Berkshire Taconic Community Foundation

Investment Managers

Berkshire Taconic strives to achieve excellence in its investments by researching and employing top specialists in each asset class. As of December 31, 2012 the $95 million invested in our Managed Pool is allocated to 49.5% global public equity, 7.1% global private equity, 14.6% flexible capital, 15.9% credit strategies, 6.3% inflation hedging and 6.4% liquid capital.

Adage Capital Management
Boston, MA
Adage was formed in 2001 by a team from Harvard Management Company. Adage has $11 billion under management. Adage uses a risk-controlled, industry-neutral, analyst-driven approach to large cap equity investing. The Foundation invested with Adage in 2008.

Ashmore Investment Management Limited
London, U.K.
Ashmore was established in 1992 and is a fund and segregated account manager with a focus on the emerging markets fixed income asset class and currencies. Total assets under management exceed $26 billion. In 2004, the Foundation invested in the Emerging Markets Liquid Investment Portfolio (EMLIP).

The Commonfund
Wilton, CT
This investment organization, founded in 1971, is an experienced partner in investment management for nonprofit organizations. The Commonfund is the largest investment manger for nonprofit endowments in the U.S. with over $37 billion under management. Berkshire Taconic began its investment in 2001 by participating in the Commonfund’s Alternative Investment “Capital Partners” which is a fund of funds with a total subscription of $250 million. This investment provides access to Venture Capital, Private Equity and International Private Capital opportunities. In 2007, Berkshire Taconic made an additional commitment to Commonfund’s Private Equity Partners Fund, a fund of funds with a total subscription of $83.9 million.

Davidson Kempner Advisors
New York, NY
Davidson Kempner (DK) manages $18 billion and is a multi-strategy firm that emphasizes bottom up research applied primarily to merger arbitrage and distressed securities investing. Merger arbitrage investments tend to be made in announced deals only and distressed investments tend to be in senior secured notes. Diversification is emphasized by holding 40-65 individual investment ideas each comprised of multiple securities. DK utilizes a conservative investment philosophy as it seeks to produce absolute returns with a high priority on capital preservation. The portfolio has been conservatively positioned with regard to leverage, volatility, and seniority in the capital structure. They tend to invest in safe and predictable deals in an effort to manage risk and liquidity. The firm’s partners are very involved in the trading of the portfolio and have over 80% of their net worth invested side by side with clients. Berkshire Taconic invested $3 million on October 1, 2012.

Dodge & Cox
San Francisco, CA
Dodge & Cox was founded in 1930 and manages over $142 billion in mutual fund and private accounts. The Foundation invested in the International Stock Fund in March, 2005. The fund invests in a diversified portfolio of equity securities issued by non-U.S. companies from at least three different foreign countries, including emerging markets. The fund invests primarily in medium-to-large well established companies based on standards of the applicable market.

Elliott International Limited
Grand Cayman, Cayman Islands
Elliott International is a limited partnership created in 1994. The majority of the portfolio is invested in distressed securities and hedge/arbitrage positions. Elliott currently has assets of $7 billion. The Foundation subscribed to Elliot in 2001.

Farallon Capital Management LLC
San Francisco, CA
Farallon was founded in 1986 and manages over $26 billion. Berkshire Taconic committed $5 million to Farallon Capital Institutional Partners, L. P. in 2007. The fund seeks to preserve capital while producing above market returns without the volatility normally associated with the equity markets. Investments are event driven and associated with extraordinary corporate actions with predictable outcomes. Areas of focus include: risk arbitrage, distressed credit investments, real estate related investments, distressed convertibles, private equity and special situations. Farallon Capital Institutional Partners, L. P. has assets of $6.3 billion.

Geneva Capital Management
Milwaukee, WI
Geneva Capital Management has assets under management of $2.6 billion. Berkshire Taconic is invested in their mid cap equity growth strategy. The strategy seeks to deliver long-term appreciation by investing in medium capitalization stocks ($1 billion to $12 billion). Geneva seeks to invest in high quality companies with consistent record of growth. The process seeks businesses that are industry leaders with sustainable competitive advantages. Geneva searches for companies with experienced management and a proven track record, solid financials (low leverage, a high return on equity and return on assets, and strong historical earnings per share growth rate). The team uses a proprietary earnings discount valuation model to assess a stock’s valuation relative to its industry, the market and the portfolio. As part of risk management, Geneva seeks to avoid high risk companies such as IPO’s, turnarounds, companies with a short operating history, and stocks with a volatile price history. Portfolio construction is bottom-up but a top down perspective is incorporated. Geneva invests with the intention of holding a stock for the long term and has historically had an average holding period of five years. The portfolio has on average 45 to 55 holdings.

Highclere International Investors
London, U.K.
Highclere International Investors focuses exclusively on managing an international small cap portfolio. The firm has $586 million in assets. The company was established in 2006 and is based in London. The key investment professionals ran Wellington’s International Small Cap strategy from 1997 to 2005. Highclere’s investment process focuses on investment opportunities in the $50 million to $5 billion range, with a higher concentration on the smaller, micro-cap names. Highclere seeks long-term growth of capital with a focus on absolute return and downside protection.

