The Exchanges

Q So Josh, you go and take over CIO and leading into this first investment committee meeting where Roz is now part of the committee. When you step into that seat, what are some of the things that you thought of either keeping the same and maybe doing a little bit differently?

A So the most important thing I wanted to keep the same is that I would talk the least of my teeth. So our first investment committee meeting was something we do every five or six years called the strategic plan, or what most people would consider a base asset allocation review, and understand how we want to make some tweaks to the core asset allocation of the portfolio, And how we want to think about what we might want to do differently. That was our first investment committee meeting with Roz on the other side of the table. And so the first day back in the office in 2024 without Roz, everyone knew this was our first project. So I divided the team up into three different analytical working groups, gave them some very general guiding questions, and said, Let's find out what we all think about these three general guiding questions, and then we'll get together and start iterating from there. And the kind of things we had to adjust were, do we need to change our inflation assumption? Because as a foundation, our goal is to last into perpetuity. We have to pay out five percent. That's the IRS mandated payout. So our long-term performance objective is five percent plus inflation. Obviously, inflation had been a hot topic. Our baseline for the last 10 years, 12 years, had been two percent, and the question was, should we bump it up? I let the team kick that around, and they came back, …

AI assessment note: “the most important thing I wanted to keep the same is that I would talk the least”

Q With all of this planning in advance, going back five years, previous 18 months, curious if there were any surprises once you took them?

A I think the biggest surprise was while I knew conceptually that managing people would be the largest use of my time, actually doing it and seeing it is a big change. It was something I was trying to be very, very deliberate about. I wanted to be the one who was talking at the end of a meeting instead of at the beginning of a meeting as much as possible so that the organic nature of idea discussion was maintained. Coming from an investment background, sometimes it was hard for me to not be the first one to say this is what I think. It's three times as important I don't do that when I'm running the department. Then the one thing I also really wanted to make sense that people could drop in on me whenever they had an issue, and so one thing I did is I blocked out the first hour and a half of every one of my days that are in the office. I called it office hours and made a priority not to schedule things that conflicted with that, if at all possible, so that anyone felt like if they had something they wanted to just talk about for five minutes, they could come in and I would not be absorbed by something else. And while I have to say only about 10% of the time has someone used that office hours, every time it has happened, it's been an incredibly productive experience for both of us. So I really wanted to keep that open door feeling going, and this one sort of official way to do it re…

AI assessment note: “I think the biggest surprise was while I knew conceptually that managing people would be”

Q How do you think about the hit by a bus risk that was originally what Roz started thinking about and mapping out well before it was really about when she was ready to retire?

A The real benefit I've had inheriting a team that I actually interviewed every single one of them and onboarded every single one of them. So when I joined Helmsley in 2012, there were two other staff members in the investment office. Both of them moved on for their own reasons over the subsequent five years, and we built out the team to 10 investment professionals at the same time. So I feel like there is a lot of continuity and understanding about our team And what the trustees expect of us, how we do our jobs, what the governance rails are, And so if I got hit by a bus tomorrow and the trustees did ask me that right away, I gave them a name, but it's something that's just there in case the team has currently configured could manage the portfolio for a year or two while the trustees decided how they wanted to go with the next step. So I think the continuity that Roz built is still there and strong and is still supportive. But yeah, it's a disconcerting question to get in your third month in the role, I have to say.

AI assessment note: “if I got hit by a bus tomorrow and the trustees did ask me that”

Q Josh, before you joined Helmsley, a dozen years before, you spent a lot of time in the direct investment world. What did you see as similar or different in your, say, last 12 years before taking over CIO from those experiences in the direct side?

A What I really noticed right away when I joined Helmsley and started interviewing managers, and obviously I had been on the other side of the table pitching long-only public equity strategies, it almost became funny that I've been hearing this language given back to me that I know how it was crafted, how it was created. I was part of building these slides. I call it the dreaded Funnel. Every investment manager has. Well, this is our universe, and this is how we narrow it. And it was almost comical to be on the other side and hear this pitch that I know was just, I wouldn't say it was phony, but it was just so managed. And I felt like my experience being a director of research and an analyst long time ago for that, you can really ask questions about the process of security selection and research within a team much more effectively and bluntly having been In that chair, and then having been called in for the big pitch meeting to the pension fund and say, well, this is how we're going to talk about this, and this is how we're going to talk about this, and it's not exactly the way you're doing things, because there's a lot of scratches and dents to managing money, and those are not the things that you present to clients or potential clients, so that nuance between the shiny new car and maybe some of the scratch and dents that you're not talking about I really enjoyed jumping into th…

AI assessment note: “It was almost comical to be on the other side and hear this pitch”

Q Knowing that's how it works behind the scenes on the other side of the table, how do you think about trying to find the very few managers that fill their portfolio with all the things that check the box compared to the most that you saw where that's kind of squishy in terms of what you're trying to find for Helmsley?

