Collette Chilton Humility and Loyalty at Williams College (Capital Allocators, EP.174)
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Colette is nothing. Short of a legend in the business she sat in a cio seat since the early one thousand nine hundred ninety s at the helm of public pension mass prim and corporate pension lucent before joining williams institutional investor bestowed its lifetime achievement award on colette in two thousand and nineteen and barron's named her one of the one hundred most influential women in finance in two thousand and twenty. Our conversation covers collects career. Path and lessons learned before joining williams. We then turn to her arrival at williams in two thousand and six to a phone a computer and a legacy portfolio williams governance structure leveraging alumni advisors asset allocation manager selection manager monitoring hedge funds venture capital and navigating around popular managers. Today show is also sponsored by queen base prime a leading prime brokerage for digital assets coin base provides a bridge to the crypto world for institutional investors high net worth individuals financial institutions and corporate investors through their professional trading platform deep and diversified liquidity execution expertise and coin based custody one of the largest and most trusted digital asset custodians for institutions looking to enter the crypto currency markets visit prime dot coin base dot com. Please enjoy my conversation with colette. Chilton thank you so much for doing this. Thank you for asking me. You've been at this. And the seat for a long time. And i mean i guess it makes sense to go back and ask how you first got interested. In investing it was purely out of necessity. i was working in investment banking. I was nine months and two weeks pregnant with my second daughter. And this was during the banking crisis in nineteen ninety three and The bank eliminated the group. I was in. And i was the first person they walked into. Hr because i literally was almost ten months pregnant. And i needed to have a job. We needed both of us to be working. And so i went around and look for a job before my daughter was born and then as soon as possible after my daughter was born and a guy who i had done. Some transactions with a lawyer was the general counsel for the state treasurer. Who at that. Time was the sole trustee in massachusetts and the guy who was a straight treasurer was a republican. Who had come in. After bob crane. Who was a famous sole trustee and democrat treasurer massachusetts. And there were all kinds of things that had been alleged to have been going on so we will. They were being investigated by everybody. You could imagine. And so this guy. I knew said i know you don't know anything about investing but this'll be a great experience. You'll learn so much because it's bad here and so that was A there used to be to pension funds massachusetts. That was called masters and so i went to work at master's knowing nothing. Remember going to my first meeting in new york with this guy and he said so. You know the difference between growth and value right. And i'm like i don't know what any of this So that is. It was purely out of necessity. I needed a job. And he offered me a job. And i worked at the state pension fund for five years and it was amazing. You spent that time. The state pension fund and he's been a longtime corporate pension fund at lucent. What are the key lessons and differences. You saw those types of the capital while some of it's all the same right across the three different public corporate pension funds and endowment. You know we're looking for good managers and trying to find him and the difference. Is that those pools of capital you have liabilities and you have retirees that you are supporting whereas at williams we support over fifty percent of the operating budget so it's incredibly important but they're they're like people i knew who retired and we're relying on what we did every day and that was amazing. You really felt the importance of what you did. And other difference at the state pension fund. Is you get paid nothing so it really is public service. You're doing it for the greater good and that was amazing. I love that part of it. But you also have to worry about your name showing up in the paper every single day of your job and so when i left there that was like what we celebrated at my going away party is that they never got me. You know you're just you're just collateral damage for them going after the state treasurer and it's like oh i can embarrass. That person might embarrass the state treasurer. And it's very tempting when you're not making much and people are offering you things and a lot of people in public funds get in trouble for that reason And it's not a very glamorous part of this we're all done people are really. They're mission focused the people who do those jobs. You've interviewed some of them. Like my friend chris hillman and it's an amazing bunch people anyway. So that's different from the other to go back to that time. What was the most outlandish thing you were offered. So the pension funds up here terribly underfunded and mismanaged each city in town has its own pension fund and so the state one started doing well and so then. The town's could invest with the state so there was actually a client facing part of it and the guy who did the client stuff was offered a car by a manager and he said it was okay to take it because they had the name of the firm on the side of the car. So it wasn't actually. They were giving him a car. It was like they were giving him a pen or some other kind of swag had their name on it so it was a joke in the office as long as it has a firm's name on it it doesn't matter what they give you there. Were certainly people who took full advantage of that upper eighties. Which firm was branded cars. There are a lot of big firms in boston a long time ago. You'd think we could say all right. They're still in business. I'll tell you that much. So we'll keep the name quiet