Investors have played the game of telephone with David Swensen’s Pioneering Portfolio Management. Re-reading his book offers insights that differ from interpretations of the Yale Model. Read Ted’s blog here.

Today’s show is the most popular episode from our new podcast, Investment Management Operations. Subscribe to Investment Management Operations on Apple, Spotify, or wherever you listen to podcasts. 

Host Scott McDonald interviews Jenn Birmingham, Managing Director at the Princeton University Investment Company (or PRINCO)

Jenn exudes the concept of organizational alpha - how operations can integrate, provide leverage, and add value to investment results. In particular, her descriptions of collaboration and decision-making at PRINCO offer an insider’s look at one of the top endowment performers for decades.

Jenn often refers to the leadership of Andy Golden, PRINCO’s longtime CIO. His first appearance on Capital Allocators is replayed in the feed.

For full show notes, visit the episode webpage here.

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Andy Golden is the President of Princeton University’s Investment Management Company (PRINCO).  Having grown from $3B at the time of his arrival in 1995 to $22.5B today, PRINCO has been among the highest performing endowments in the world. Andy came to PRINCO from Duke Management Company, where he was an Investment Director, and received his formative training in the business working for David Swensen at the Yale University Investments Office. Andy currently serves on the fund Advisory Boards of several well-known private equity and venture capital managers, including Bain Capital, General Catalyst Partners, and Greylock Partners. He was a founding member of the Investors’ Committee of the President’s Working Group on Financial Markets and serves as a Trustee of the Princeton Area Community Foundation and Rutgers Preparatory School. Andy holds a B.A. in Philosophy from Duke University and an M.P.P.M. from the Yale School of Management.

Our conversation discusses Princeton’s endowment two decades ago and today, including its strategic advantages as an institution, shifts in thinking about asset allocation, decision making, team development, and partnership with managers. Andy’s long tenure in his seat, insight, and wisdom provides a treasure trove of information about how a top endowment manager practices his craft, and his subtle wit always keeps things light.

For full show notes, visit the episode webpage here.

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Next week, we’ll release the first episode of Season 3 of Private Equity Deals, this time focusing on deals in the middle market. As an interlude between Season 2 and 3, this week’s show is a classic – it’s Bain Capital and KKR’s take private of Hospital Corporation of America (HCA) in 2006.  The $33 billion club deal was the largest private equity transaction in history at the time and was significantly larger than any deal since KKR’s famous run at RJR Nabisco in the late 1980s. The HCA deal showed the private equity industry the scale of what was possible and set the stage for both mega buyouts and public to private deals ever since. My guest is Chris Gordon, a Partner and Co-Head of Private Equity in North America for Bain Capital. Bain Capital today is one of the world’s largest private, multi-asset investing firms that oversees over $165 billion in assets. Seventeen years ago, Chris was a younger member of Bain Capital’s HCA deal team. HCA is one of the nation’s leading healthcare services providers, with over 182 hospitals and 2,300 sites of care in 20 states and the United Kingdom. Its origins date back to 1968 when it was one of the first hospital companies in the United States. Our conversation covers HCA’s history, the private equity environment in the mid-2000s, and the impetus for the HCA buyout. We discuss the complexity of navigating a large-scale transaction, conducting due diligence discretely, navigating the financial crisis, and what happened to the company. We turn to HCA’s return to the public markets through an IPO in 2011, Bain Capital’s eventual exit of the investment, and the implications of the deal on the firm and industry. For full show notes, visit the episode webpage here. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

Stan Miranda is the Founder and Chairman of Partners Capital, a $50 billion OCIO that started in 2001 as a solution for private equity founders. Earlier in his career, Stan spent 17 years at Bain & Company, rising to Chairman of the Worldwide Executive Committee and leading its private equity practice. Our conversation covers the founding of Partners, learning the endowment model from first principles, and scaling Partners over the years since. We discuss the firm’s original interpretation of the endowment model, manager selection process, evolution of the endowment model since. Along the way, we touch on a range of portfolio and business management challenges, including team structure, internal and external management, succession planning, and insights across asset classes.

For full show notes, visit the episode webpage here.

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Kimberly Sargent is the Chief Investment Officer of the Packard Foundation where she oversees $10 billion. She is a well-respected member of the Yale diaspora, having started her career under David Swensen. Our conversation covers Kim's time at Yale, some lessons learned from David Swensen, and her application of them and a lot more at Packard over fifteen years. Kim shares thoughts on a range of asset classes and closes explaining why her role is the best job in the world.

For full show notes, visit the episode webpage here. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

Today’s Sponsored Insight features Michael Carmen, the Co-Head of Private Investments at Wellington Management. Wellington’s Private Investment platform has $8 billion in committed capital investing across technology, consumer, health care, and financial services. Michael helped launch the firm’s first private equity fund in 2014, bringing Wellington’s broad scope to late-stage venture-backed companies. He previously invested in diversified small- and mid-cap public equities. Our conversation covers Michael’s early career, path to Wellington, and pivot after a decade at Wellington from public markets to privates. We discuss his investment process across sourcing, diligence alongside Wellington’s public equity analysts, value proposition for portfolio companies, portfolio construction, and exits. We close with opportunities and risks for those with capital to put to work. For full show notes, visit the episode webpage here. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

Today’s show is a panel about the merits of private equity. On one side is Sachin Khajuria. a former partner at Apollo and twenty-five-year veteran of the industry, who recently authored “Two and Twenty.” Sachin was a past guest on the show discussing his book and that conversation is replayed in the feed. On the other is Brendan Ballou, a federal prosecutor who serves on the special counsel for private equity in the Justice Department’s antitrust division and recently authored “Plunder: Private Equity’s Plan to Pillage America,” highlighting controversy and potential flaws in private market investing. Our conversation begins with Sachin’s view on private markets as an essential value-additive element of the economy and Brendan’s thesis on the inadequacy of the legal structure surrounding the activity. We discuss incentives, investment duration, failed deals, fees, operational effectiveness, legal environment, risk, and broad education about the space. While the titles of their books might suggest a point-counterpoint discussion, the thoughtful nuance Sachin and Brendan bring to the table offer more commonality and food for thought than difference. For full show notes, visit the episode webpage here. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

Sachin Khajuria is a former partner at Apollo and twenty-five-year veteran of private equity who recently authored “Two and Twenty,” a fantastic insider’s account of the private equity industry. Our conversation covers Sachin’s rationale for writing Two and Twenty, the strengths of private equity, areas for improvement, and needs for change. We discuss the defining traits of the industry across the sourcing process, depth of research, use of operating executives, ability to pivot, and democratization of alternatives. We close by discussing opportunities and risks going forward, and Sachin’s application of his insights to investing at his family office.

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For full show notes, visit the episode webpage here. 

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This WTT: Active Management Today is a Single Decision comes from a few conversations I’ve had recently with CIOs about the underperformance of long only managers who are underweight the magnificent seven. I got me thinking about the ramifications of stock index concentration on active management.

Read Ted’s blog here.