The Exchanges

Q And so then the opportunity comes up here. Attorney Wall Street, I guess it sold a property, is that?

A Well, so they were in the process throughout, much of, much of, Thinking about taking money off the table on their real estate. So historically, the vast majority of their endowment had been in real estate. And then really, it's all in sort of a 10 block radius in downtown Manhattan, in an area called Hudson Square, which is north of Tribeca, south of West Village, west of Soho. And it was all these turn of the last century buildings with these really big floor plates, high floor to ceilings. They had been, a lot of the printers for Wall Street had been there, and they had been very industrial at one point. Then they were sort of a value play for a long time, and even coming, or in the midst of the crisis in oh eight, they were kind of the value play in terms of rents, and so they actually were fairly resilient during the crisis. But what had started to happen, and even before the crisis this had started to happen, there had been a secular change in the kind of tenants that were there, and so, you know, more media, advertising, technology, and, you know, these, they, the, the floor plates were really suited for big open floor Type seating, and really light, and just modern feeling. And so the rents had gone up. That had done really well. There had always been concern about this very concentrated exposure. They actually had damage in 2012 during Hurricane Sandy, and so there wer…

AI assessment note: “put together 11 of their core commercial buildings, and Put it into a joint venture”

Q So Meredith, when you came in a couple months after Ellen had started, what were you thinking?

A I was just thrilled to have the opportunity. We were in class together. Looking for a job in the ENF world is not just throwing your resume in the pile and getting interviews with everybody else. So I had been networking, doing phone calls, trying to find whatever way I could into the industry. I ended up getting connected to Ellen. So I was just so thrilled to have this opportunity to do what I had already identified as my dream job. And so then to be there as she was getting started, And have the opportunity to learn the portfolio just a step behind her. And she said, we were really thinly staffed. There was me and one other person. So there were three of us in those early days. So we were all doing everything. So you got to know what all the managers were doing and sit in on all those meetings and then think about, okay, we're going to build out the private equity portfolio. How are we going to do that? And what new stuff do we want to do? And what managers does Ellen know from her background? And what managers do I maybe have connections with from business school? It was just great to be both At the manager level and doing all that work, but then also getting to sit beside Ellen while she was thinking more about how do we build out everything we do here.

AI assessment note: “I was just thrilled to have this opportunity to do what I had already identified”

Q How did you balance going from, okay, if it's, if it's U.S. equity investing, you like value managers and a certain style of rigor and fundamental analysis, to, oh, yeah, but that growth can be good, or maybe it's value and momentum, or So how do you calibrate, really, when you're broadening out what, you know, are different ways to succeed?

A You know, I think, I mean, you, you look, again, you look for sort of the markers that perhaps should ultimately transcend some of that stuff, and so what is, what sort of partners have these manage, have these managers been? What kind of access do they have to really interesting investment opportunities? How creative have they been over time, and how has that worked out for them? As much as I'm sort of a true value-oriented person, I think, you know, yeah, in growth you can find people who actually Do a great job on their, their companies, and they're really thoughtful about the underlying dynamics of what they're invested in, and they're respected by the managers at the companies that they're invested with, such that they can provide real value add, and that can kind of transcend value versus growth.

AI assessment note: “you look for sort of the markers that perhaps should ultimately transcend some of that”

Q What investment beliefs did you learn at Carnegie, and how similar are they or different from what you thought you knew when you got there?

A I learned a lot about understanding manager alignment, which I probably hadn't been as sensitive to before. I just hadn't really thought about it, and that Was something that Ellen was great about kind of emphasizing when we looked at managers and trying to understand how well aligned they were with us or not. What I learned from Ellen was in a couple of, we had a couple of instances in the portfolio where we had the chance to really kind of stand by a manager, either giving them more capital at a difficult time or sticking with them as they went through some organizational challenges and The value that that added to our relationship, our long-term relationship with those managers, and Ellen's willingness to really stand up and kind of partner with our managers. I mean, that's at the core of what I try to do now, and that was something I really learned from her.

AI assessment note: “I learned a lot about understanding manager alignment, which I probably hadn't been as sensitive to”

Q Yeah, yeah. I'll turn a little bit. You spent a couple years in Asia. Yeah. What was different about the hunt for talented managers across asset classes when you were in Asia than in the US?