for now and maybe we'll share it with their premium. Members at the end of the recording was exactly. Exactly what was the impetus for moving men onto loosen. I'm from the bay area. And we had two little girls. And i was desperate to live closer to my to have more help. You know both of us working fulltime and two little girls. So i started looking for something in san francisco and there was a guy at goldman back in the day named tom. Healy something called the pension services group and he covered pension funds very effectively and he invited me to lunch one day and he said oh. I know you're looking for something. I have the perfect job for you. There's this company the spinning out of. At and t. called lucent. And i'm like where is that and he said it's in new jersey. Tom new jersey is not san francisco and so he kinda reeled me in goldman had done. The ipo loosened spun out of at and t. and he was very close to the treasurer and it was just an amazing opportunity. Despite not being in the bay area had seventy five billion dollars in a m and it was like the last piece of the spin out from a and t and the treasurer was a forty year old woman so in the. at and t. world that's unheard of and she was amazing and she convinced me to take this job and like literally. Nobody knew anything. About what i was doing. They're like here's a phone. And a qb and seventy five billion dollars go at it. It just felt like the opportunity of a lifetime. And how could i pass it up. What are the portfolio. Look like with your phone and seventy five billion dollars while it was hard to figure that out because at and t. Was still managing the money for lucent south. It took a while for us to make that transfer an at and t. Was one of the first corporate pension funds to invest in venture capital and private equity. So you know it started off and family offices and endowments and foundations and then there were small group of corporate pension funds like at and t. and gm and ge and they were early to those asset classes so we actually had a great venture and private equity portfolio and so that was the illiquid part which was a nightmare to separate because we had to go through each agreement and negotiate with the gp when we are splitting apart and loosen was bigger than a t and t and so we were also negotiating with our largest client because at and t. Bought more lucent equipment than anybody else. It was just an interesting time but a great a great portfolio. We are incredibly lucky to get started with that. How impact could that have been in size. Relative to seventy billion dollars of assets while part of the seventy five billion was the defined contribution plan which we invested in the separately managed accounts of the defined benefit plan so of the defined benefit plan was probably fifty billion. But i don't remember the numbers. It's been a long time but it was. There was a lot of venture in private equity. The returns on the portfolio had been very good so i started there in nineteen ninety eight. We're getting a lot of distributions of our venture portfolio. I used to make the joke. That lucent was really a pension fund with a little bit of technology on the side. Which is what drove the earnings of the company for that whole time but nobody thought that joke was funny except for me but it was actually pretty close to the truth. How did that influence you. Invested the capital. Well we had liabilities and so despite those liabilities we still had a lot of equity. In our portfolio the pension fund had to underlying groups of employers went occupational one management and they both at different points in time were well over-funded their assets to their liabilities. Which is unusual for corporate pension funds. So we actually suggested to the board of the company that they basically immunize the portfolio and lock and the gains. After i left one of them was in process. When i was leaving and the other one i think got done after i left but it didn't happen before various market correction so have a number that you have to meet. It's different from an endowment or foundation. How long were you listened about. Eight or nine years when i started at lucent there one hundred and fifty thousand employees in when i left there were eight thousand employees. Wow it was quite a ride. So i was working at loosen. It was living in boston. We had moved. We opened an office in boston and was easier to hire people for that kind of work in boston. Then in suburban new jersey and so my family. We all moved back to boston. Rather than being in new jersey and tell had announced a merger with lucent but it hadn't closed yet and somebody from the williams investment committee called me and said. Hey we're going to start up an investment office. And how would you like to talk to us about it. He said would you think about coming in. Starting the investment office at williams you've started an investment operation at loosen. Obviously on a much bigger scale. You know you have the playbook you can do this. And i said no. No no. this is my team. I hired all these people. There are twenty five of us. And you know you don't walk away from your team and back and forth and he finally said you know colleges don't get taken over so this is actually more stable job and i'm like it's not a takeover it's a merger blah blah anyway So then i started meeting. Some of the williams people and i got completely sucked in after having said no to the initial phone. Call the last person who i met in the process was the guy who is the president of the time marty shapiro. Who's now at northwestern. And he's just an amazing guy and salesperson. I expected new england. Liberal arts college bow tie nodded all hilarious cracking jokes wearing funny just wonderful guy and he was the closer. I guess because after that. I i think that's what i said. Yes so yeah. So what did it look like. When you arrived it was like the phone and the cube again. There was like nothing and so part of the plan was to set the office up in boston but there was nothing so i had to go