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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…”
Klein: Manager track records must link back to ex-ante research engines
“Ideally, you'd have a manager that has been doing
The same strategy for a long period of time.
So we should be able to see our way mapping a manager's research engine to the returns that they actually have produced.
And then if you have that benefit of the tra…”
Klein: Internally competitive managers make better partners and collaborators
“I would say an internal competitiveness or competitiveness that is internally oriented. Like to find people that are driven, but driven to compete mostly with themselves to do as best as they can. As a result, hopefully that will propel them if they're skilled…”
Klein: Exceptional managers are driven by production and contribution over consumption
“I think the third one would be a, what I would sort of describe as productivity, meaning an interest in being productive. We find that there are people in this world, there are managers in this world that have, by any measure of success, certainly any measure …”
Klein: Flexible mandate managers are ideal partners for perpetual investment
“Flexible mandate managers, which is sort of the ideal for us. If we spend the time to research, find the people, understand their worldview, understand their philosophy, understand their risk taking, if we are aligning ourselves with them, Then we can hopefull…”
Klein: Post-commitment premortems uncover overlooked risks and create monitoring checklists
“What we have found is that creative thinking, once you're fully committed, It lets you take a step back and identify things that, from a different perspective, maybe you didn't do, identify earlier on, and what it also does is it gives you a sort of checklist …”
Klein: Debating 1-2% positions with elite investment committees is inefficient
“If we're pulling together that kind of a group, and we're discussing a one or two percent position, it's just not the best, highest impact that we can bring their experience to bear on behalf of Memorial Sloan Kettering.”
Klein: MSK backs flexible managers who trade across asset classes nimbly
“Really what we're interested in is nimbleness of capital. What we're interested in is managers that can make those real time or more real time trade-offs across asset classes and in a much more nimble format than we're ever going to be able to do.”
Klein: Manager Opportunity Set Shrinks as AUM Increases
“As AUM rises, the opportunity set tends to fall. So as you gravitate towards larger managers, that larger capital base acts as a constraint on the opportunity set itself. So there's a sweet spot. That sweet spot might be measured in a small billions or a high …”
Klein: Public and private equity share identical core dynamics despite different structures
“When it comes to public equity, well, that's really sort of similar dynamics and drivers as private equity, but different structures.”
Klein Outlines Memorial Sloan Kettering's Target Portfolio Asset Allocation
“The pie looks like using the conventional asset allocation framework that we have, Global equities, roughly 30%. Hedged equities and uncorrelated strategies, roughly 30%. Private equity strategies, all in, roughly 20%. Real asset-based strategies, roughly 10%.…”
Klein: MSK Freely Shares Ideas Because Cancer Centers Do Not Compete
“One of the big benefits about investing on behalf of the cancer center is we're not in competition with anybody. We're here to help patients. Happy to be collaborative. In a trusted sense, never break a confidence, but happy to be collaborative with people and…”
Klein: MSK tests manager allocations using a '30 questions' diligence framework
“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 u…”
Klein: MSK Divides Managers Evenly Across Three Flexibility Tiers
“Probably a third of the managers have a very meaningful degree of genuine flexibility across many different asset classes. I'd say another third of the managers Have meaningful flexibility within their asset classes. So for example, global equity is a global e…”
MSK Investment Team Starts Weekly Meetings with Scientific 'Memorial Moments'
“So every Monday morning, our team gets together, organizational meeting, full team, and we'll begin with what we call Memorial Moments. There, what we're doing is we're either sharing some sort of research that's going on at the organization, some sort of ad t…”
Klein: MSK maintains a fully invested portfolio with minimal turnover
“Again, coming back to the turnover question in practice, the answer is, is that we're not turning over the portfolio all that frequently at all. So we have the benefit of being, of having a fully invested portfolio without a whole lot of turnover.”