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00:00:00 – 00:50:21
The video features Robert Morier hosting an episode of the Dakota Live podcast, which delves into the intricacies of investment decision-making. Key guest Taylor Jackson, investment director at Verger Capital Management, shares his professional experiences, educational background, and the influences that shaped his career in finance. The discussion spans Jackson's early role at Bank of America Merrill Lynch, his subsequent positions at Credit Suisse, and the North Carolina Department of State Treasurer, highlighting important lessons in networking and risk analysis.
Jackson elaborates on Verger Capital’s investment principles—protection, performance, and provision—and their unique asset allocation approach, categorizing investments into Equity, Real Assets, Absolute Return, and Fixed Income. He underscores the importance of strategic manager selection, leveraging both quantitative and qualitative analyses, and maintaining long-term relationships for better portfolio allocation. Engagement with emerging managers and commitment to diversity, equity, and inclusion (DEI) within manager selection processes are emphasized, including the success of initiatives like restructuring internship programs to eliminate biases.
The conversation also highlights Verger's positive outcomes with diverse internship hires, its community engagement efforts, and strategic partnerships with entities such as the Wakeforest University speaker series and Climate Vault. Through these partnerships, Verger aims to foster inclusive and environmentally conscious investing. The video concludes with a call for viewer feedback and expresses gratitude to the participants and audience.
00:00:00
In this segment of the video, the host, Robert Morier, introduces the Dakota Live podcast, aimed at providing insights into the people behind investment decisions. The segment outlines the nature and purpose of the podcast, the importance of understanding the investment sales ecosystem, and includes a disclaimer clarifying that the content should not be considered investment advice. The host then introduces Taylor Jackson, an investment director with Verger Capital Management, discussing Taylor’s responsibilities at Verger, including sourcing, due diligence, and monitoring investment managers. Taylor’s background is also shared, highlighting his education, career trajectory, and involvement with charitable programs. The conversation transitions to Taylor’s experience at NC State University and the influence of his father, who is a financial adviser, on his career choice in finance and financial services.
00:05:00
In this segment of the video, the speaker shares their academic and early career journey, expressing an early interest in financial services initiated by working with their father. They discuss how passing the Series 7 exam ahead of their senior year gave them an edge in the competitive finance industry post-2008 financial crisis. While their initial job at Bank of America Merrill Lynch was challenging due to the industry’s turmoil, it underscored the importance of networking. This networking ultimately facilitated their transitions to roles at Credit Suisse and later, the North Carolina Department of State Treasurer. At Credit Suisse, they gained significant experience as a credit risk analyst for hedge funds, which led to an investment analyst position in private equity. Their role involved making investment decisions, learning a new asset class, and benefiting from a supportive environment that allowed for substantial hands-on experience in due diligence processes.
00:10:00
In this part of the video, the speaker discusses the criteria for private equity and manager selection, emphasizing long-term objectives and maintaining stable returns for a state’s investment portfolio. It highlighted that private investments were a small portion of this portfolio, primarily allocated toward buyouts with operational improvements rather than financial engineering. The conversation then shifts to Verger Capital’s core principles: protect, perform, and provide, explaining how these drive their investment approach to ensure capital preservation, investment performance, and predictable distributions for their clients. Additionally, the speaker provides background on Verger Capital, its origins, the type of clients they serve, and their generalist investment team model, stressing the benefits of such a collaborative approach in a small team setting.
00:15:00
In this segment, the discussion revolves around the early stages of developing a private equity program. Initially, the organization had minimal exposure to private markets, but after spinning out in 2014, efforts to develop private strategies intensified. The speaker, who joined four years into this process, began by understanding the existing portfolio and the role of various managers. With the departure of a key colleague, their responsibilities expanded to building and maintaining relationships with managers to ensure proper allocation.
The segment also covers Verger’s approach to asset allocation. Instead of traditional categories, they split assets into four segments: Equity, Real Assets, Absolute Return, and Fixed Income. Each segment contains various strategies, both long-only and hedged, to access underlying asset classes. They focus on understanding the driving factors behind returns and risks of each strategy. Notably, their fixed income allocation is non-traditional, including long-short credit and private credit rather than core strategies.
For manager selection, the typical underwriting process is hinted at, although details are not fully explored in this part. The approach emphasizes strategic fit and risk assessment within their defined portfolio segments.