work in williamstown for the first six months which was great except that i had to leave my family every monday morning and come back on thursday night but williams towns mazing and the portfolio was incredible because the way that the college invested the money as they had committees of alumni volunteers all in the investment business there lot of williams people in the investment business and they got williams into funds that they liked and so it started off with joe rice at sea. Dnr and a couple other people of his era and they would sit around the williams club in new york and decide what to invest in so they started off in stocks and bonds. And then one of the guys up here in boston l. kherson. I knew something about venture said you know. Let's let's try a little venture and and so we did a little venture and so this was like i don't know in the seventies or something so we ended up with this incredible venture and private equity portfolio. Joe rice's good friend. Was john candy. And so we were in like the earliest. Cdr madison dearborn funds. And that was true. Like across the board in every asset class just like something special because of those incredible alumni. Volunteers who put the portfolio together. It was just you and a bunch of great manager so headed you think about what you wanted to put together. So there is the structure of the portfolio and the structure of the team. Right and you kind of have to do all of that at the same time. And so the first person i hired was a guy who had i had worked with that the state and loosen who came to be our cfo and so that was a critical higher. Name's brad wakeman amazing. He's still here. He's our cfo coo today. And he just brought order from chaos and so we have worked together for a long time so we kind of knew like what we needed to do and how to chop the wood and then we built the team out from there and then we had an analyst at cambridge who covered williams who has a williams alarm and we hired her as our first analyst. And she's now managing director abigail. Otley and then. I heard my assistant christine corrigan. Who still here today. So that was kind of the core at the beginning and then as far as the portfolio. Who'd probably too many managers you know. The problem with having committees put portfolios together as they love putting stuff in there really. Don't like taking stuff out and it's hard to agree on what to stop doing. And so and there wasn't really what i would call a policy portfolio. You know i came from this world in the corporate pension fund public pension fund where we have a policy portfolio and you manage to a target and you have ranges around target and that was important and liquidity was important and organizing things in that way which hadn't really been the way it was done and so fortunately we had one manager was sort of a balanced manager and it was a significant part of the endowment. When i started what significant to calibrate well was more than thirty percent in one manager. Yeah okay so. I started in two thousand and six. We had that manager in the portfolio when we went into the financial crisis and it was the only separately managed account we had and it was basically large-cap s and p five hundred stocks. So it was amazing. Because we're sending money to the college like eight out of twelve months. And i'm barely have figured out where my offices let alone the portfolio and we have this incredible liquidity gift. That we didn't even know was going to be important and so that helped us get through the last financial crisis and And we had these amazing managers and the other thing. That was really fortuitous. Is the people who were on. The investment committee on our advisory committees had all been involved for a long time so there was this huge sense of stability. It's like we're gonna to be okay. Don't worry about it. We got this which is nice when you're new in a job when you go into a situation like that when the governance structure always comes up with something challenge you have the committee and then you have these advisory committees by class or category. How do you work with them. So that structure was in place before we had the investment office. And so that's how they invested the portfolios. They'd have a marketable committee picking long equity managers and they had a committee called the special strategies committee which was the inception of the hedge funds and amazing people on that committee so the chair of that committee was bill. Simon is famous for almost being republican governor of california. He's a wonderful person and dear friend so he chaired that and then people on the committee were like on his halverson paul singer and just very successful investors who liked to get together and argue about what to put into the portfolio. We kept that structure in place but those committees became advisory and they didn't actually vote on anything but they helped us with the portfolio and then the investment committee is the fiduciary committee. It's a standing committee of the board and they actually vote on hiring managers on that kind of thing and so one of my jobs at the beginning was to make that all work and honestly that is one of the most fun parts of my job. It's like ahead twenty four bosses. I love all of them. They all help us in different ways. And i tell people that that's the secret sauce of the williams investment program. We have these. Alums are on these committees and they love helping us and they don't have an extra grind. They're not trying to sell us something or it's like you can call them and say what do you think about this manager and you get sort of a thumbs up thumbs down past. They love williams. They want it to go. Well i'm us have good performance and so it's really incredible. I mean other people call me from time to time at similarly sized schools and they'll say someone on my committee heard about your structure and they want us to do this and sounds like a nightmare. I said you know. I love it. And it's super helpful when you have a small team and