A I think it's really important that managers understand, be aware of what they're really doing, and to break that wall a little bit in the conversation, Early in the relationship, and one of the ways to do that is by asking details about investment examples, and then flipping back to the generic slide deck, you can generally find inconsistencies, and you want a manager who's going to not feel like you just called them out and get really defensive. You want them who's going to acknowledge that the process is a very unspecific process. It's a very Go where your nose leads process. You have to be adaptive. You have to be flexible. And managers that try and pretend that they're not being flexible or not being adaptive, I think that comes across as less sincere.

AI assessment note: “one of the ways to do that is by asking details about investment examples”

Q How do you think about when you came across the other side of the table with deep domain expertise in one style of equity investing, the various other asset classes you got exposed to, and how you thought about asking those good questions when you might not have had as nuanced of an understanding of how those strategies work?

A When a strategy seems complicated or is not something where you have full transparency, like some kind of quantitative strategy, it always helps to go right down to individual investment examples and really dig into why did this pop up on your radar screen? How did you decide who to assign to do the work on this? What was their initial reaction that was different from the eventual conclusion? And really, by asking those kinds of questions, you can really dig into the process, and I think it's important when you're evaluating a manager to really isolate who's making the decision, who is really getting to the real crux of this is a really good idea, this is an okay idea, this is a bad idea. Is it one person who always comes out with that decision, Or is there some depth on the team where those decisions can be made a little bit earlier before they filter all the way up to actual competing for portfolio positions? And I think understanding that nuance within a manager, there's no right or wrong answer, but you have to understand that nuance within how a manager builds a portfolio to really understand what you can expect from the manager when you actually invest with them.

AI assessment note: “it always helps to go right down to individual investment examples”

Q So Josh, what was this like from your perspective? If you go back to that five-year period before Roz retired, when did you start to notice some of these conversations that she was bringing to the fore?

A Biggest indicator that this idea was bubbling in Roz's head was intentionally or unintentionally, sometimes there are misunderstandings among a staff about who is working on what project or how something should be presented, what should be prioritized, and these can create little moments on the staff that they're not unfriendly, but they're just little disagreements, and I think Roz's Started putting me in the position to think about how to resolve some of these, how to approach what was going on, and think of my role as helping the team work together and gel together really efficiently across lots of different roles on the team, where before as a director of investments, I was really very focused on portfolio implementation and finding managers. And so, my purview slowly expanded to just being a little bit more aware of What managing a group of people who are all contributing to the greater whole, how that might be a different focus or something I had to be a little bit more aware of. And it's clearly the most important part of my job there. So I'm glad I got a little taste of that. It was not a deliberate thing where Roz came in and said, you need to be aware that this is going to something you have to learn how to handle. She just sort of gave me little pieces of it at a time, and that was a really constructive way for me to become aware of what would become a really importa…

AI assessment note: “Roz's Started putting me in the position to think about how to resolve some of these”

Q What were one of those first pieces that you remember having to take a different perspective on?

A Sometimes on a team, there are new things that crop up, new events, new projects, and there needs to be some clarity on who's going to be handling it and who's going to be assembling the final pitch to the team about how to handle it. And no team can be a hundred percent clear on new things about who's going to do it. And so I think some of that early stuff was just getting the group together and finding out who really wanted to do it. Who thought this was an opportunity for them. Trying to think about who on the team could professionally benefit from stretching to try something new. I think that was something that Roz always was very good about doing for me. Basically, this is something that you probably need to learn how to do a little bit better. It gets more practice. So why don't you try to do this? Why don't you send this particular email to this manager Telling them what we're concerned about. Why don't you write it? I'll take a look at it. And so I started thinking about how to hand off those kinds of tasks to other people on the team in a way that would sort of balance their strengths and maybe develop some of their weaknesses. And I think that's another thing that's really important as a CIO is to give your team members the opportunities to grow professionally without dropping problems in their lap, being incremental about it.

AI assessment note: “I started thinking about how to hand off those kinds of tasks to other people”

Q What are a couple of little examples of that?

A Well, a lot of managers talk about a very disciplined process, and the five factors of security selection that they evaluate, and I know it's a lot squishier than that all the time. Maybe 20% of the ideas fit into this lovely definition of what you're looking for, but you can't limit yourself to that, or you won't be able to build a portfolio. So there's a lot of Behind the scenes scrubbing of how what you're looking at fits into what you're trying to do, making sure it makes sense from some of a larger attribution perspective, but a lot of the pieces end up not really fitting into the exact category that you're claiming is what you're doing, or at least the process is a little rougher than the linear process that you put in the slide deck.

AI assessment note: “a lot of managers talk about a very disciplined process, and the five factors”