Today we are joined by Clint Stone SVP of Investments at the Larry H Miller Company to hear about running an endowment style investment approach at a family office. We discuss Clint’s approach to asset allocation which is focused on long term capital appreciation. A key pillar of the portfolio is a large allocation to private markets and we discuss the rationals for this. We delve into the foundation’s approach to portfolio construction, how to estimate the volatility of private markets exposures and discuss Clint’s belief that the volatility of a private market portfolio may even be lower than a corresponding public market portfolio. We also talk about the challenge of manager selection, what Clint looks for in managers and why he likes both market neutral long/short equity strategies and directional strategies like global macro and trend following in his absolute return portfolio.

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Episode TimeStamps:

02:48 - Introduction to Clint Stone

07:07 - Their approach to investment

12:12 - A challenging decade for equities?

15:06 - Stone's perspective on equity valuations

18:32 - Building a model and strategy

23:04 - Modelling the risk of a private equity portfolio

30:52 - Getting the correlation right

34:14 - Correlation in economic downturns

39:04 - Building a multi-asset strategy

41:11 - Getting the speed right

44:39 - Stone's approach to trend following

46:34 - Evaluating managers vs. security analysis

49:05 - The search for capacity constraints

52:02 - The challenge of picking managers

53:41 - Working with real businesses

57:52 - What is a good investment process?

01:03:01 - Generalists vs. specialists

01:06:50 - Advice for new allocators

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Floodgate’s Ann Miura-Ko