you're covering the world so take me back say ten years you get out of the crisis you have the liquidity to match and now you can put in place the policy portfolio that you think makes sense. What did that look like. And what does it look like today. Well i wish it were as you described head that we got through the crisis and then we got to get started but we are actually doing all of that starting in two thousand six through the crisis coming out the other side wasn't like they said okay just like hang out here and wait for this to be over. So we're in the crisis. We had just set up our investment office. We had just moved files from williamstown to boston. And i don't know if it was the weekend of lehman or bear. Stearns it was one of those weekends in office looking for our contracts to see what we can do in the situation with all of these managers and we had some contracts so it was an interesting time. When you're you know it's a new office and you have long standing relationships and you're trying to figure out what is going on here while the world's coming apart all around you but coming out of that what did we do. We really didn't do much differently. We had sort of core fixed income going into the crisis because of this manager who was kind of a balanced fund so that was helpful and we had added to that fixed income going into the crisis. Because you look at how much we support at williams and was like. Wow we might want to have some fixed income in here so that was helpful and then we also had put in some credit non investment grade credit in the portfolio not because we had any view on the markup but just had added that going into before the crisis and that all performed like equities during the crisis and so that was helpful but then coming out of the crisis wasn't like we took this most liquid part of the portfolio and went crazy with it. We just you know like we have the whole time. Just tried to find very very good managers and not too many of them. You know when i started the was one point five billion and now it's three billion over fourteen years. We've tried to keep the number managers the same as when i started. That was sort of our philosophy. How many managers is that today across the portfolio. It's just over sixty. So when i started if you went through the portfolio and you said you know this private equity fund. We've already passed on so it's not active but if you counted the active relationships were kind of at the same number as we were then so walk me. Through quick what. The asset allocation structure looks like today. Well it's mostly equity. It's almost all equity. We no longer have the fixed income that we had back. Then we still have some credit. But it's just all forms of equity. We have almost forty percent of our portfolio and hedge funds and that is partly driven by just the the hedge funds that we have so. It's kind of bottom up fundamental. We have great managers and and they happen to be global long short or what we call absolute return managers. The private part of the portfolio is about a third of the portfolio. I wanna say and then we have what we call globe along equity so we have frictional cash. We don't have fixed income or cash. We really need the equity to grow the assets to support the college you know that had trump portfolio was to start. There is quite a bit bigger than your peers and yet for the decade where hedge funds have been under the microscope to say the least your returns have been right up there with the best and i'm curious how you've gone about that. I mean you mentioned. We have great managers. Everyone likes to think they have great managers. Well it's not like we said okay. Let's have forty percent and go fill the bucket. It's you know we have these amazing managers and do we want to have a little bit more a little bit less of that. We're not very tactical and we don't make a lot of changes in our policy portfolio. We look at it every year and review it with the committee. Maybe like a one or two percent. Change kind of at the margin you know. All of our value add is in manager selection. It's not in calling the market or anything like that when we do the attribution work. It's it's all manager selection. How many different managers to have across that forty percent had once maybe ten or fifteen walk through what that process is like when you make a change putting a manager. Egner taking a manager out Could be both to different decision. It takes us about a year between the time we meet someone and recommend putting them into the portfolio. So we're pretty careful. Like i said we really try to manage the number of relationships in the portfolio in part. Because we don't want to dilute away returns by having too many managers and in part because we're just this lean mean team here of not a lot of people covering a lot of the world so we've gone back and run the numbers and it's about a year from you know i meet you and by the time we do all the work and we met you a few times and make a decision about investing in them bring a recommendation to the investment committee. It's pretty slow outside of the basics of you know you wanna get to know the people in the strategy in how they go about it. What do you think or the most important aspects of a manager. You're trying to tease out in the ones that do make it to the portfolio versus the ones that might be close. But don't i mean there are a lot of good investors in the world right and we don't need to be invested with all of them but the ones that we have need to be really good. So that's how we kind of think about it. We do lots and lots and lots of meetings. We track the number of meetings. We do like five hundred meetings a year between our current and potential managers and we only will add a small handful of new managers every year. So part of it's just meeting so many different people that you start recognizing things and i've been doing this for a long time. So you start recognizing things and you also remember where people came from and what they used to do and when they