A Well, it was a lot more Wild West in many ways. So we were there from 2007 to 2011. So clearly an interesting time in the global financial markets to, um, to be there. We got there just on the edge of sort of the craziness that happened from oh three to oh eight in terms of, you know, private equity was, was exploding. Venture capital was exploding. Uh, hedge funds works Exploding. And they were doing all sorts of stuff that maybe they might not have been doing in the era before that, and that they maybe got called out for doing in 2008 and 2009. But so it was just a really, really interesting time to be there for that. Underwriting opportunities and who you wanted to partner with was the, the personal side of it became even tougher because there was so much massive turnover and, you know, Turnover in terms of people, for sure. And so, you know, and this is, I'd gotten, I'd gotten very used to in New York with the Carnegie team, you know, spending a ton of time getting to know the teams and feeling, and coming to a conclusion of, okay, are we, are we comfortable in the stability of this team? Are we comfortable that they're going to be good partners and we can trust them? And, and then over there, you know, people were constantly leaving and, and kind of maximizing their market value and going to another firm and, you You know, spending a year here, and then an year there, and,…

AI assessment note: “personal side of it became even tougher because there was so much massive turnover”

Q So Kim, Meredith, you then become the co-CIOs. I'd love to hear when you started discussing what your leadership regime would be like, what did you decidedly want to keep that Ellen had put in place, and what did you want to change?

A So there's a bit of complexity around it because it was Kim and I, right? The way that all happened was they came to us and said, we want it to be both of you, but you figure it out. Come back to us and tell us what that looks like. So rather than saying, okay, what do we want to do different than Ellen? We were more focused on what do we want to do here that makes sense with the two of us from all sorts of perspectives. And We both wanted to be a CIO. We had both thrown our hats in the ring to be a CIO. We very deliberately talked about, okay, how do we get enough experience? If this doesn't work out, we could go be CIO somewhere else and justifiably say I had a real role in being a CIO at a portfolio.

AI assessment note: “rather than saying, okay, what do we want to do different than Ellen”

Q Merit, I'd love to ask you, you were there plenty of time before structure got imposed, and then some time after. What do you think worked better?

A As Ellen was describing all that, too, like, I wouldn't sell yourself short. I worked for you for a long time. I thought you were a great manager. There's maybe an element as well of what the size of the team was. So the team had gotten a lot bigger. So when we were small, I didn't feel like I was under managed. It was three of us, or maybe it went up to five. So we were just in and out of each other's offices all the time and talking about stuff. So there wasn't as much management that needed to be done, but when you have more people, it does. And I think there's also an element of the maturity of the portfolio. Because when it's all hands on deck, it's all hands on deck, and you're doing the whole portfolio, and once you've got a mature portfolio, you've got to prioritize the opportunities that come in, and you've got to figure out who's going to chase it down, and how you're actually going to decide whether you do it or not, because you can't do everything. So then you do need processes more, and we were definitely at the point where we needed it. It was just different points in our history. I don't know that I would say one was better or worse.

AI assessment note: “I don't know that I would say one was better or worse.”

Q Yeah, so we'll get full blown to what you're doing now, but I'm really curious about how do you think about investing in Asia today, now that you're back here full time?

A It's tough. It's really tough. And so I can't tell you how many times between coming back in 2011 and now where I've had the feeling of it'd be so nice to have someone on the ground that you knew was sort of in the middle of all those flows and you trusted. And so I do what I can to leverage the people I do know who who are over there and on the ground and that I, you know, it's a smaller community over there. So it was a really in many ways that was nice that we all sort of had each other It was this community of people who had connections to some sort of U.S. firm, and they tended to be more allocator-y type things, and, um, so I've tried to, to maintain those so that when we look at stuff, we can do a little bit more targeted, uh, diligence, uh, off, off reference sheet targeted diligence, and then there, that is much more of a, I go with my gut in terms of, do I feel comfortable with this person? Do I really feel like if the chips were down, This person would do right by us. And versus, I feel like sometimes in the U.S. you might be more willing to, okay, we can structure this in a way that will be protected if it doesn't, and it's, and we know how it would play out sort of in a U.S. legal system and all of that sort of, in terms of kind of risk management over there, I think you, you need to be very, very comfortable with the people that you ultimately are partnering with.

AI assessment note: “in terms of kind of risk management over there, I think you, you need to be very, very comfortable”

Q Does the resilience come in from kind of hedge fund strategies?

