Elizabethtown College James HooverElizabethtown College has just $55 million under management, yet its asset allocation and performance rival much larger endowments. It has a colossal 70% allocation to alternatives, up from 60% a year ago. It is increasing exposure to international and emerging markets across several asset classes and seeking credit opportunities.
James Hoover
The college outsourced investments in July 2005 to James Hoover, principal and founder of Dauphin Capital Partners, an Elizabethtown alumnus and trustee. He has been able to gain access to esoteric strategies, such as a Brazilian real estate fund, through relationships with managers.
Early last year, Hoover predicted that the subprime mortgage market would suffer and invested in John Paulson’s Paulson Credit Opportunities Fund, which returned 589.9% in 2007. Elizabethtown later invested in a specialty credit strategy with Oaktree Capital Management and a couple of other partnerships to take advantage of turmoil in the credit markets.
The endowment returned 17% in calendar year 2007. For the fiscal year ended June 30, 2007, Elizabethtown was up 19.9% versus a 15.9% average for comparable colleges, according to the National Association of College and University Business Officers. Elizabethtown has 50% in hedge funds, 15% in private equity, 5% in real assets and 30% in long-only equity.F.B. Heron Foundation Luther RaginThe F.B. Heron Foundation is a pioneer in mission-related investing. It is working toward having up to half its assets in MRI by 2010, which will probably be the highest exposure in the industry. Luther Ragin, v.p. of investments, is making a wider impact by encouraging peers to follow suit and partnering with asset managers to develop investment strategies.
Luther Ragin
The $320 million foundation hired Lehman Brothers in March to develop a range of active and passive equity MRI offerings. They will be based on an index that Heron and Innovest Strategic Value Advisors created, containing about 400 companies with a track record of engaging with underserved communities. Heron is searching for a real estate manager to create a fund of funds targeting wealth creation in lower- and moderate-income areas.
Heron is one of three nonprofits behind the “2% for mission campaign” to encourage U.S. foundations to put 2% of their assets into investments aligned with their charitable causes. Heron is also helping to finance Cambridge Associations’ efforts to research MRI. The New York foundation was named Small Nonprofit of the Year in 2006.San Francisco Opera Ned RollhausThe $125 million San Francisco Opera endowment invests in a wide variety of asset classes, many of which are typically found in funds more than triple its size. Last year it took a big and unusual step by hiring a full-time investment professional. Ned Rollhaus, director of endowment finance, was previously a consultant at Alan D. Biller & Associates. Following his arrival, he helped position the portfolio along the lines of a much larger fund.
Ned Rollhaus
The opera increased its allocation to hedge funds and rather than take the fund of funds route followed by most of its peers, it opted for direct investment. It made commitments to several different strategies, including event-driven and multi-strategy managers, and avoided the double layer of fees associated with funds of funds.
The endowment also bumped its private equity allocation and made its real assets debut, an uncommon move for an endowment of this size. It tapped a real estate manager that focuses on commercial real estate and commodities managers that run diversified portfolios including precious metals and energy components.