change the name of their firm what they were doing and that kind of stuff. So that's definitely helpful his years and years of experience but some of its art in some of its science. You know. there's a lot of what my team calls desk work that you can do. And that might tell you part of the story. But it's really meeting people and their strategy makes sense for what they're saying they're doing and for their assets under management and we've done a lot of investing with first time funds or a day one investor about a third of our portfolio. When i went back and looked at you know we were in fund one or invested with somebody who started so a lot of times. Track record isn't really available or the most important thing. So what is the most important thing somebody who's honest somebody who you can trust somebody who you're you're not gonna lose sleep at night. What's important for us is understanding. What are managers do and being able to explain it to the investment committee. So i've always sort of felt like if i can't explain to these guys what we're doing and why something went wrong but nice shouldn't be in this job so as a result we don't have a lot of black box macro quant kind of stuff in our portfolio lot of fundamental bottom up kind of managers where you can understand. Most of what they're doing. What are your conversations like with the kind of long standing managers in your portfolio on a routine basis. What you're trying to dig into to learn about. Well if you ask my team they would answer that one way. If you ask me. I won't answer it in a different way. So i've done one manager meeting during covid. I was in san francisco a couple of weeks ago. And i met with one of our managers out there and we spent more time talking about everything but the portfolio and this manager they're fabulous. Investors are not crushing at right now. But i didn't really want to go talk to him like can we go position by position. Can you tell me why this isn't working and why this is working and we talked about a lot of stuff. We talked about the election and covert and their lives. And what's been going on. And i feel like i walked away from that knowing a lot. More about how. They're thinking about things without having talked about the positions and your team. That would be very different. They wanna have like the notes in front of them and their ipad and taking notes and asking him position by position and and that's appropriate. You know i'm responsible for nothing and everything and i've been doing this for a long time and you know if we had performance wasn't great it's my responsibility but you know the people on my team are the ones who do all of the work to get us there. If you're having a meeting one on one you can cover certain personal things that might not get covered as much in a meeting with say three or four of you. Managers have limited amount of time. They spend with each client. So how do you think about. What are you trying to tease out and win over time in one of these relationships well i would say. We're very respectful of our managers time. We like to see each manager at least once a year if not twice and many of the managers we have in our portfolio. We've had for twenty years or something like that. Our practice is to see them at least once a year. My team definitely does that. And they're in touch with a much more by phone in that kind of thing but we try to be. Lp's or clients who are not kind of overstaying are welcome. And i think that's worked out well for us because then when we are looking at a new firm or trying to get into a fund. And they're doing their due diligence on us. I think that's what they hear about us is that we're not you know. Taking too much of their time. I meet every manager before we hire somebody. And then once they're in the portfolio. I travel about fifty percent of the time in normal times. And so i see a lot of people along the way obviously the most important relationships and the trickiest relationship but it's not like i parachute in when somebody's having performance difficulty in you know. Bring the hammer down. That's not how we do things and i would say. I probably do the least amount talking when i go to meetings with my team. And it's their relationship and they know these guys the best and then i'll hear them say something and ask a question. And it's not a gotcha culture in our office. That's really like trying to understand what they're doing. And is this what we hired them. Far do you see any commonalities in that group of managers of either way. They invest or the size of the balance sheet that they're using or their exposures that have been more conducive to success than others so the legacy of our portfolio al was andrea was part of the committee that started this portfolio and there are a lot of williams people who have worked at tiger or tiger family firms. And so what that means for our portfolio today is there's kind of this fundamental bottom up kind of investing style. We have managers who were not part of tiger but there's definitely coming into williams and never having invested in a hedge fund. I learned a lot from those people and the culture of williams is one of incredible accomplishment and success and incredible modesty and humility and people really helped me when i got started so when i look at our list of global long short. They're doing all different things and some move their exposures around and some do privates and some are incredible shorting. And you know we have a small number and they'll do different things so we don't need to have three firms all doing the same thing in a much bigger portfolio so when you turn over to the absolute return inside of it did serve the same purpose. You mentioned earlier that andreas did on the long short mean did he influence what was in the portfolio. There are a lot of good stories about what happened in those committee meetings back in the day so chair to share any one particular good one. That was before my time. There was so much debate that i think the outcome was really