Druckenmiller Says Alternatives Fueled Bowdoin's 14.4% GainBy and
Fund helped by decline in oil, currencies, Druckenmiller says
Endowment is led by Paula Volent, protege of Yale's manager
Bowdoin College’s endowment return of 14.4 percent -- the best among schools so far this year -- was fueled by a portfolio built around top-performing private equity and hedge funds, said Stanley Druckenmiller, a longtime investment committee member.
Druckenmiller, a legendary billionaire investor who graduated from Bowdoin in 1975, said Paula Volent, the college’s chief investment officer, deserves credit for constructing the portfolio. In addition to selecting private equity funds that bore fruit in the last year, the college had stakes in macro hedge fund managers who had “outsized, outlier returns taking advantage of the decline in oil and currencies,” he said, declining to name specific investments.
“It’s mainly Paula Volent,” Druckenmiller said in a telephone interview. “She’s done just a phenomenal job.”
Bowdoin is an elite, liberal arts college in Brunswick, Maine, that has benefited from outstanding endowment investment performance, helping it compete with peers such as Amherst and Williams. The school was founded in 1794 and its alumni include Franklin Pierce, the 14th U.S. president, numerous state governors and Congressmen, as well as leaders in business and arts.
The value of the endowment rose 15 percent to $1.4 billion in the year through June 30. The university had an annual average return of 10.5 percent over the past 10 years, according to a statement Tuesday.
“This investment performance is truly remarkable,” Bowdoin President Clayton Rose said in the statement. Rose was hired this year from Harvard Business School, succeeding Barry Mills, the president for 14 years.
The endowment’s annual and 10-year annualized returns for fiscal year 2014 were among the top 10 highest, according to data compiled by Bloomberg.
Volent is a protege of Yale University’s David Swensen and joined Bowdoin in 2000. She began her career working on the conservation of works of art on paper and has an MBA from Yale, where she worked in the investments office as a senior associate, according to a bio posted on 100 Women in Hedge Funds website. Volent declined to comment on the fund’s returns.
Another Swensen protege, Seth Alexander, runs the endowment at Massachusetts Institute of Technology, which posted a 13.2 percent return this year. Other Yale endowment alumni run funds at Princeton University and Wesleyan University, which haven’t released returns yet. Yale also hasn’t reported its investment return.
Bowdoin’s gain this year outpaced both MIT, which has more assets at $13.5 billion, and Stanford University, which this year hired a Yale endowment alumnus. Earlier Tuesday, Stanford, with assets of $22.2 billion, reported a net return of 7 percent for the year.
The median return for endowments and foundations with more than $500 million this year is 3.6 percent, according to an estimate by Wilshire Trust Universe Comparison Service.
Volent’s success has exemplified the so-called endowment model, where diversification and manager selection help large funds earn higher returns than possible with passive investing. Little is known about the portfolio’s exact composition. In a tax filing from earlier this year, Bowdoin disclosed only a handful of past holdings, naming private equity firm Oaktree Capital Management, hedge fund BlueMountain Capital Management, and Tiff Real Estate Partners.
Druckenmiller said the investment committee has helped Volent and her staff identify promising alternative assets, giving her “introductions and access in the hedge fund world” as well as private equity. Other members of the committee include BlueMountain Capital’s Jes Staley, who is chairman, and
Oaktree’s Sheldon Stone.
Druckenmiller manages his personal wealth through Duquesne Family Office. He worked for billionaire George Soros for more than a decade, making billions of dollars with bets against currencies such as the British pound. He started hedge fund firm Duquesne Capital Management in 1986 and returned 30 percent annually before converting it into a family office in 2010.
“She’s got an unbelievable work ethic and she finds great managers,” Druckenmiller said about Volent. “It’s a team effort but there’s one strong leader.”
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