those decisions, just not me. If I have a concern about a manager, I raise it with a team and then we go in. And so, for instance, one of our managers that has historically had a very strong track record has been underperforming more recently. We went in and did a ton of diligence. For every company they have ever invested in, we built our own comp panel for every one of their companies. And we went back to try and answer the question, okay, what's the source of their alpha generation? Have they been good at picking sectors and they just picking the right sectors? Are they picking the right companies in the sectors that performed well? And so until you do all the analysis to really tear that all apart, can you really understand what their expertise is? Instead of just looking at the tracker and say, yeah, great, they've generated an X return over a long time period. Why? And how many companies? And that took us three to six months just to do one manager to give you an idea. And we ended up with a 100-page deck where I think the team did a great job of putting and providing a lot of information. And it's still not fully clear after that process.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“If anything when I first came in, I was too slow at pulling the trigger for the concentrating the portfolio. I think with a couple of exceptions, I was pretty accurate on where I thought the weakest links were. And for a host of reasons, I didn't immediately just pull the trigger. I think part of that is you're trying to balance all the different constituencies and making sure that people don't feel like you're moving too quickly, et cetera. But in hindsight, that was probably a mistake. It cost us a little bit, not at the end of the day, not that much. But if I were to redo it again, I'd have no questions. I would do it very fast. Because I think you have to trust your judgment. And so that would have just been me looking at them and just tearing through all the information, going through the analysis.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Concentrate in the same sectors in a lot of cases. And then we talked about well, do we do a passive overlay to bring it back into line? And then we start looking at the underlying companies that we would actually be investing in. We're generally not that excited by those companies. There's a reason why our managers aren't choosing those. And so this is where we have major mismatches in the portfolio on public equities. And so for us, it's about picking managers to have a value orientation in their overall selection style and then letting them go pick the best ideas and giving them a long enough horizon to implement that strategy. And so we truly try and think, you know, a five to ten year horizon with each of those managers. We think a business cycle of 7 to 8 years and some of those managers need the full business cycle to make sure their strategy works.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have 10 public equity managers, I think, if anything, it's too many. But the problem is you want to have some diversity in the type of strategies. And most of our managers have a tremendous amount of freedom on what they can do. They're not really constrained in where they can invest very often. And so two of those managers are, I would say, predominantly China with a little bit of other areas, but mostly China, they're probably the most constrained, if you want to think about it from that point of view. But they're both conviction-based managers. We also want US. We want a little bit of Europe. We also like a little bit of small cap. But we do zero out whole sectors. I mean, there are definitely sectors like utilities, things like that. We just don't own hardly anything in those categories. And one of the things we're wrestling with is just, I think many others are dealing with is that the tilt in what is viewed as value versus growth in your portfolio and given the performance of growth versus value and just the sector concentrations. We have managers or conviction base. It's not a coincidence that they all tend to come.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you have an overweight, however you want to define it, that's going to be called an overweight. There's two bets you're making. You're making it on China, you're making it on the manager. Now, how do you decide how many managers to have that are going to comprise, say, 10% of the portfolio?”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“We've been fortunate that historically we've generated a reasonable amount of excess returns in our public equity portfolio. Most of our managers are highly idiosyncratic. We generally like managers that are 10 to 15 stock managers. So if I'm going to pay you a fee, pick, don't just be a closet benchmarker. So it's funny when I meet some managers and they tell me, oh, we're high conviction. We have 50 stocks. I'm like, yeah, that's not high conviction for us. And so it's also we've got a major overweight to emerging markets and particularly China. And we're actually debating what's the right allocation for China, et cetera. Right now it's a little over 10% of the entity. It's an important component of our public equities. We're about a third of our public equities are emerging markets.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Back to your competitive advantage, it's just not one of our competitive advantages. And we generated almost call it 35% net returns plus minus depending on whether using IR time weighted returns. That would suggest you should go do that here. But they were not. And it's a function of the complexity that it brings. We're not set up structurally from a resourcing point of view. We're not set up from an operational point of view, from a tax point of view. We're not set up from just bandwidth and time. So it would be a bit more of a distraction for us at the moment. Now, long term, I think we might do that. It would be a function more of if there are more of a financial dislocation in the markets, et cetera, when everybody else is sort of maybe running away, we might run in. And they may not look like a traditional.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“At the end of the day, everybody understands that I'm the final decision maker. Everybody has input, generally speaking, we seek to make the investment decisions where everybody's on the same page, but we will agree to disagree sometimes, and ultimately that's my decision. I would say if it's just a question of the magnitude of their concern, I have to think if we've got anything where someone really, really had major concerns. But we do so few investments. I think we really are striving for investments where we all, for the most part, are pretty supportive of the investment. The real question is, do we have the right facts on the table? If it's just a difference of opinion versus do we have a different set of facts? And so our main goal is make sure we have the same set of facts on the table so then we can discuss them. And then from there, I'm the final arbiter because I always tease them if the portfolio doesn't work out, the MESCO committee is not looking to them. They're looking to me.