A A mixture. So from hedge fund strategies, we've been looking for, or looking, we've been, you know, spending a bunch of time with managers we know, as well as trying to meet new managers who we think are really good at shorting, or who are really good at, who have shown, you know, an ability in the past to cycle to really interesting things when the opportunities present themselves, and so, you know, are willing to kind of move their exposure. And then also, the fixed income portfolio was much more really equity, beta type exposure. And so we've built some resiliency there and put, you know, some sovereigns and some things that hopefully should be a little bit of a diversification.

AI assessment note: “A mixture. So from hedge fund strategies, we've been looking for”

Q What was easier than you thought it was going to be when you showed up?

A Even though a big reason I was comfortable taking the job was based on the people I knew who were on the investment committee, I would still say that has been easier, more fun than, you know, I, you know this, this model that we all live with in terms of governance structures, and you know, this ENF sort of interesting, you report to a board, there are various levels at Carnegie, we took every decision to the board, here we are taking every decision to the board, and I actually, I was I'm completely comfortable with that because these, this board wasn't used to having those sorts of decisions close to them. And so I really want the investment committee to know what we're investing in so that they're, they can have steady hands when things are more challenging. That interaction with them has, it's been wonderful. It's really been wonderful. They've, they've asked the right questions. They've pushed us on the right things. They, you know, they come having read the, the materials and, and, Just asking really good questions, just pushing us on things that we should be thinking about, and so that I have really loved, and that's been easier, you know, because I, that, that's always sort of an unknown when you go into one of these circumstances, and, and my own personal opinion, the, the governance structure is the Achilles heel of this industry, frankly, that some of the biggest mist…

AI assessment note: “I would still say that has been easier, more fun than, you know”

Q what did you see with other allocators? I used to refer to going to Asia as like flyby or jet lag due diligence. So you'd go in for a week, you'd be half asleep in most of your meetings, and then all of a sudden you have to make decisions. What did you see when other allocators came about what they might miss from not being on the ground consistently?

A There were so many bodies that were buried that I, you know, I just, I know I never saw before when I would fly in for those weeks, and, and I, it's almost impossible. The stuff you heard about over lunch, just sort of randomly, you weren't even necessarily doing diligence on a particular manager, and someone would be like, oh yeah, that guy, during the 98 crisis, he did this, and totally screwed all his investors, and you, you know, you just, it sort of got buried in the history, and they refashioned themselves, and now they were the next hot thing. And I just, Realized that many times over as I was there and sort of just sitting and, you know, having lunch with people or catching up with someone on something that wasn't even necessarily supposed to be diligence on a manager or an opportunity and things that would come up were just, oh, wow.

AI assessment note: “The stuff you heard about over lunch, just sort of randomly”

Q Meredith, where do you think private equity goes from here?

A I tend to be a skeptic in general. And sorry, I asked this question to all of you in the email before today. But no one answered. Is there enough dry powder out there to bridge between here and there? Just a ton of money was raised over the past couple of years. There is no real forcing mechanism on valuations. So if you don't have to raise money, you don't have to mark down. It's going to take a while. My question is, is this cycle going to be that long? At the shortest, it's quarters. It's probably going to take more like years. And where will we be in 20, 24, 20, 25? And people will be able to raise money again.

AI assessment note: “It's going to take a while... It's probably going to take more like years.”

Q So the experiences that you had going through that, was there a commonality of the ones where you stayed and it worked? Versus ones when you stayed and, you know, a few years later, realize that one didn't work out the way we'd hoped.

A Right. But I do think, you know, to the extent that we had done our homework, and we really felt confident that we understood how a manager did what they did, and what their processes were, and how disciplined they were. So to the extent we were disciplined in our process, to understand the discipline in their process, that those tended to work out. And the other circumstances, you know, that, that tended to work out back to sort of the alignment is the, when we could point to examples of when a manager did something that was either personally or economically painful to them in their firm to, to do right by their LPs or their investors. And so, you know, didn't take the carry for a long time, even though by rights in the document, they could have taken the carry. And did what they could to ultimately, at the end of the day, get great returns for them and their investors.

AI assessment note: “to the extent we were disciplined in our process... those tended to work out.”

Q And do you think that's a lack of shared information?

