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Gordon And Betty Moore Foundation To Actively Increase PE & VC Allocations | Denise Strack, Chief Investment Officer | Q&A

by trusted insight posted 2months ago 1667 views
Denise Strack has been the chief investment officer at the Gordon and Betty Moore Foundation since 2008. Previously, she served as the director of private equity and real assets at the foundation for six years. Prior to that, she was the director of private equity at Stanford Management Company and an engagement manager at McKinsey & Company. She holds a B.S. in Industrial Engineering from Stanford University and an MBA from Stanford Graduate School of Business.

In this interview, she discussed how having a disease prevention expert at the organization has benefited them during these times; how they are playing offense to take advantage of the current market opportunities; and why they plan to actively increase private market exposure over the next years.  

Denise Strack was named on Trusted Insight's 2020 Top 30 Foundation Chief Investment Officers.

Trusted Insight: Tell us about the Gordon and Betty Moore Foundation and its investment office dynamic.

Denise Strack: The Moore Foundation is a $7 billion foundation. The original grant was given by Gordon and Betty Moore, and Gordon was the founder of Intel. We've been around since 2001, so we are relatively young in the world of foundations. Our grantmaking is focused on three main areas: environment, science, and patient care. We're also a major donor to Bay Area science museums and land conservation.
 

"Our president Harvey Fineberg is a disease prevention expert and he chairs a committee advising the government on COVID-19. His insights and expertise benefit our team and our organization."


We are very focused on trying to make measurable, enduring long-term impact on important issues. We want to make a difference, and we want to be able to measure that difference. It’s a very thoughtful way of grantmaking and our investment office works very hard to support that effort. We have 10 investment professionals, and we align our investment program to support the foundation's grantmaking needs.

Trusted Insight: How has your team or and the foundation dealt with the COVID-19 pandemic both internally and externally?

Denise Strack: We've had two great things that were lined up in our favor. After the tsunami, we created a disaster preparedness plan and every year we revisit it. The plan is for both our investment office and processes, as well as technical support for the entire foundation. We've been thinking about this for 10 years. We certainly didn't know what the crisis would look like, and a global pandemic was not at all on our radar. In essence, our plan has supported the transition pretty seamlessly.

Our president Harvey Fineberg is a disease prevention expert and he chairs a committee advising the government on COVID-19. His insights and expertise benefit our team and our organization. We've been lucky.

Trusted Insight: You were with the organization during the 2008 crisis - do times like these look familiar to you? What’s different apart from the pandemic?

Denise Strack: I think it's always easier to go through these things the second time, rather than the first. This crisis, obviously, looks very different, but our team’s experience helps. We've done two things: make sure that our grant spending levels are thoughtfully and remain focused on the long-term. Where are their best uses and purposes for the money we are spending now and keeping flexibility for the next couple of years as none of us really know what the economic impact is going to be long-term and how that's going to play out in our investments. Keeping some flexibility for future years of grant-making is important right now.
 

"It's no surprise that private market vintages tend to be better during times of recession, rather than leading into it."


The second item relates to our endowment. Obviously, this all moved very swiftly in March and then has rebounded in April 2020. It's a lot easier to rebalance more diligently the second time around because we understand a bit more about the long-term nature of these types of corrections. Again, Harvey’s expertise is keeping us all pretty calm around COVID-19 issues and so we were able to stay true to our long-term strategy. We don't necessarily think this is over, but as a team, we are able to operate pretty efficiently in this environment.

Trusted Insight: You bring up a great point about having that long-term perspective when leading an investment office, but have there been any talks of rethinking the strategic asset allocation strategy?

Denise Strack: We've been thinking a lot for a while about increasing our private equity and venture capital allocations, but we were sort of waiting for a time like this. It's no surprise that private market vintages tend to be better during times of recession, rather than leading into it. An increase in our private market exposure is something we are actively going to do over the next couple of years.

Trusted Insight: There's a lot of debate on whether reducing/increasing exposure outside of the U.S. Are there any markets outside of the U.S. that your team is particularly excited about?

Denise Strack: We have a global portfolio. We're always looking for opportunities within the U.S. and outside the U.S. I don't believe that's changed. I don't think that we have any strong perspectives on a short-term tactical move around different geographies. We're just staying true to running a pretty global portfolio.

Trusted Insight: Would you say the Foundation is in a better position than most in taking advantage of the current market volatility?

Denise Strack: Well, we were fortunate we raised a decent amount of cash at the end of last year, so we came in with a pretty big cash position. We've been able to reach out to some managers that we haven't been able to access in the past and deploy capital. We are also more on the liquid side right now, which gives us a chance to take on more illiquidity at an opportune time.
 

"The question for a lot of folks right now is if there is a role for cryptocurrency in their portfolios. That is one that we're leaning on our managers to define for us. That could be an area that is going to evolve over the next decade for sure."


We are trying to deploy some capital in what we hope will be the winners for the next couple of years. Right now, we're playing mostly offense in trying to take advantage of that opportunity. We're fortunate that the other side of the business, the grant side of the business is relatively stable. We're not running a P&L where there's a massive loss of profits and we are not over-levered.

Trusted Insight: Do you find it beneficial to have many meetings and video calls throughout the day? How has interaction and communication changed for you?

Denise Strack: I think it has made our interactions with our investment managers more frequent and focused. It's also kept me very engaged with the grant side of the business to make sure we're all aligned. I know everybody is sitting in different situations right now based on how they entered this time in the market and how their organizations are coping with the stresses that are being placed on them. It’s less on the peers’ side, but definitely an increase in frequency with the investment managers.

Trusted Insight: What areas, topics keep you up at night? What are you trying to get a better grasp of?

Denise Strack: I think you guys do a nice job. The question for a lot of folks right now is if there is a role for cryptocurrency in their portfolios. That is one that we're leaning on our managers to define for us. That could be an area that is going to evolve over the next decade for sure.

View our full catalog of interviews here

The full list of 2020 Top 30 Foundation Chief Investment Officers can be found here
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