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Scott Malpass was the CIO of Notre Dames' endowment for 32 years and has always been a pioneer at the forefront of the endowment investing world - leading Notre Dames's early investments into Sequoia as well as some of the premier fund managers in China decades ago. Scott built the endowment into a powerhouse, scaling it from $400 million to over $12 billion of assets under management across 175 managers. In our conversation, we talk about the qualities he looks for in great investors, how asset classes have evolved over his 30 years of investing, and how Scott recruited top talent to work at Notre Dame’s endowment.
www.joincolossus.com • shared by Marcelino Pantoja in #Measurement • over 2 years ago
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Notre Dame's former endowment CIO retired last year. During his 32-year tenure he grew the endowment nearly 30 times. Had he stayed on for another year in this market, it would be much more than that.
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"Most endowments haven't beaten the S&P. And that is true for a lot of investors who embrace this model. I actually believe that there's a very few number of organizations, who can actually implement it successfully. It requires a really strong, skilled staff, a lot of resources. I would guess 40 to 50 institutions in the world. Most should not try to do it. They're not going to have access. They're not going to have the staying power, they're not going to have stable teams, that can build the relationships. I do think it has worked for a lot of investors, but not all investors."
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"Part of it is pattern recognition. I loved getting in front of people, I loved the meetings. I've met thousands of firms over the years. I just really enjoyed sitting down with people, asking them questions about their investment approach and philosophy and process. And really getting to the human side. What makes them tick? Why are they passionate about this? How's it going to be enduring? A lot people are going to be a flash in the pan, have a few good years, but they can't sustain it. So what about the person and their personality and the organization would be enduring over time? Try to really drill down on that. And I found, honestly, that the really top people, had such clarity of thought about who they were, what they could do, what they couldn't do. And we're tremendous at executing it over the market cycles. So just that real sense of clarity and what they're about was critical.
Ultimately, we were trying to define what the skill is they had, what edge they had and whether it would be enduring or not. And that's what we really focused on. Look, I wanted great partners. I wanted people who would be transparent and collaborative and open about things. You have surprises about something that happened in the portfolio. And I also found the top folks in the business to be incredibly resilient. Look, not everything works all the time. Every market cycle is a little different. The shape of it's a little different. Think about the market structure. Think about the globalization of markets, a lot's happened. I found the best folks were very resilient and were able to adapt to changing times."
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"By the way, leadership is a choice. People choose to be leaders. Some people choose not to be leaders. They don't want that. But it's a daily intent. It's something you have to very much focus on. For me, it was trying to inspire [the team] every day. Even when we had tough markets or managers didn't work out or problematic issues, it was taking the long-term, focusing on the problem, not blaming anybody, all right, we're in this together, we decide this together, let's fix it. Let's find a way to move forward without it. It was a very strong, positive culture that way. And I think it encouraged people to get out there and talk to a lot of people and not be afraid to make mistakes. And every capital allocator makes mistakes. And I think we got better at it over time, hopefully, right? But we made a lot of mistakes as we were growing and becoming mature professionals."
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