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00:00:00 – 00:50:21
In a recent episode of the Dakota Live podcast, hosted by Robert Morier, Taylor Jackson from Verger Capital Management shares his professional journey and insights into investment strategies. Verger Capital, servicing mostly nonprofit institutions with $2.6 billion in assets, employs an investment philosophy centered on asset protection, capital preservation, and sustaining purchasing power. Taylor Jackson elaborates on his responsibilities, including sourcing and due diligence of investment managers, and details a distinctive asset allocation strategy divided into four segments: Equity, Real Assets, Absolute Return, and Fixed Income.
The episode delves into Taylor's background, beginning with his early interest in financial services, and highlights his roles at Bank of America, Credit Suisse, and as an investment analyst for private equity at the North Carolina Department of State Treasurer. At Verger, relationships with managers are paramount, and their investment strategy integrates a "Bottoms Up" approach, supplemented with "Top Down" methods as needed. Emphasizing the importance of ongoing evaluation and re-underwriting of investments, Taylor describes a collaborative team environment that leverages diverse experiences and extensive networks.
The conversation further explores venture capital opportunities, support for early-stage managers, and Verger's commitment to diversity, equity, and inclusion (DEI). Verger has made substantial progress in DEI, with a significant portion of their team and managers being women or people of color. Community engagement also stands out, with initiatives such as partnerships with HBCU VC, Climate Vault, Girls Who Invest, and sponsoring Wake Forest University events.
Overall, the episode underscores Verger Capital's multifaceted approach to investment management, the importance of strong relationships and continuous due diligence, and a deep commitment to community and diversity.
00:00:00
In this segment of the video, the host Robert Morier introduces the Dakota Live podcast, which aims to acquaint listeners with key figures in the investment industry. The segment clarifies that the content is informational and not investment advice. Robert highlights Dakota Marketplace, a comprehensive investment opportunity database, designed to streamline fundraising.
The guest, Taylor Jackson from Verger Capital Management, is introduced. Taylor discusses his role, which includes sourcing, due diligence, and monitoring investment managers, as well as decisions on asset allocation and market commentary. Verger Capital, servicing nonprofit institutions, manages approximately $2.6 billion in assets.
Taylor shares his background, including his education, past professional experience, and personal interests. He talks about his journey from NC State University to his current position, driven by inspiration from his father, a financial advisor.
00:05:00
In this part of the video, the speaker describes their path into the financial services field, starting in middle school and high school, and an impactful experience working with their father before graduating in 2008. They passed the Series 7 exam before their senior year, which gave them an advantage in the financial services industry after the 2009 crisis. Despite initial challenges and a tough first job at Bank of America dealing with unhappy clients, they learned the importance of networking. This led to opportunities at Credit Suisse and eventually a role at the North Carolina Department of State Treasurer as an investment analyst in private equity. The smaller, supportive team at this job allowed for significant learning and hands-on experience, including leading full diligence processes by the end of their tenure.
00:10:00
In this part of the video, the speaker discusses investment strategies and criteria used in private equity for a state’s investment objectives. They explain that, unlike endowments with long-term horizons, the state required recurring monthly distributions for retirees, which led to a smaller allocation in private investments—around 5%, focused primarily on mid-market buyout managers who could drive returns through operational improvements rather than financial engineering.
The discussion then shifts to the “protect, perform, provide” investment philosophy of Verger Capital, emphasizing asset protection, capital preservation, and maintaining purchasing power to support their clients’ missions. Verger, which originated from Wake Forest University’s investment office in 2014, now has $2.6 billion under management and serves 10 nonprofit clients. The firm operates with a 15-employee team divided between operations, client relations, and investments, leveraging a generalist model to manage various asset classes collaboratively and flexibly.
00:15:00
In this part of the video, the speaker discusses the evolution and strategy of Verger’s private equity program. Initially, the private equity portfolio was relatively immature when the speaker joined, having only begun focusing on private strategies around 2014. The first essential step was familiarizing themselves with the portfolio, understanding its strategies, and the roles of various managers, aided by a knowledgeable colleague. As this colleague left, the speaker’s responsibilities increased, requiring direct engagement and relationship building with managers to maintain portfolio allocations.
Verger’s asset allocation approach is described as distinct, with four main segments: Equity, Real Assets, Absolute Return, and Fixed Income. Each segment includes various strategies and vehicles, such as long-only, hedge, and private strategies, tailored to the expected return and risk drivers. For Absolute Return, the goal is to achieve uncorrelated returns across market cycles, emphasizing performance rather than mere diversification. Their Fixed Income allocation eschews traditional core strategies, favoring long-short credit and private credit. Real Assets are considered largely inflation-sensitive, following a pragmatic view suggested by their COO.