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“The vast majority of times is yes. And it's just a question of how well they know them. And so that's actually, talking about the governance as a real advantage. I think most organizations, they are trying to put their arms up as a sort of a block to the investment committee getting involved in decision making because it's not always been productive. And a lot of endowments foundations and for ours, they're actually giving us good ideas. Actually, they really care deeply about making the best decisions and things they can do to help. And so they have a different insight into the conversation than we do. So we can do reference calls, et cetera. We'll get all kinds of information. We'll never get the same lens that they get because they're viewed as peers or friends. And so they can tell us a whole set of things that are valuable.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Usually the person who has the S class major will take the lead on doing the next diligence as a team. I believe early on in building a hypothesis you lay out your hypothesis for your investment thesis and the key risks and the key things that you think you need to understand from a diligence point of view. And then we just discuss the diligence plan and how to prosecute that. And that may be the person that brought it in that will then prosecute it. It may be actually saying, I'm too busy. Can someone else take the lead on this? It could be people tag teaming. So it just depends on what we're trying to accomplish. But it goes to basically an iterative process from there in which it can be handed off to any individual or a group of individuals to then go and do further diligence and bring it back to the team. And they just keep bringing back information and informing the decision making process. But eventually we'll go and do a full on site, do the traditional reference calls, all that kind of stuff. Well, one of the advantages we have is a great investment committee and I will ultimately always email them and say, do you know so and so or anybody? And it's surprising.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the things I like is for individuals to bring things back to the whole team quite early. So after the first meeting, if you think it's interesting before you keep doing the diligence to try and figure out whether it actually is worth, and that's what they're thinking about, bring it to the whole team. Let's talk about it. Because either you might be lukewarm on it and everybody else is excited about it, then we run the risk of actually you turning it down as an individual versus the whole team thinking it's interesting and or you might think it's really interesting. And the rest of the team's kind of like, that doesn't make any sense. And you're wasting all your time. It's a little bit harder on your ego, quite honestly, as a director with a lot of independent. I would describe it as just because you're capable doesn't mean you should in terms of decision making. And so what I want people to have the capacity but actually choose to seek the input from the rest of the team so that we can make the most informed decisions. Because I think part of our decision and investments is trying to eliminate bias. And we all have implicit biases. And we spend a lot of time trying to rein that out of the system.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“In each of the areas it's all about portfolio fit. So there's a lot of great managers that are out there that we choose not to invest with. They are still great managers. They're just not the right fit for our portfolio. So for us, it's really about what is the right fit for our portfolio. And that for each asset class, we have an objective. What are we trying to accomplish? And so it really is them going out and looking for the things that are the highest need in our portfolio and everybody having a clear understanding of what that is. And so we talk about it as a team. I think everybody understands that. And that's where we're focused on sourcing. Now, if there are excellent managers that just happen to fall in completely different category, but they're just outstanding, then we also will pursue those. I mean, we really just want managers that are focused on alpha creation and really about absolute returns in the sense of most of our managers are not benchmark oriented. They are absolutely focused on how to just maximize returns, period.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, if you break down the process, you start with that sourcing piece, and you mentioned you don't want your team to miss something. There's a lot of funds in all these asset classes that get started, private equity's on a constant rotation, hedge funds. There's always new stuff. What is it that you're looking to capture?”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“So that was probably one of the most interesting decisions I had to make early on. The board gave me a short list of objectives that they wanted me to sort out in the first year or so. Obviously, team is always on that list. But the real question was, what's the model? Is it a generalist model? Is it a specialist model? And so I actually did a tour I went and met 25 endowment foundation CIOs across the country in the first couple of months of my tenure. I had a bunch of different questions for them, but one of them was team and how they organized their team. I came from a specialist model and obviously a lot of endowments and foundations use a general.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Six investment professionals, so I believe in running top heavy teams. So we have three investment directors all that have twenty plus years experience, and then we have two pre-MBA associates.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Environment, and we believe in them. How do we step up and be a supporter, not just financially but emotionally going out, even introducing them to other investors, et cetera?”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“You have both an institutional brand and a personal brand. I think Irvine, I think, has a strong institutional brand, although not as well known by a lot of people among our managers is extremely well known. Personally, I've always tried to build my personal brand of trust and I do what I say. And so when you couple that with a strong institutional brand, I think it can lead to very strong relationships. And so with our managers, it's really a function of how do they behave. We really want managers that put our interests first. So that means sometimes they'll do things or not in their interest because it's the right thing to do. That's a small universe of managers that are willing to do that and it's really a scarce universe. But we have a number of managers that actually outright say that in their principles, that that's their intention. And they follow it and they do it. And so when they then call us and need something, we try to be supportive and be a good partner and provide advice. And then on the privates, for instance, a lot of people come in and out of funds during different time periods. I think if they're having a more difficult...”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source
“Managers that we have in the US or China for our privates I'm pretty comfortable with. And so I think those are examples of us not spending our time traveling to Europe meeting with private equity managers is I think highly beneficial.”
2019-05-20 · Capital Allocators · Tim Recker - Concentration at the James Irvine Foundation (Capital Allocators, EP.100) · IDENTIFIED FROM THE TRANSCRIPT · source