Welcome to the weekend! Here are a few of the latest stories from the Avenue of Giants:
- Stanford: The Board of Directors of the Stanford Management Company has named Robert Wallace, a Swensen-ite and family office alum, as its new CEO. Wallace is very respected among the people I’ve spoken to. I’m told he is a very talented manager of managers, and that he helped anchor at least one ridiculously successful GP (and no doubt there are others). So he clearly meets all the criteria of a successful endowment CEO. And therein may be the problem. In picking Robert Wallace, SMC’s Board has signalled clearly that it plans to stick with the “endowment model” of institutional investment in the decade to come — albeit a more concentrated and deliberate version of the model. But will the “endowment model” work in the coming three decades the way it worked in the past three? I admit that I was hoping the Board would revise and restructure the way it approaches investing and focus on new and innovative ways to access underlying risk factors — ways that are more appropriate for a fund of SMC’s size. Either way, I wish Wallace well.
- Quotable: Wall Street is “...essentially a back office function for the entire economy.”
- Keep It Real I: We can expect more real, and directly-held, assets in U.S. and Europe for the China Investment Corporation this year.
- Keep it Real II: Norway’s giant SWF is looking at commercial real estate in Singapore and Tokyo.
- The Fee Machine: Sigh. The SEC isn’t taking private equity fees nearly seriously enough.
- Holding Court: Australia’s SWF tells Australia’s pensions to be more courageous in portfolio construction.
- Green: CalPERS’s boss says the widespread focus on divestment is “... well intentioned but flawed.”
- Beers: Ireland’s Strategic Investment Fund is investing in the redevelopment of a historic brewery. (This round of diligence is on me!)
- Long Termism: According to Singapore’s GIC, “The minimum time horizon for performance measurement is five years.” I agree wholeheartedly. Now, how do we design easy-to-understand compensation policies in sovereign funds to pay for five year performance?
- Selfie: Silicon Valley will eat Wall Street ... despite not having a taste for finance.
Have a great weekend!