A I think some people who come into this industry who haven't been in this industry before may not appreciate the extent to which you really, really, really need to be communicating with your governance structure and understanding who's anxious and who needs maybe more handholding and who needs a call or two before you actually are sitting in the meeting. And I just, I think people underappreciate that if you haven't grown up in this. And it's a hard, actually, even if you've grown up in this, I think it's a hard skill to develop because it is, it's not investing. It's, it's much more interpersonal dynamics. And I think, you know, the people who've had the most success have, have not only been good investors, but they've been able to manage those dynamics so that they are in a position to do really interesting stuff when real interesting stuff happens. Which tends to be when people are most anxious.

AI assessment note: “may not appreciate the extent to which you really, really, really need to be communicating”

Q And when did you think about shifting over to sort of multi-asset allocation?

A So, actually, it was completely serendipity. And I had been doing a lot outside of work in terms of fundraising, and I was involved with my undergraduate institution, and just, I was interested in the nonprofit sector, broadly speaking. Alongside that, at that time at Bernstein, Mr. Bernstein still used to send out articles that he would cut It was like your grandparents send you articles that are cut out of the newspaper. Mr. Bernstein would send those out, these B notes, and then he would send them out, and he was really into a number of kind of more philanthropic things, and, um, I always loved reading these various articles that he had found, and so I was just broadly interested in the nonprofit sector and what could I do that would be more meaningful. There was that plus this combination of, I worked with some phenomenally great investors, really smart people, And they would come in and be like, oh man, when I was taking a shower this morning, I was thinking about this with this stock, and when I was taking a shower, I was not thinking about any of my stocks. So I knew, like, I was, it was intellectually challenging, and I really liked that part of it, but I did not go to bed and wake up thinking about my stocks. I was just never that passionate about them, and so I, I just sort of came to the conclusion I was never going to be as good as a lot of these people that I worke…

AI assessment note: “So, actually, it was completely serendipity. And I had been doing a lot outside”

Q What's the difference in your day-to-day doing this work in downtown Manhattan compared to midtown Manhattan?

A It's a lot of traveling back and forth on the subway to Midtown. But you know what? In some ways, actually, it's also, it's fun to be down here. You know, our real estate is close to here, and so that's really nice to feel. I mean, this neighborhood is a totally different neighborhood. This is the neighborhood where I started my career 25 years ago, and it was a totally different neighborhood then. It was dead at night, it was dead on the weekends, and so To be here and see how much it's changed, and there's families, and there's a lot more residential, and, and to be with Trinity Church, which is such a core part of that, and, you know, one of our big areas of focus is creating neighborhoods and communities, and so that's really motivating, and so it's sort of, it's, it's, that's really nice in terms of being down here.

AI assessment note: “It's a lot of traveling back and forth on the subway to Midtown.”

Q So the next leadership change, Meredith leaves to go to Trinity. Now, Different situation, different pool of capital, but now it's just you. No compromises. What did you do the same? What did you do differently?

A I would say it's been a combination of both, actually. It definitely was going back to like working for a startup. Our first hire came on in June of 2016. Portfolio was invested. So we spent a ton of time meeting the managers and thinking about, okay, where are we right now? But because the real estate at Trinity is so significant, I was also spending a significant amount of time on that. So I was between in the details. I've got to be right next to the people that I'm hiring, doing a lot of this stuff. And a decent amount of my time is taken up with this real estate stuff, so it's gotta be more that I let people run with the stuff that they're doing. I can't be at every meeting, and I can't be really pushing this manager or that manager.

AI assessment note: “it's gotta be more that I let people run with the stuff”

Q How different does it look on buyouts versus venture?

A I have no information whatsoever to back me up as I say this, but my anecdotal sense is versus the last big cycle. I'm thinking of before oh eight, oh nine and oh, oh, oh three. I feel like this cycle in my mind, and this is a mistake that we all need to be careful of me, especially it rhymes most with that cycle, but this cycle versus that cycle, venture capital firms have a lot more money than they had back then. And the nature of the businesses that have been founded over the past 10 to 15 years, those are very asset-like businesses, and so they're not expensive to keep going. The biggest expense, honestly, is the people. So there's that impact, but it's not like some factory that you're building and semiconductor chips and all of that stuff. The managers who have the most money could stretch it out until the next cycle.

AI assessment note: “this cycle versus that cycle, venture capital firms have a lot more money”