Institutional Investor's Alpha Magazine - October 2007 - (Page 34)

Dartmouth College apart, and we need someone to be treasurer,’” recalls Russ, who was excited with the prospect of serving his alma mater. When Russ left Utimco in June 2001, it had $14.1 billion in assets, including a $1.7 billion hedge fund portfolio. As treasurer, Russ believed he had found the job that would see him into retirement, ending where he began, in Northern California. But the dream job turned out to be a nightmare, requiring an overhaul of both the investment office and its $55 billion in investments. He managed the university’s defined contribution and defined benefit plans, as well as the endowment and cash assets. He also helped restructure the $4 billion debt portfolio. After determining that the system’s actively managed equity portfolio and its internal managers had underperformed the S&P 500 index for ten years, Russ eliminated the internal management program, resulting in the termination of one portfolio manager and 10 analysts. He then moved the $15.8 billion equity portfolio into an index holding pen until he could hire external managers and staff to oversee them. Just as he had done at Utimco, Russ added new asset classes, including hedge funds and direct real estate investments. As Russ rebuilt the investment office, trouble was brewing in another quarter. A lawsuit was brought against the University of California in 2003 under the Freedom of Information Act by Berkeley professor emeritus Charles Schwartz, the UC clerical union and the San Jose Mercury News, demanding release of information on the underlying holdings of all venture capital investments, as well as their internal rates of return. In response, most of the venture capital firms — the source of a ten-year annualized return of 26.5 percent — shut the tap on new commitments. To counter the attack, Russ helped write and lobby for a state law that successfully shielded private equity ﬁrms from having to expose their underlying investments but conceded the release of IRRs. He also wrote in a provision for hedge fund protections. Continued distractions from the unions, the California public and professor Schwartz, who maintained a Web site called “Russ’ Whoppers,” ﬁnally pushed the treasurer out of the once-coveted job. When an executive recruiter coldcalled him in January 2005 with news that Dartmouth was looking to hire a CIO, Russ was more than intrigued. DARTMOUTH’S ENDOWMENT, Daniel Webster might have said, is a small fund but there are those who love it. For 16 years Jonathon King was one of those people. In late 2004 the Dartmouth community was caught by surprise when its director of investments announced that he was leaving to take over the CIO position at the University of North Carolina vacated by Mark Yusko. A Tuck graduate, King was seen as a lifer. But he had never been granted the CIO designation at Dartmouth nor the salary that comes with it. When it came time to replace King, Adam Keller, executive vice president for finance and administration, turned to investment committee chair Joyner to help lead Photo by Tom Tavee for Alpha “David is tough; it doesn’t bother him to ﬁre a manager,” says Russell Carson, Dartmouth trustee and a graduate of the class of 1965. CEO of the then–newly formed University of Texas Investment Management Co., to help manage the University of Texas endowment in Austin. The relocation meant Russ’s wife, Eileen Fehskens, a scientist at Genentech in South San Francisco, would have to put her career on hold, as Austin was not a biotechnology center. Fehskens, who grew up in New Jersey, has a degree in pharmacology from Yale. She and Russ were introduced in 1978 by a friend from his Berkeley genetics study group; they married on January 1, 1982. At Utimco, Russ oversaw all public markets portfolios — about 97 percent of the $10.8 billion endowment. (The other 3 percent was in private equity, which Russ and Ricks took over when the private equity team quit in 1999.) While there, Russ helped restructure and modernize the portfolio, using quantitative analytics that included Frank Russell data and Barra risk management tools. He also introduced commodities and hedge funds. “At that time, disclosure was not a big brouhaha, and we were able to hire some of the great hedge fund managers,” says Russ, who invested in Farallon Capital Management, Maverick Capital and Perry Capital. In the fall of 2000, the troubled University of California endowment and pension system reached out to Russ. “I got a call, saying, ‘The bubble is bursting, the world is falling 34 • INSTITUTIONAL INVESTOR’S ALPHA • OCTOBER 2007

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - October 2007

Institutional Investor's Alpha Magazine - October 2007 Contents Letter from the Editor Longs & Shorts Pension Corner: Applied Knowledge The Good Guys: Autism Advocate Interview: Nerves of Steel Cover Story: Ivy League Education Alpha Awards: Top Service Providers: Trying Times Strategies: Passage to India Profile: The Oracle of Irvine Alpha Bytes: Futurama Research Center: Funds of Funds 50 Unhedged: Commentary: Crisis? What Crisis?

Institutional Investor's Alpha Magazine - October 2007

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