The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
why aren't all 59 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 0 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
Golden: In investing, theory can outweigh conflicting empirical data
“Being able to have an appreciation of theory over data in the right bounds is key. You know, there are times when you want to say, if the data don't support the theory, the data are wrong, right?”
Golden: Since 2009, there has been an active cost to portfolio diversification
“It's still, you know, since 2009, the frustration has still been that not just zero return to diversification, there's been a cost to diversification, but there's also been a cost to hard work.”
PRINCO intentionally preserves inefficient large meetings to improve organizational learning
“It is ok to be inefficient sometimes if you are more effective in the learning process. So we have huge meetings. One might say that would be much more efficient if there was just five of us. We'd probably come to the same decision. Be done with it. However, y…”
Dislocation drawdown vehicles force allocators to suboptimize their portfolios
“I have long been frustrated by a trend among Marketable managers to create drawdown vehicles to be used in market dislocations because it causes us to suboptimize our portfolio.”
PRINCO entered the 2020 crisis with a significant bet against US stocks
“We had also not done that evenly and had a fairly significant bet against the US stock market. Which was helpful in March.”
Golden: PRINCO allocates 4% of the endowment to a single equity manager
“Within domestic equity, we've got 40% of that 10%. Your listeners can do the math. It's about four points with just one manager, right?”
Golden: Rotating devil's advocate processes sound better than they actually work
“Process of that rotating assigned devil's advocate sounds a whole lot better than it actually is. We still haven't cracked the code as to how they're really implemented”
Golden: PRINCO holds heavy China exposure but hedges RMB currency risk
“We've got, if you were to dig deep enough, you would say, oh, I bet you they've got a lot of investment in China.
Yeah, we do.
And so maybe we want to take that RMB exposure down a little bit, because that's something you could imagine having, you know, a real…”
Golden: Over half of PRINCO's worst investment decisions involved political friction
“I only got to about number seven or eight when I realized that more than half of them shared this characteristic of there was some kind of political element”
Golden: Lateral investment hires often fail to adapt beyond fixed recipes
“And what we're really looking for are first principle thinkers as opposed to learn a recipe and just use that recipe, which is one of the reasons why it's often difficult to bring the lateral higher in because they've got a certain way of doing it, and it's ha…”
Golden: Base management fees should not create major wealth for fund managers
“Base level fees really should not be the source of major wealth.”
Golden: LPs should optimize private equity fees, not just minimize them
“On the specific point about fees, we believe it's important to optimize fees, not minimize fees. And we want to make sure that the firms actually have, you know, revenues to the principles that are enough to make them silly rich without having to find some oth…”
Golden: PRINCO wouldn't invest in hedge funds for median returns
“If we were condemned to produce the median return of the hedge fund space, there's I don't think we'd have any allocation.”
Golden: Quantitative manager selection fails because return engines do not stay stable
“You can't get enough data to base a decision without, you know, running afoul of a key premise, which is that the engine that produced that is stable, right? And that nothing's changed.”
Birmingham: AI in operations is useful for data capture, not autonomous action
“I'm going to use it loosely because I'm not convinced it's AI the way they're promoting it, but there are certain automations of reading data that can be used by the ops team. We'll call it AI, but using AI to read K-ones, using AI to read capital calls, but m…”
Birmingham: Overhearing and butting into conversations drives learning at PRINCO
“Overhearing conversations is a big part of our learning and culture. Someone hearing something and then interrupting or butting in is actually what we want people to do.”
PRINCO's board delegates full investment approval authority to internal team
“So one of the great parts of the governance is that the PRINCO board doesn't approve investments. PRINCO has the ability to invest without constraint as it relates to the board.”
PRINCO operations team monitors legacy PE managers instead of investment staff
“We still had a lot of managers on our books that had market value, but that we weren't re-upping with their next fund, and so because the operations team understood, dealt with these managers so frequently, They are actually the people who are attending the AG…”
Birmingham: PRINCO had zero documentation for benchmarking when she joined
“One of the first things that I did when I came here was force the analyst to document. There was no documentation for anything. I forced them to document the benchmarking.”
PRINCO quickly sells in-kind stock distributions in 90% of cases
“A manager distributes a public company securities to us. We then have the view in nine out of 10 cases that we typically sell pretty quickly.”
Birmingham: PRINCO feeds data to its custodian rather than relying on it
“We do have a custodian, which is technically our books and records, but it's really The shadow book, because we enter all the data into our system, and then we feed that to our custodian.”
Birmingham: Emerging managers must plan infrastructure five years ahead
“Plan for zero plus five. Don't plan for today. Plan for five years ahead, because infrastructure needs are not going to decrease. They are going to increase.”
Birmingham: Excel is a calculation engine, not a database
“Many folks might still be in the Excel world where you use Excel as a database, but Excel is actually a calculation engine. It's not supposed to be a database.”
Birmingham: PRINCO uses only external legal counsel to enforce team ownership
“It's another reason why we actually do not have internal legal counsel. We use external only, and the reason for that is that the investment person, as well as the ops team, has to play quarterback.”
Andy Golden: Backing managers everyone roots for creates true force multiplication
“We want to work with people that we know that everyone who meets them is going to root for them, because that's where you'll really get the force multiplication.”
