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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Samuels: NEPC resists paying 2-and-20 fees for PE returns driven by leverage
“We're happy to pay two in 20 for the first two, not so much for use of leverage, but it's interesting because some GPs think about the world that way, but many just say, well, it's all alpha.”
Samuels: Concentrated founder equity drives risky outside GP stake sales
“If there's a large lump sum, whether it's a boutique firm or a huge organization, it's probably going to be tricky for that next gen to buy them out, which leads to Increased risk of a GP state coming in or an outside minority or majority investor, which neces…”
Samuels: VCs replace 75% of venture-backed founders by the time of IPO
“There's one study that found that about half of founders are replaced by VC firms who've invested in the company by the time they reach the third round of financing, and that's 75% of founders have been replaced by the time a company IPOs.”
Samuels: First-time venture fund managers rarely understand portfolio construction
“I think portfolio construction is one thing, especially in the venture side, where newer funds, founders on the GP side, who haven't done this before, have very little idea of how to construct a portfolio, whether it's having reserves or position sizing, the p…”
Samuels: Sole fiduciary structures pose governance challenges for public pensions
“When you have an institution that has a sole fiduciary, that can be tricky from a governance perspective.”
Samuels: Granular private market exposure data is of limited use due to illiquidity
“Even if you knew your exposure to Chinese venture to the 10th point, you can't really trade on it because it's illiquid unless you do a secondary sale.”
Samuels: Early-stage private market return potential dwarfs manager fee impact
“And when you think about the return potential for some of those earlier stage private investments, it dwarfs the fee impact and it's well worth it.”
Samuels: Millennials Were Raised as 'Mini Consultants' Expecting Workplace Inclusion
“Millennials were raised as mini consultants to their parents. Parents would say, where do you want to go on vacation this year? What should we have for dinner tonight? And they want to be part of every decision. They want to be involved.”
Samuels: Chinese Healthcare Offers Tremendous Returns Despite Allocator Fears
“We think that healthcare is for sure a theme in healthcare in China. China's a little scary for a lot of people right now. It was a big part of a lot of portfolios, and I would say it's a little scary for investment committees to think about committing new cap…”
Samuels: Highfields Capital folded two weeks after NEPC flagged succession risk
“We identified a list of GPs that were of higher concern to us on this succession framework that we built, and two weeks later, one of the firms that was at the top of our list, Highfields, announced that they were folding and turning into a family office.”
Samuels: Ownership transfer requires at least five years of advance planning
“There's a lot of tension on price, and this is something that needs to be thought about at least five years in advance of a liquidity event or a transfer of ownership.”
Samuels: Promoting top dealmakers to managers without training causes organizational damage
“Oftentimes, it's the person who has a zone of genius In doing deals, and then they're asked to manage people, and they have no idea what to do. They throw spaghetti against the wall to see what sticks, and a lot of damage can be done in the meantime.”
Samuels: Eponymously named firms indicate higher succession risk for LP allocators
“If it's somebody's last name, it's a bit of an indicator that perhaps there's maybe going to be some difficulty in imagining a firm without them.”
Samuels: Next-gen leaders lack capital for direct founder buyouts 80% of time
“And then the other way that we've seen is that next gen buys the ownership directly from the founder with capital that they've accumulated in their personal wealth. Eight times out of 10, I would say they don't have enough money to do that.”
Samuels: GP stake backers pressure firms to scale, diluting focus
“But they're going to want to grow that base, and oftentimes there's pressure to scale and diversify the revenue streams, which can be a big distraction for folks if they have to manage a smaller fund, lower middle market buyout pool when they've only been doin…”
Samuels: Hiring a 24-year-old founder's son as CIO caused talent collapse
“This founder's son came to work for the company, 24 years old, becomes the CIO. So he's directing all sorts of stuff and managing people who are 20 to 30 years his senior. Of course we saw turnover, we saw cultural issues, we saw redemptions, and turns out the…”
Samuels: Analyst spidey sense accounts for one-third of NEPC's evaluation framework
“A third of our investment framework is what we call analyst opinion, which is our instinct and our gut based on spidey sense.”
Samuels: Private market GP succession data lacks transparency and public disclosure
“I don't think that there's any real way to get this information if they don't share it with you, especially with the private market GPs. It's not going to be necessarily laid out in a Form ADV or anything like that, so I don't think there's a lot of transparen…”
Samuels: Arrowstreet Capital manages thoughtful succession despite proprietary opacity
“And so this firm is Arrow Street. They are a quantitative strategy that has a very, very definite edge in terms of how they manage their quant process, but they view it as IP and don't share every single bit of the model. I would say that they're similarly not…”
Samuels: Nine in ten next-gen investment leaders don't know succession plans
“And I would say nine times out of 10, that next gen has no idea what the firm's plans are for them.”
Samuels: Presenting to Public Pension Boards Is Harder Due to Non-Industry Trustees
“The other thing that I learned is that boards, in many cases, at least for a public pension, tend to be composed more of maybe retired state policemen or people who are not in the industry. And so learning to present at a different level is actually much harde…”
Samuels: Investment Committees Fixate on Line-Item Risk Over Portfolio Hedges
“But it's very difficult for humans to think in terms of pair trades. The temptation to look at line item risk is huge. Even if you know that a long treasury position is in there to offset the meaningful equity risk in the rest of the portfolio, you still might…”
Samuels: Allocate active capital only where median managers beat fees and dispersion is wide
“We developed an active management versus index framework where we would put more active dollars to work and asset classes on the traded side that had a wider dispersion of results from the best and the worst managers, and where the median manager outperformed …”
Samuels: VC and growth equity halo effects make accessing top managers essential
“So the good GPs attract the good LPs, and this all also attracts the greatest portfolio companies. It's super important to get into those best top names.”