good. There was no sort of polite. Oh yeah i agree with you. That's that's yeah. I think that's good too. So i mean paul was an incredible committee member and surfer longtime and he's not an alum has two sons who went to williams which is how he got involved and was an incredible non alum volunteer. You mentioned earlier that you had a terrific group of venture capital managers from when you showed up it still a small percentage of your portfolio both on an absolute basis and relative to some of your endowment asian peers. Curious how you've thought about now clearly asset class. That's done extraordinarily well with the managers who had whether or not you'd grow it. And if so how so. Our target allocation is six percent. Our current allocation is like three times that we haven't done anything differently. It was the same managers and we commit the same amount of capital when a fund is raised. So we have terrific managers and we look forward to them taking advantage of the ipo market and doing direct listings and returning capital to us. That's not a secret anyway. So between that and the private equity it's twenty some odd percent of the portfolio. The allocation to venture and private equity haven't changed since i started with the college and it really goes back to this need for liquidity because we support so much of the operating budget so we spend a lot of time looking at liquidity and unfunded commitments and how we compared to peer institutions and how much they have an unfunded commitments and an illiquid investments so we are slightly less than the schools that have the best tenure returns but not very different and we haven't really moved off of those targets because we have to be careful about our liquidity and and we look at our unfunded commitment level moving around and what that means and we didn't get upside down in the last financial crisis and have to borrow because we couldn't get money in our portfolio and and that's just really important to williams the endowment is here to support the college endowment is not just here to be a pool of capital to ambassador. Sure anderson as you have a six percent target that's grown to eighteen. Well call it. Sixteen sixty was that a recent phenomenon in the last couple years with ordinary performance. Or is that just something that's evolved over time and haven't changed the allocation. It's all performance driven. So we really. We had some core relationships. When i got here that we've been with for a very very long time. That have been great. And then we've added a few names in our portfolio but a lot and mostly first time funds in different parts of the world or here but we haven't really add much as far as relationships but when the funds do well it grows. We saw the same thing with our private equity portfolio. Where targets nine percent and it was well above that when buyouts were doing well now it's ventures the good thing is we have all these people on our committee who have seen it before as have i and my team that's like this too shall pass or there's a couple of ways at shell pass right. Once you get the distributions it comes down the others less exciting yes. How how have you thought about managing around those allocations when they move away from longer-term targets. We definitely talk about. Should we move the target as the actual has moved then. It becomes tempting to add more relationships and make bigger commitments. And then you've gone from the current target to bigger target to it. You know so we just stay the course and it's bigger than the target but as you said it will come back down hopefully for good reason and not because valuations dropped precipitously. So we're lucky to be in these amazing partnerships and we really value them and they are private portfolios have done really well over long periods of time and we don't try and reinvented all the time are venture portfolios barbell between these very long standing relationships and then some new stuff and that's been good to us because what was new ten years ago now is very established and very successful. What have you found in the newer stuff that has worked. And hasn't i mean listen. We all make mistakes. You haven't asked me that yet but happy to talk about higher mistakes mistakes in the portfolio mean. You can't have one of these jobs without having a whole you know. We could just talk about mistakes. So which wouldn't be wouldn't be a lot of fun but let's have no. I think it's great talk about the mistake that you learn the most from well one of the mistakes was you know you have someone who you think is a good adviser and they say something to you like run. Don't walk to this manager and you do and that is not necessarily a good thing to do. I mentioned earlier that we have sort of a slow careful process for adding new managers and getting to know them. And sometimes when you move too fast and you don't do everything that you normally would because of not having time to do that and that doesn't necessarily end up well. Should you have a particular story in mind about that. I have a specific manager in mind. So what was it that you missed that you think you would have gotten with more time. Well you know. Sometimes a lot of the best managers don't give you a lot of transparency on the way in and it's a little bit of a trust me and sometimes you just have to go with that and you do as much reference checking and talking to people who are investors and people who know that person or know the firm as you can but there's a little bit of a sometimes you just have to step off the clip and hope for the best and most of the time that's worked out for us and sometimes it just doesn't and sell some of it's unknowable ahead. Of time but if you are investing by definition you're taking risk and so if you don't take risk you're not gonna have return in tennessee lingo. That's to some extent unforced air. How but four stairs for me personally. It's all your friends are doing it. And you say doesn't feel right to me but all the cool kids are doing this. So we're going