00:20:00
In this part of the video, the manager discusses their investment process, highlighting both bottom-up and top-down approaches. They emphasize leveraging diverse backgrounds and networks within the team to source and evaluate investment opportunities. Key actions include collaborating closely without hierarchies, rigorous due diligence involving quantitative and qualitative analysis, and leveraging existing managers for insights. Team members bring different experiences, enhancing the sourcing and validation process, which involves thorough discussions and multiple rounds of analysis to ensure strong portfolio allocation. The collaborative environment on the trading floor fosters continuous communication and collective decision-making to improve the portfolio.
00:25:00
In this part of the video, the speaker discusses the ongoing process of re-underwriting their portfolio, emphasizing the importance of revisiting and reassessing each manager’s role annually. Even though continuous monitoring happens throughout the year, a dedicated whiteboard process ensures a thorough review. The speaker talks about cultivating patient and honest relationships with fund managers, sometimes passing on first funds but maintaining communication if the potential remains. They give examples of managers who, over several years, eventually received commitments due to their persistence and the strategic fit of their funds. Additionally, the speaker mentions the value of having generalists in the team, the preference for asset managers who can handle multiple exposures, and the significance of focusing on specific strategies in different market segments, like buyouts. They touch on the challenges and strategies in cultivating relationships in private market investing, particularly in venture capital, citing its reliance on strong, enduring relationships and proper introductions.
00:30:00
In this part of the video, the speaker discusses the importance of building relationships and understanding new opportunities within private markets, emphasizing the necessity of a deep understanding of strategies and underlying companies. The speaker highlights the significance of transparency with managers and the value of providing feedback. They address the challenges in private markets, such as fundraising and deal activities, but convey a positive long-term outlook. The focus is on consistent asset allocation across vintage years and the difficulty of timing in private markets.
The speaker mentions that more attention is being given to the small market buyout sector, which historically has been underweighted. These managers use significantly less leverage and are less price-sensitive, aiming for long-term value rather than immediate gains. By partnering with disciplined managers who allocate capital over multiple years, they see opportunities in improving operational efficiencies and professionalizing small businesses. Lastly, there is a discussion on the ease of growing smaller companies and potential value increases as they scale.
00:35:00
In this part of the video, the discussion centers on the venture capital market, noting it is currently favorable for investors and anticipating an interesting year ahead with increased and higher quality deal flow. The conversation then shifts to emerging managers, highlighting the importance of early-stage investments and the high standards required for partnerships. Verger prefers to engage with managers early in their fund’s life, providing insight and introductions as needed. The segment also covers Verger’s diversity, equity, and inclusion (DEI) initiatives, emphasizing that Verger actively integrates DEI considerations into their manager selection process. They illustrate this with an example of encouraging a buyout manager to enhance diversity within their firm, which subsequently led to positive changes. Additionally, Verger ensures diversity within their organization and has restructured their internship program to remove biases, such as no longer requesting resumes during the application process.
00:40:00
In this segment, the discussion revolves around the positive outcomes observed in the intern hiring approach, emphasizing a notable increase in the quality and diversity of interns. The speakers mention having interns from varied academic backgrounds such as biology, computer science, and all being women, which enriches the talent pool. Additionally, they talk about mentors and supportive colleagues from past employment, highlighting the collaborative environment and the learning opportunities it provided. When transitioning to Verger, the support from former colleagues was significant. The conversation then shifts to welcome Ingus Smith, Communications Manager from Verger Capital, who discusses community engagement and the rewarding experience of working with selective partner institutions. Smith had recently been recognized with a leadership award, showcasing their contribution to the community and the organization.
00:45:00
In this segment, the discussion highlights various initiatives and partnerships supported by Verger Capital. These include the Wakeforest University face-to-face speaker series, which Verger sponsors to help community members attend, and HBCUvc, an organization that supports people of color in the venture space. Another key partnership is with Climate Vault, a nonprofit focused on innovative carbon removal, where Verger has offset both the firm’s and employees’ carbon footprints. Additionally, Craig Thomas from Verger has been a mentor for Girls Who Invest, promoting gender equity in investment. The segment also details Verger’s approach to internships, emphasizing active integration into the firm, participation in meetings, and leading substantial projects, which provides interns with valuable, practical experience. The video concludes with gratitude expressed to the guests for sharing insights about Verger’s impactful work and internship successes.
00:50:00
In this part of the video, the hosts express their gratitude to the viewers for liking, following, and sharing the episodes. They also welcome feedback from the audience. Taylor and Dan are thanked for their participation, and viewers are appreciated for investing their time in the show.