Keep pulling the thread on Andy Golden.
In the 1990s, Princo Chair Dick Fisher, then CEO of Morgan Stanley, initiated a diversification strategy into private investments, hedge funds, and global balance management.
Under the leadership of board member Ed Matthews, Princo transitioned its governance to a fully empowered, staff-centric decision-making model.
Princo's core investment belief is to use external managers because specialized firms have more bandwidth and focus, making it difficult for an internal team to compete effectively across a diverse portfolio.
Princo avoids investing in strategies like black-box or "market feel" approaches where it would be unable to re-underwrite and maintain confidence during periods of poor performance.
Princo's long-term policy portfolio targets allocations of 25% to private equity, 25% to independent return (hedge funds), 19% to real assets, 10% to domestic equity, 10% to emerging market equity, 6% to other developed markets equity, and 5% to fixed income.
Princo's current asset allocation process is primarily bottom-up, driven by manager selection, with the aggregate portfolio position then assessed for overall risk tolerance.
Princo has a highly concentrated domestic equity portfolio, with 40% of its 10% allocation (4% of the total endowment) invested with a single manager.
Princo's major investment decisions are made in "bull/bear sessions" where all 16 investment professionals participate and specific team members are assigned to argue the devil's advocate position.
A post-mortem of Princo's worst investment decisions revealed that over half were influenced by internal political dynamics where Andy Golden, as the sole skeptic, felt pressure to approve investments to maintain team morale.
Princo's investment philosophy prioritizes the quality of the people managing the capital ("who") over market timing ("when") and even the specific strategy ("what").
A key reason Princo avoids direct security selection is the compensation disparity, as front-line security selection roles pay significantly more than fund-of-funds roles at endowments.
Andy Golden believes that attempting to compete on compensation for direct investing roles would weaken Princo's key cultural advantage of having a "sense of mission."