to do and that's never a good strategy and there are some big things that have blown up that we haven't been in and there have been things that we would prefer to not have been invested in. It's funny because in pension fund law. There's some protection for investing in something that everybody else's here. It's not like that. Like if i said the reason we invested in ted's firm is because all these really smart people were in it and even though we couldn't really get there that you know they're in it that's like not a good answer. How do you balance that with the reality that you're venture capital portfolio. Your hedge fund portfolio generally speaking these so-called great managers that everybody loves there are a lot of other great investors alongside of you. So it's not necessarily the case that in a lot of the managers at drive your returns. There isn't a good crowd alongside of you. We're definitely careful about who we invest alongside as that can drive the outcome right but you can be in things with other good investors and have a bad outcome so we were in a hedge fund and forgotten about this. But you're making me like think of all these bad things. We are in a hedge fund where the guy at like five o'clock on new year's eve day announce that he was turning the hedge fund from a hedge fund into a publicly listed security. That was a holding company. For all these underline investments we evolve and trying to redeem and he wouldn't let us redeem and he said you have complete liquidity. It's the security but he he was the majority owner of the security so the only liquidity came from him and that was a long drawn out really bad expensive legal fees experience and we were alongside some great investors but there were also some large investors with just a different motivation and they were kind of driving what was happening there. So what is it in your thought process that drives that situation where all the cool kids were there. But there's something telling you not to go with them. I mean part of it's for me personally is instinct and if you don't feel one hundred percent comfortable with the person like even if all those people are doing it or if you just don't get it you know sometimes people say oh you know he's doing blah blah blah. She's doing blah blah blah on. If i don't get it then we shouldn't do it and they're definitely things that a lot of other people are in and have done fabulously well with and were not in it in part because of that kind of experience or you know i've experienced this before in a different flavor or different version and sometimes it's like i'm glad we didn't do it and sometimes i'm really sad that we didn't do it. What volved in your process and thinking of your time from when you first got the williams to today you know. I think i'm a lot more comfortable taking risk. I mentioned that a third of our managers are for time finder day when investor. And if you ask me in two thousand and six. When i first got here i would be like. There's no way we're doing that. And now i'm a lot more comfortable with that risk and can see you know ten years from now why you wanna be with that person today and it doesn't always work out but i'm much more comfortable with that kind of risk meeting somebody and having a few meetings with them and understanding what they're doing and yeah let's take that risk and sometimes it makes my team crazy. I think because you know. I'm ready to step off that cliff before they are but that's probably for me percent. Probably the biggest difference. The whole world of technology keeps innovating and a lot of different ways and some ways asset management is a late mover. Curiously how you thought about innovation in your process when so much of it is built on long term relationships with great managers. Stay the course. I don't know if we're like the thought leaders on innovation. We did one thing that was innovative dot and saved us. A lot of money and headaches is we moved away from a custodian hired an administrator. Which at the time we did it. Nobody had done that in the dhamma world and not very many people have done it since then but we got so crazy about not being able to understand what our managers were doing for twenty or thirty days after the end of the month and so we went with an administrator and it's made a huge difference in how we look at the portfolio and can manage the portfolio and understand what our managers are doing it sort of like the plumbing underneath at all. We just tried to simplify slash expensive. I don't think that's what you're asking about but You know it was. It was something that made a big difference for us and our team and where we spend our time so when you think about how you allocate your time and how important that is because he never have enough of it. But i don't know if we're like the the bleeding edge of innovation with regard to how we look for manager or analyze a manager. I know it people on your team teach this winter. Study every year at williams. What is that curriculum. Look like oh my god. That is like one of the best parts of the years when her study. And it's really sad because we're not doing winter study this year. We are doing something called the winter experience but winner. Study is a month of the year at williams. That students can take one. Course and it. They're encouraged take something. That's not related to their major. Yeah i think it's all pass fail so people take knitting and winemaking and cartoons and stuff like that and so we started teaching winter. Study eight or ten years ago and we started off bringing two or three students to boston and having them work in our office five days a week then we realized that we could have more students involved if we didn't on campus so we do it on campus and we basically do endowment management one. Oh one they read david swanson's book they learn what an asset class says somebody different from the team as their everyday talking about. This is what a hedge fund is. This is what private equity is. Our provost. who's fantastic