Long-term compounding manager relationships beat short-term high IRR bursts
“For relationships that can compound over a long time into something Really big, even if there's a lower nominal return to that, if you don't have that kind of reinvestment risk, you may want to choose that relationship over something that has more of a burst o…”
Early 2020 high-quality corporate debt dislocation offered guaranteed multiples
“There was a brief moment where there's such dislocation across high quality corporate debt that had to take precedence of like, because you were pretty much guaranteed a multiple. You didn't know what your IR would be because you didn't know the time.”
Golden: Early COVID-19 volatility surpassed the 2008 Lehman Brothers collapse
“During what I think is objectively the most volatile markets in my career, even compared to the Lehman days, you gotta understand Is there anything particularly unusual going on?”
Universities must evaluate liquidity holistically rather than isolating the endowment
“One of the lessons that we actually learned as opposed to were reminded of during the global financial crisis was a benefit of looking at liquidity in a unified way across the university. So it's not so much about how we're deploying liquidity within the endow…”
Developing internal talent requires showing juniors how decisions are made
“You can only grow your own talent if you don't grow well, at least if they see not just the output of decisions, but see the how the sausage is getting made.”
PRINCO prioritizes post-crisis culture over exploiting immediate market opportunities
“In terms of big worries right now, a surprisingly large share of my worries are not about getting through this crisis, not even about Exploiting as much of the opportunity created by the crisis as possible. It's more about what happens after the crisis and how…”
Allocators avoid offbeat strategies when traditional assets are cheap
“I think it's also interesting that the really kind of off the beaten path investments, like a Sports betting fund. That's interesting that you would think that I would think that what I need right now, when very traditional things are on sale, is to go far afi…”
PRINCO paused offensive capital deployment during the early 2020 market crisis
“We're really hitting pause on the offense for now, because it's just so hard to figure out.”
PRINCO refuses to back new managers for short-term market opportunities
“And we Have never, and can't imagine we ever would create a new relationship to seize upon an acute opportunity, because then what happens when that opportunity goes away?”
Golden: A single volunteer directed Princeton's portfolio for decades
“And for decades, there had basically been a single volunteer who made security level decisions.”
Golden: PRINCO's top equity manager focuses on fallen angel biotech stocks
“These guys you know, who many of our closest friends invest with them do biotech stocks, fallen angel biotech stocks. So you're not just concentrating, you're concentrating on, you know, a sector that can be quite volatile, that is pretty distinctive.”
Golden: True time horizon is enduring discomfort without changing course
“But the real horizon is not what you claim your horizon is. The real horizon is this thing that you maybe don't even discover until after the fact. It's how long Can you go with a large amount of discomfort without changing your path inappropriately?”
Golden: I originally proposed a Yale-style committee governance model
“It was really unusual, and in fact, was not what I originally proposed. I said to Ed, I don't want to reinvent things when there's a good model. You know, here's a kind of Yale-like model where the major decisions, manager hires, fund re-ups, would still flow …”
Golden: Knowledgeable investment boards enable allocators to take contrarian pain
“It means that you got to be contrarian, and it means that you got to be able to do some uncomfortable things. And people who understand what you're doing will allow you greater units of discomfort, and they will also allow you to optimize that discomfort spend…”
Golden: Manager selection matters more than timing or specific strategy
“We believe that who matters a whole lot more than
When you invest, and may even matter more than what they actually do.”
Golden: PRINCO targets 25% private equity, 25% hedge funds, 19% real assets
“If we just kind of go around the pie chart, it's 10% dedicated to domestic equity, long-only managers, six percent to other developed markets, long-ish only managers, 10% to emerging market public equity managers, 25% in the category we call independent return…”
Golden: PRINCO relies almost entirely on hiring undergraduates directly from college
“But where we think the future of PRINCO is, is mostly, if not entirely, on our grow our own. And so we're hiring one to three or maybe more kids out of college, primarily Princeton, where we have some unfair recruiting advantages.”
Golden: PRINCO avoids black-box and discretionary market-feel trading strategies
“It's one of the reasons why there's a bunch of strategies that we don't invest in, even though others have made a ton of money. But we know that when the bad times come, we would not be able to do anything to give us confidence to continue... You know, any bla…”
PRINCO modifies diversity diligence to focus on manager recruiting pipelines
“We modified it to actually really gauge not only where managers stand in terms of their diversity, but also what we call the faucet, because that's where we feel the biggest impact's going to be.”
Birmingham: ILPA is the premier operational resource for fund managers
“I'm gonna say ILPA, just because it has everything that we want and ask for, and it's an easily digestible format for these managers. It helps them not only with their reporting, but also with how they arrange their data.”
Princeton's endowment covers over 65% of the university's operating budget
“Over 60% of our students are on financial aid, which is no loan, and then also the endowment provides over 65% of the budget”
Birmingham: PRINCO reviews every financial statement and conducts annual debt surveys
“We do read every single financial and we do call out those types of items into files and systems so that it is available. But we come at it at different ways. The investment team also does a debt survey every single year with our managers.”
PRINCO Mandates Every Team Member Vote on Investments Without Abstaining
“The culmination of all of that work comes to a bull bear decision meeting, and that is just the Prinko team, and we all vote. So we have this voting dynamic, two right pound the table, two left Negative, or one and one. You have to vote, though. You can't abst…”