To address portfolio needs, Verger identifies and underwrites new managers by delving into the strategy and risk profile of prospective managers, ensuring they align with the broader fund’s objectives.
00:20:00
In this part of the video, the speaker discusses their team’s investment strategy, emphasizing a “Bottoms Up” approach while also employing a “Top Down” method when necessary to address portfolio gaps. They highlight the diversity in the team members’ backgrounds and how these varied experiences contribute to their investment decisions. The team leverages their extensive networks and relationships rather than relying on screens to find managers. The process includes initial sourcing and conversations, followed by a series of internal reviews and discussions, often conducted in an open and collaborative trade floor environment. This methodology ensures that all team members contribute to and validate investment decisions, leading to comprehensive due diligence and ultimately better portfolio outcomes. The team also emphasizes leveraging existing managers for insights, which has proven beneficial in identifying promising new opportunities.
00:25:00
In this part of the video, the speaker discusses the ongoing process of underwriting within their investment portfolio. They emphasize that underwriting does not stop after an initial decision; continual re-underwriting occurs, especially on the private side due to its natural cadence. For public investments, they have an annual process where the team reassesses every manager, their role, and the necessity of their inclusion.
The speaker highlights the importance of patience and communication between managers and the investment team, explaining that some relationships develop over years before commitments are made. They provide examples where initial interest didn’t immediately lead to investments but eventually did due to transparent and honest feedback. They value long-term partnerships over short-term gains.
The discussion transitions to preferences for asset managers, noting that it depends on the strategy. For instance, they prefer managers who can handle multiple strategies for hedge funds to provide diversified exposure while maintaining fewer relationships. However, in the private sector, they focus on specialized managers for buyouts who can consistently create value across market cycles.
Lastly, they touch on the significance of relationships in private market investing, explaining that successful cultivation of these relationships is crucial for obtaining introductions and access to managers.
00:30:00
In this part of the video, the speaker discusses their approach to developing relationships with managers and the importance of transparency and feedback in building these connections. They highlight their method of taking numerous initial meetings to understand new investment opportunities and hone their diligence skills. The speaker also emphasizes the importance of reputation and how it affects new relationships and opportunities. Furthermore, they discuss their consistent investment strategies across different years and their focus on allocating capital in the small-market buyout sector, which they find attractive due to less reliance on leverage and inefficient pricing dynamics. The speaker mentions that these small businesses present opportunities for operational improvements and professionalization, which can drive significant value.
00:35:00
In this segment of the video, the discussion revolves around venture capital, with an emphasis on maintaining current levels of investment. It is highlighted that the coming 12 months may present a favorable environment for venture capital deals, with improving deal flow and quality. The importance of due diligence and patience in evaluating opportunities is underscored.
The conversation shifts to early-stage and emerging managers in private equity. It is noted that Verger values partnering with early-stage managers for potential returns, engaging significantly in funds’ first and second rounds. If early-stage managers seek advice, Verger is open to providing guidance and introductions to other potential investors.
The discussion then moves to Verger’s efforts in diversity, equity, and inclusion (DEI). Verger actively engages in DEI considerations during their manager selection process, asking tough questions about diversity efforts and seeking improvements. Their current portfolio allocation reflects significant diversity among senior-level decision-makers, with 30-40% of managers being women or people of color. Verger also emphasizes internal DEI, with 60% of their team being female and implementing bias-reducing measures in their internship program.
00:40:00
In this segment of the video, the discussion focuses on the improvement in the quality and diversity of interns following recent changes in the interview process. One speaker shares their personal experience and the positive impact of mentorship in their career, particularly highlighting a collaborative environment in a previous role at the state of North Carolina, where they gained significant insights from colleagues. The conversation then shifts to welcoming Ingus Smith, Communications Manager at Verger Capital, who is recognized for a leadership award and discusses community engagement and strategic partnerships at Verger.
00:45:00
In this segment of the video, the discussion revolves around various community engagement and partnership initiatives supported by Verger Capital. Key points include Verger’s sponsorship of the Wake Forest University face-to-face speaker series, their partnership with HBCU VC to support people of color in the venture space, and their collaboration with Climate Vault to reduce carbon footprints. Additionally, the segment highlights Verger’s commitment to gender equity through the Girls Who Invest program, mentoring students, and fostering an inclusive environment. The video also praises Verger’s successful internship program, which integrates interns into all aspects of the firm, culminating in a capstone investment project. The hosts express gratitude to the guests and provide information on how to learn more about Verger Capital and access past episodes.
00:50:00
In this part of the video, the host encourages viewers to like, follow, and share the episodes, and expresses openness to receiving feedback. They thank the guest, Taylor, and the regular participant, Dan, for their contributions. The audience is also thanked for investing their time with the show.