comes in and talks about the finances of the college and how the endowments supports it when you think that the majority of kids at williams around financial aid so they leave at the end of that month of january understanding. Why what we do is so important to what they're able to do it williams and it's just fun. It's fun to get to be with the students. But in our summer programs winter study and our full-time analysts. we have a huge alumni. Base for williams. That's close to one hundred kids who have worked in our various programs and they're all out in world doing different stuff a lot of them in the investment world which is great coming out of a small liberal arts school that doesn't have anything business or accounting or anything like that but these kids come out and they learn how to think critically and write and make an argument and put a mosaic of things together. And and that's what investing is right. So i keep telling these guys. You are the most well suited for investing investment management. You don't need to go to work or someplace like that. You guys have got it all going on here so anyway. Winter study is really fun. It's really cold and dark and williamstown in january and the other thing that we've done that's been a great success is. We've brought some of our managers to williamstown and they talk about what they do and they'll talk about a stock and the students will get some materials ahead of time and they'll have to talk about. Would they invest or would they short whatever testing if you make it this far each week. You're probably ready for the closing questions. but wait. there's more if you sign up for a premium membership. You can access our premium fee which includes an additional set of closing questions each week and removes all the ads from the show including this little pitch to subscribe hop onto the website to sign up. Thanks and let's get on with it all right it it. Let's turn to a couple of closing questions and go on with it. What's your favorite hobby activity. Outside of work and family. I would say the one thing that i really do. Pretty religiously now is make sure i get exercise. And he favorite form hiking running my husband and i work with a trainer together and we love it so much that we bought our own sled and we have a bunch of we have medicine ball and a bunch of other stuff and we keep it in the trunk of the car so when we are williamstown working out there for the summer we would drive around to different parts of campus and do our workout and people would go by and laugh at us and it's great great. It's something we can do together. It's a lot of fun. So that's i would say that's not really a hobby but it's something i like to do. What your most important daily habit you know. I would say the exercise. These jobs are great and they're a lot of fun but they're super stressful. Regardless of what's going on in the market going up or down or sideways or things going on with your team or mrs been such a difficult time for colleges you know closing we re williams reopened and has had great success with at. But there's just you know it's stressful and so staying healthy and mentally you know on it keeps you calm. And that's better for everybody on the team and at the school. But biggest pet peeve i would say my biggest pet peeve is people who lack humility and that's both in the investment business and in life more. Broadly i didn't grow up thinking i was going to be in the investment business. I wasn't you know. I didn't have my little stock portfolio as a teenager. I kinda landed here out of necessity and it's been incredible. I love it. But i'm also very humble about it and think. How did i get so lucky. You know i get to go to china india and meet all these people and support an amazing college. And i'm very proud of all of that and feel extremely humble about the whole thing and made a lot of people in our business who are not that way. And so i would say that is definitely my pet peeve teaching for your parents as most stayed with you i was with my family recently in california and we were coincidentally talking about stuff that we learn from our parents. That's really been impactful on us. And one of the things that i think was most important is to be positive and it was something my parents both were and my siblings are and and it's just you know life is so much better if you're positive you know bad things happen but you know it was kinda like always you'll get through this. It's not really pollyannaish. But you know the sun will come up tomorrow. There's another day and in what we do. That's incredibly helpful. Because there's always something bad happening. Our portfolio managers do what they do and you of just like you know what it's okay we're going to get through this and so being positive. That was like an incredible gift from my parents. All right last one and we'll turn to a couple extra for the premium members. What life lesson have you learned that you wish you knew a lot earlier in life. I think it's sort of tied to what we were just talking about. Which was when something bad happens. It's gonna be okay. You're going to get through it. And when i was younger it would just be so upsetting and you know you kind of get caught up in the drama of it being upsetting. And i think i wish i'd learned much younger that it's like you know it's okay. It's all going to be good. This isn't going so well right now but it's all going to be fine and you. I wish i. When i was forty that i had the confidence and the understanding of that. But i don't know how you get that life lesson any earlier than learning in overtime. Cohen has been great. Thank you so much. thank you ted. This has been so fun so much less scary than i thought it was gonna be. Thanks for listening to this episode. I hope you found a nugget or two to take away. Apply in your besting and your life. If you'd like what you heard. Please tell a friend. And maybe even writer review on i tunes. You'll help others. Discover the show. And i thank you for it. Have a good one and cnx dot.