His introduction to private equity
When I came to Vanderbilt, we had a small allocation to venture capital. At the time, I didn’t really know too much about it, so I basically learned on the job.
Becoming an Institutional Investor
I don’t think there’s any single career track. It’s important to start early with a top firm and build great relationships. Also, the key to all of this is financial analysis, so it’s crucial to be in a position that allows you to tear up and analyze financial statements.
Convergence between private equity and the hedge funds
We’re in a number of hedge funds, and there are some fundamental issues involved. Hedge funds have a different time horizon and they don’t have as much operating expertise. They are certainly savvy in the financial markets but we’re scratching our heads like everyone else asking if these two can actually meet.
We don’t co-invest. We haven’t had the staff to do the due diligence on individual investments, but our board has looked for us to be more active. Co-investing is the logical next step, though.
We may add one more person, but I’m dedicated to keeping our staff small. We don’t want a large staff. I’m at the point in my career that I don’t want to be an administrator, I want to be an investor.
The model GP
We tend not to be too focused on performance numbers. We’re focused on teams and chemistry, with a bias for teams that have been together a long time. We’ll look for a few emerging market funds, but in general we want stable teams and specific industry expertise.
LP strategies targeting specific regions
I think it’s a bad idea myself. Our job is to maximize the return of the fund, and you shouldn’t be mixing in the objectives of the state or local government. It’s not our job… We have done a fair amount of investing in buyout funds that do have a regional focus, not in this region, but we look for attractive funds.
Prospect of buyout funds going public
I hope that doesn’t happen. When you start retailing institutional investments, it kills them. We’re in the club, so we’d obviously like to keep the club closed.