Klein: MSK tests manager allocations using a '30 questions' diligence framework
Jason Klein · Jason Klein – Investing to Cure Cancer (Capital Allocators, EP.28) · Oct 9, 2017 · at 34:57
Jason Klein, CIO of Memorial Sloan Kettering Cancer Center, details the internal underwriting and due diligence process his team executes when evaluating prospective fund managers.
0:00 / 0:50exact quote · 50.4s
720p mp4 · rendered on demand · StarZero watermark
“One of the earlier stages of the gestation period, as it were, something that we call 30 questions. We've got a group of 30 questions that we've put together. Again, it's meant to be informative. It's not meant to be prescriptive, but we're looking at, do we understand the deal, the investment mechanics? Do we understand the investment thesis? Do we understand the alternatives? Do we understand any behavioral biases that might exist or might not exist? Are we undue, are we under, Any undue pressures or timing to rush to make a decision? How sure are we that we're having the opportunity to do all of the research that we have? If we had only three opportunities to make an investment over the course of the next year, would this be one of them? If we wanted to change our mind later, could we? Under what macro environment do we expect this investment to succeed or not?”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Jason Klein
Klein: True institutional risk is loss sensitivity and liquidity, not volatility
“And by risk there, I don't really mean standard deviation or volatility, but I mean, what's the sensitivity to loss? What's the sensitivity to accessing their capital? How does their capital figure into their plans and their aspirations? And understanding How …”
Klein: Memorial Sloan Kettering targets a 100 bps annual illiquidity premium
“And then we came up with a Simple heuristic. Basically a hundred basis points per year. We think that we should be getting in terms of an illiquidity premium to lock up our money.”
Klein: Platforms Like Seeking Alpha Offer Allocators Genuine Investment Edge
“You look at the kind of information that people are sharing On Stock Guru, or Seeking Alpha, and you realize that a lot of the people that are sharing that information, or on Quora, for example, you realize that a lot of the people that are sharing information…”
Klein: MSK backed Harlem Capital for returns, not purely diversity
“And we didn't approach them as a diverse manager per se. We approached them as a manager that was going to make a lot of money and had a good objective, a good strategy, a good philosophy.”
MSK sizes early-stage emerging managers at half a typical allocation
“We tend to size that at about half the size of where we would size an initial relationship, all things equal.”
Klein: Deep specialized niche research creates substantial institutional investment edge
“The investment world is is a is a series of smaller worlds that are quirky, that are funky, that are differently understood, that are driven by some set of underlying fundamentals in the longer term, but many sets of technicals in the near time. Taking the tim…”