Samuels outlines six-phase change management cycle including a critical danger zone
“The first is loss, so people don't want to change the way to do things usually because we're humans, and then doubt in the new process and their new leader, and then discomfort, and I watched all this happen. It's like a cycle. After discomfort, it's this dang…”
Samuels: NEPC Assigns a Low Weight to Past Performance in Manager Model
“One is that performance is actually a pretty low weight in the model.”
Samuels: Managers Needing an Information Ratio of 2.0 Won't Succeed
“And if they need an IR of two to be successful, I don't think they're going to be very successful.”
Samuels: Smaller asset managers manage risk by gut compared to larger firms
“The larger firms generally know what their exposures are because they have risk management teams who are looking at these things. The smaller firms are much more gut-driven in general in terms of managing risk, and they are sometimes surprised.”
Samuels: Public and private specialists struggle without a common performance language
“And I think that's a big issue with teams, especially when there are specialists in long only versus specialists in privates is creating a common language. You've got multiple uninvested capital and IRR versus time way to return. You've got all sorts of differ…”
Samuels: GPs must groom next-generation leadership at least five years before succession
“Really, you need to start grooming that next generation at least five years before it's time.”
Samuels: On-site diligence remains essential despite remote work tools
“When it comes to the future of diligence, I do think we can do a lot more virtually, but we still need to be traveling and meeting with managers. You miss a lot of stuff when you're not there face-to-face, whether it's the dynamics of the junior person with th…”
Samuels: Private markets AUM approaches $10 trillion, with $2 trillion in VC
“The amount of capital in private markets, it's almost 10 trillion dollars in private markets AUM, and two trillion of that is held by VC firms, which is astonishing when you think about those numbers for early stage investments.”
Samuels: Top private equity vintage returns occur during corrections and recessions
“Some of the best vintage year returns are in years like this, leading up to and during a market correction or a recession.”
Samuels: Allocators cannot successfully time private market vintage year commitments
“Don't try to time vintage your allocations to private markets. You can't do it.”
Samuels: Replicating Swensen's Yale Model Requires Differentiated Selection, Not Formulaic Allocation
“When you think about the David Swenson model, people think it's this recipe that you can replicate by just throwing ingredients into a bucket and throwing them into an asset allocation model, and you're going to get the same results. And the reality is you hav…”
Samuels: Ideal investment committees should have five to seven members
“Ideal committees should be five to seven people. It increases accountability, it increases the preparation, the discussion is different in the room”
Samuels: Private market allocations can only increase 1.5% to 2% annually
“We went from 10 to 20% in terms of target, 10% in privates to 20%, and they want to do it overnight. You can't. You can't increase it more than one and a half to two percent a year.”
Samuels: Extended underperformance triggers founder fatigue and fund turnover
“If we have an extended period of underperformance, it's going to lead to fatigue on behalf of not only the founder, who has accumulated a great deal of wealth in this organization, and may be tempted to fold and say, you know what, I've made my money. I'd love…”
Samuels: Wellington provides in-house executive coaching for senior leaders
“Wellington has a wonderful program where they are basically providing in-house executive coaching and a leadership program for managing directors and even some partners to learn about these skills, and other organizations support a coach.”
Samuels: $60B to $70B has been raised for GP stake funds
“I've seen research that suggests that 60 to seventy billion dollars has been raised for GP stake funds.”
Samuels: Oaktree floated 6% in its IPO and founders cut equity sub-15%
“They thoughtfully saw the need to begin transitioning ownership, and they had a number of liquidity events, including selling a percentage to clients and then to institutional investors via private placement, and then ultimately via an IPO, and they floated si…”
Samuels: NEPC viewed succession as one of largest portfolio risks
“Five years ago, it was very firmly on my radar. We viewed it as one of the largest risks in our portfolio to just put things in perspective.”
Samuels: Prioritize Company Quality Over Job Titles Early in Career
“Don't worry about titles. Go into the best company and you'll find amazing opportunities there.”
Samuels: MassPRIM Defied Stereotypes by Championing Innovation
“Some people might think that state pension funds are overly bureaucratic or risk averse, but Prim was just the opposite. We had a fantastic executive director and chief investment officer in Michael Trotsky. He's still there. He really encouraged us all to cha…”
Samuels: MassPRIM held 240 underlying hedge fund relationships before moving direct
“Our hedge fund portfolio began a long time ago as fund of funds. We realized we had 240 underlying relationships when we looked through those dozen or so fund of funds, and we built a direct program when I was there.”
Samuels: Generalist model works best for smaller investment offices
“We were generalists at Wellesley, which I think is a really good model. It works really well with smaller investment offices, and I learned a lot about how to think like a CIO and allocate capital across the liquidity spectrum and have perspectives on everythi…”
Samuels: NEPC advises and manages over $1.5 trillion across 400 clients
“And we have over one and a half trillion in assets under advisement and under management. We have about 400 clients across seven different client groups.”
NEPC tracks roughly 1,200 high-conviction focus placement managers across asset classes
“Those are the ones we spend our most time on and try to get into our clients' portfolios, and we have about 1200. So that's across equity, credit, multi-asset, hedge funds, private equity, private debt, and real assets.”