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.
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Lenehan: China will very shortly become the world's largest economy
“But from our perspective, we actually think that China's going to be the largest economy very shortly. It will grow. It'll continue to grow. At a rate higher than any other developed country kind of post COVID.”
Chinese regulatory crackdowns cyclically occur every seven to ten years
“If you take a broader perspective and kind of open up the aperture, this is cyclical. This happens every seven to 10 years, where the Chinese government makes sure everybody knows and realizes kind of who's in charge at the end of the day.”
Lenehan: Diligencing a new fund manager from scratch cannot be done over Zoom
“Otherwise, if we were meeting a group from scratch, it's great that we can certainly meet them on Zoom, but until we actually get on the ground, walk the floor, meet the people, meet the team in person, one-on-ones, you can't do it.”
The Federal Reserve never successfully executes economic soft landings
“I tend to think that the Federal Reserve, they never seem to get it right. They're right in the direction, but in the execution, they never really navigate a soft landing, per se. We're expecting bumps along the ride.”
Lenehan: Distressed debt windows close too fast for dedicated funds
“I've seen the last 10 years as if there is a distressed moment in time, it's a blip. There is so much capital that is just waiting on the sidelines to kind of plow into from dedicated distress managers and their time, the window just opens and closes very quic…”
Lenehan: Widespread inflation across corporate operating costs is not temporary
“I was speaking to somebody yesterday who has a public investment, I think, in DoorDash, and he talks to that management team quite often, and the inflation that they're feeling is everywhere. It is in the packaging of the materials. It is in the food costs. It…”
Lenehan: Biotech and Software Were Probably Way Oversold in Early 2022
“The market went from being heavy risk on to heavy risk off in those particular sectors, and probably was way overbought, and now it's probably way oversold.”
Western response to Russia altered near-term risk calculus for Taiwan
“Given the response of the Western allies and NATO to Ukraine and to Russia, perhaps that has maybe changed the calculus a bit as it relates to what's going on in Taiwan.”
Rockefeller's private market portfolio beats public equivalents by 400-500 basis points
“We actually kind of thought that we should be getting, I'll just use, you know, privates as an example, we should be getting kind of four to 500 basis points above the public market equivalent, whatever that is... And we were pleasantly surprised to see that n…”
Time is the only controllable variable for institutional allocators
“Not every email, I hate to say this, not every email deserves a response. And so you got to be very picky. It's a broader idea that you got to be very picky with how you spend your time. That is the one thing I can say that we can control in this crazy world i…”
Lenehan: Fully exit unwanted positions immediately rather than dollar-cost averaging
“It was a good lesson learned. It was like, look, if you figured it out that you don't want that position, then you don't have to dollar cost, just get out and move on to bigger amount of things.”
Wallace Foundation committee voted to decarbonize portfolio in 2021
“We actually made a decision last year at the committee to decarbonize the portfolio.”
Lenehan: Wallace Foundation relies primarily on pre-existing relationships for manager commitments
“I would say the vast majority of the things that we put on the books here at Wallace have been relationships that I've had either at Rockefeller or Wintergren or any of the other organizations in which I'm affiliated with.”
Lenehan: Diligence in China requires a native speaker to capture critical nuances
“When you're dealing with China, I think our secret weapon is to have a native speaker. And when you're speaking in the native language, she can pick up on so many of the nuances that I can't, and she can be on the chat boards and just get so much richer view o…”
Staff are not evaluated on whether sourced deals make the portfolio
“No one's going to get graded on whether or not their idea made it in the portfolio. At the end of the day, we all make that decision.”
Wallace Foundation re-underwrites incumbent manager re-ups identically to new managers
“We re-underwrite any commitment to capital, whether it's to a new manager or to an incumbent the same way, but really have to be thoughtful.”
Lenehan: Investment memos should distill impactful points, not document all diligence
“One of the things that, that I had to train folks at Rockefeller when they came from other jobs, they put everything and anything into the memo. And I said, let's just distill this down. We're not going to put all the work that we did, you know, quite the oppo…”
Lenehan: Wallace Foundation avoids being a first mover in new asset classes
“When it's something that's brand new, we don't ever want to be the first mover. Here at Wallace.”
Venture capital requires acting as a promoter despite a 90% failure rate
“If anybody thinks venture is easy, they are out of their tree. It is incredibly difficult. You have to get, you have to be a salesperson. You have to promote things and think they're the best thing ever, if you're a good venture capitalist, realizing that you'…”
Rockefeller University barred endowment investments in board members' funds
“So what's interesting is while at Rockefeller, we had put in a conflict of interest policy in place. It was one of the first things we did. And to be honest, I think it was one of the best things we ever did. So that we could actually not commit or invest in a…”
Lenahan: A few high-quality reference calls beat 50 superficial ones
“Sue Carter at Common Fund Capital taught me once upon a time that a handful of really high performing quality Reference calls is way better than doing 50 surface level call home type calls.”
Summit Partners and TA Associates pioneered private equity cold-calling
“This was the cold call model was being implemented, but by, you know, a handful of the summit and TA type folks, they were the pioneers. Now it seems like it's complete commonplace for any group, you know, almost any size, they have some element of kind of rea…”
Rockefeller University operates with an aggressive 5.5% annual endowment spend rate
“So we're now today at 5.5%, which is still high, still aggressive, plus inflation.”
