Jay Willoughby on Manager Selection

Shai Dardashti, managing director of The Manual of Ideas, recently had the pleasure of interviewing Jay Willoughby, Chief Investment Officer of TIFF Advisory Services, based in Boston.

Prior to joining TIFF in 2015, Jay Willoughby spent four years as CIO of the State of Alaska’s roughly $50 billion sovereign wealth fund, the Alaska Permanent Fund. Previously, he was Co-Managing Partner at Ironbound Capital Management and spent nine years with Merrill Lynch Investment Managers LP as CIO, Private Investors Group; Head of Research for Equity Funds; and Senior Portfolio Manager, Merrill Lynch Real Estate Fund. He received a BA in biology from Pomona College and an MBA from Columbia University. Jay Willoughby is a CFA charterholder.

The following transcript has been edited for space and clarity.

MOI Global: Please elaborate on your organization’s mission and structure.

Jay Willoughby: TIFF is short for The Investment Fund for Foundations. It was formed in 1991 when a group of larger foundations, including the MacArthur Foundation and the Rockefeller Foundation, decided that smaller non-profits needed a way to pool their capital to become more effective investors. Many of the smaller charities couldn’t afford to hire their own investment staff. So TIFF was created to help point non-profits in the right direction, and we operate as a not-for-profit ourselves.

Our first endowment strategy was launched in 1995. We manage two complete endowment solutions, one offering daily liquidity and the other intermediate liquidity. Additionally, we run hedge fund strategies and private investment strategies. We work for approximately 700 member organizations in 43 states and oversee about $9.5 billion in AUM, including committed capital. All our members are non-profits.

MOI: Please tell us about your background and how you became interested in investing. Also, how did you come to be a part of TIFF?

Willoughby: I will tell you what got me started: I was a senior in high school and bought $1,000 worth of a stock in a company called Superior Oil Company of Nevada. A few years later, when I was a sophomore at Pomona College, I sold it for approximately $7,000 and it paid for a full year of college. I said, “Now this is the sort of thing that I want to do for the rest of my life!” After Pomona, I went straight to business school at Columbia, knowing full well what I wanted to do, which was be in the investment business. For the first three years or so after school, I was on sell side of the business and then starting in 1986 – so for 30 years now – I have been on the buy side.

For the first 25 of those 30 years, my job was to actually pick securities. Over my career, I’ve managed money market funds, government bond funds, corporate bond funds, equity funds, and funds focused on Real Estate Investment Trusts. I have also managed exchange funds – a type of a tax structure – not to be confused with ETFs. I never did private equity, but I managed pretty much all kinds of assets throughout the first 25 years of my career.

In late 2010/early 2011, I was the co-managing partner of a hedge fund when the managing partner decided that his health wasn’t what he wanted it to be – so we shut the hedge fund down and I started managing my own capital. That gets pretty boring pretty fast if you are a value-oriented guy, so another friend of mine said, “Hey, there is this CIO job in Alaska at the Alaska Permanent Fund that you should apply for”. To make a long story short – I did apply, and I got the job, and so in the second half of 2011 my wife and I moved to Juneau, Alaska. I managed the Alaska Permanent Fund, which is the state’s sovereign wealth fund, for four years before moving back to Boston, where we had lived back in the mid-1990s, to join TIFF.

MOI: You’ve called yourself a “value-oriented guy”, is this a Charlie Munger business-quality orientation or a Benjamin Graham asset-focus? Where do you put yourself on the value spectrum?

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