Rockefeller University cut its long/short hedge fund allocation from 25% to 10%
“On the other side of the hedge fund slice, where that was 25%, we reduced that down to 12. And we're currently today at about 10.”
Rockefeller targets 15 to 20 public managers at 3-5% NAV each
“Of the folks that are on the public side, we think between three and five percent per each manager of NAV makes sense. So that on average, that might give us, you know, 15 to 20 managers on the public side.”
Rockefeller limits sector-specialist private equity managers to 1-2% of the portfolio
“We think it's okay to have groups like that, but we don't want them to have too much because if they're a sector that is out of favor, could be out of favor for a decade, and we kind of want folks that can make money at any time period, but there's a role in t…”
Information technology venture capital has outperformed healthcare venture over 30 years
“A student of venture capital going back, you know, 2030 years would say, you can have, you know, IT and healthcare, and IT won. There are times where healthcare does fine, and in the last couple years, it's actually done great, but for the most part, on the wh…”
Commonfund found every top-quartile manager has raised non-top-quartile funds
“One of the research that I did at Common Fund that I participated in, we found out that even the top quartile best managers of all time will have at least a fund in their history that is not top quartile.”
Greylock's extreme LP transparency and partnership culture are rare in venture
“When you look at how they got there, and they do meetings twice a year, they used to do meetings four times a year, and the level of transparency and the level of disclosure and how they think of the world as a partnership, not only with their portfolio compan…”
Wallace Foundation survived by divesting Reader's Digest stock before bankruptcy
“Had he not done that, and we were still in the public company stock of Reader's Digest, it went bankrupt in the 2000. And so yet another case study of the beauty of diversifying.”
Wallace Foundation raised private markets allocation target to 35%
“And so from an asset allocation perspective, we increased our exposure to privates from 25% to 35%.”
Wallace Foundation secured full allocations from targeted private funds
“I had estimated that maybe of all the ones that we wanted to go after ourselves, we might get half of those in terms of allocation, and we might get half the number that we asked for. We batted a thousand, we got everybody we were looking for, and we got the n…”
Wallace's inherited Treasury position dropped 15% in Q1 2021
“And when I got that, the ten-year treasury rate was 90 basis points, and this was January of 2021. And I said, okay, I got plenty of bigger fish to fry. Let me just kind of Put this one on hold for a little bit, and had my first IC meeting at the end of Februa…”
Lenehan: Wallace plans to trim long-only equities to fund private investments
“Over time, I think we'll start to trim a little bit from the long only side to help feed the increase in the privates as they start to come out, because a lot of it's very liquid.”
Secondary bids for legacy oil and gas funds hit 60 cents
“We looked at the secondary market pricing for the partnership interest that we had. And even back then the prices were 60 cents on the dollar.”
Rockefeller withdrew an extra year of spending for historical scientist lawsuits
“Rockefeller had a very unfortunate circumstance with one of their scientists, and there were a lot of lawsuits that came through. That we had to basically take an extra year's worth of spend out of the endowment at Rockefeller to help pay for a lot of these la…”
Lenehan: Wallace Foundation allocates roughly 15% of portfolio to Asia
“We have about 15% of the portfolio, public and private, in Asia. And we'll just, I'll start with China first. So it's, and of that, half of it is in China, half is elsewhere in Asia, which I actually think is a good number.”
Wallace Foundation is deliberately seeking non-tech private equity managers
“Most of who we have incumbent managers are heavy tech, if not all tech. Everybody's doing tech these days. Everybody has a tech group, but most of these groups that we have and that I inherited are solely tech, so we've been Looking for decidedly non-tech.”
Lenehan: Half of US foundations maintain credit lines
“When we did our research, about half of the foundations in the country have credit lines, half don't.”
Wallace Foundation secured a $50M credit line for liquidity cushion
“So we're two billion dollars in AUM, our five percent Target is roughly a hundred million dollars. So half of that, fifty million dollars is what we took out.”
Some Wallace Foundation growth managers fell 50% from market peaks
“Some of our managers were down 10, 15% so far in 20, 22, that's a big number, and some of them are down 50% from their peaks.”
Lenehan: Wallace Foundation has no dedicated crypto funds but has Coinbase-invested managers
“So we don't have any dedicated crypto funds, but we have a couple, not all, but a couple of venture managers who were early investors in Coinbase.”
Wallace Foundation receives one pitch per day for new crypto funds
“We're getting a solicitation a day about a brand new crypto fund from some incumbent managers, from brand new managers, folks spinning out.”
Vista Equity Partners launched with a single captive investor, bypassing traditional fundraising
“They had just been around for a little bit, and they had one investor who provided all the capital. And so there wasn't fundraising involved. They actually had captive sources of money, which I thought was always a good thing.”
Rockefeller University's endowment earnings fund one-third of its annual operating budget
“Earnings from the endowment support about a third of our operating budget Every year.”
Rockefeller University operates on 'negative tuition' by paying students stipends
“Nobody pays tuition. Quite the opposite. We actually, if you want to be technical, we have negative tuition. We actually pay people. They're heavily recruited and they're paid stipends to attend Rockefeller.”
Rockefeller University increased its private market target allocation to 22%
“One of the things we did most recently at this February, getting back to your question about the February meeting, we increased our allocation of privates incrementally. So we went from, you know, originally it was five, 15%, then it was at 20% the last severa…”