Highline Capital
New York, NY.
Highline Capital was established in 1995 with main offices in New York City. The investment company has $1.9 billion in assets with $932 million in the long short fund. Highline Capital seeks long-term capital appreciation coincident with conservative portfolio structure and thoughtful risk management. Highline’s research process is based on their belief that value is often created or destroyed when a company or industry undergoes some form of transformation. Highline seeks out investment opportunities combining structural change, strategic change and financial change such as major product launches, legislative developments, spin-offs, restructurings and accounting red flags. Highline focuses on proprietary research, utilizing a network of sources including industry consultants and CEO-level LPs. Investments typically fall into one of five buckets: contrarian long, event-driven, thematic, paired trades and short sales.

Kinderhook Industries
New York, NY
Berkshire Taconic committed to Kinderhook Capital Fund II, L.P. Fund II in February 2007 which makes equity and equity-like investments in companies within a $10 - $50 million valuation range and seeks acquisitions of orphaned non-core divisions of corporate parents, management buyouts of entrepreneurial-owned businesses where the founder is no longer active and acquisitions of platforms where the infusion of capital and management can accelerate growth rates.

Lexington Capital Partners VII, L.P.
New York, NY
Berkshire Taconic committed $1 million in capital to Lexington Capital Partners in December 2009. This fund focuses on the purchase of privately negotiated secondary positions in domestic and international venture capital (20-25%), buyout (70-75%), and mezzanine funds (0-5%). The Fund seeks to provide access to previously offered private equity partnerships and achieve superior risk adjusted returns of 25%+(net). Lexington believes that private equity investors are trending to more active management of their portfolios, which increases the volume of the secondary market.

Loomis, Sayles & Company
Boston, MA
Loomis, located in Boston, has assets of $115 billion under management. The company uses a value-oriented total return approach to fixed income and seeks to identify securities that are increasing in credit quality and are non-market issues. The manager utilizes interest rate anticipation as an alpha generating strategy. Berkshire Taconic hired Loomis Sayles in January 2008.

Mondrian Investment Partners
London, U.K.
Mondrian Investment Partners manages $62 billion in assets. The company was formed in 2004 and is based in London. The International Small Cap Equity portfolio has $1.2 billion in assets. Mondrian implements a value-oriented defensive investment approach with a strong focus on attractive long-term dividend flow, rigorous dividend discount analysis, and future real growth. Mondrian’s investment process involves a combination of top down research (20%) to determine a range of country allocations and currency movements and bottom-up security research (80% of the process) for assessing individual companies. 89% of the portfolio is invested in Europe. Average capitalization of the 70 to 120 holdings is below $3-$5 million.

Oaktree Capital Management LLC
Los Angeles, CA
Oaktree Principal Fund V, LP makes investments primarily in equity, equity-related, and debt obligations of corporations, partnerships, limited liability companies, and other similar entities that management believes are undervalued, offer an opportunity for growth if funded appropriately, and provide an attractive risk/return profile. The Fund generally will attempt to structure its investments with the goal of obtaining control of, or significant influence in, such companies. The Fund concentrates its core investments in approximately 20 to 30 companies. Berkshire Taconic committed $2 million in November 2009.

Pacific Investment Management Co.
Newport Beach, CA
PIMCO, founded in 1971, is one of the world’s largest active bond managers with over $667 billion in assets under active management. Berkshire Taconic invested its Income Pool in PIMCO’s Total Return Fund, a broad market bond fund, in 2002 and our Managed Pool in 2003. The Total Return Fund has assets over $100 billion. Berkshire Taconic’s Socially Responsible Investment Pool is 40% invested in the Total Return III Fund which also seeks maximum total return, consistent with preservation of capital with a primary portfolio of intermediate-term fixed income securities with a concentration on socially conscious companies.

Prince Street Capital
New York, NY
Prince Street Capital is an investment management firm focused on global emerging and frontier market investments. Prince Street manages Long-Short, Absolute Return, Flexible Balanced and Long Only Strategies. The office is headquartered in New York with a research office in Singapore. The firm has $250 million in assets and was established in 2001 by David Halpert and Peter McKown. Investment ideas are typically self-generated by the investment team through a continuous cycle of research, in-country visits and company management dialogue. Prince Street looks for companies with a competitive advantage to their domestic and global peers. Investment ideas are screened for liquidity, valuation and corporate governance progress before being placed in the portfolio. Berkshire Taconic committed $1.5 million to this strategy in September 2010 and $2 million in April 2011.

Stralem & Company
New York, NY
Stralem & Company, Inc is a privately owned, independent asset management firm founded in 1966 and has $2.1 billion under management. Stralem’s flagship product is its US Large-Cap Equity Strategy. Stralem believes there are four distinct phases to a market cycle. By correctly identifying a particular phase and appropriately structuring portfolios, Stralem has successfully navigated changing market environments. Strong fundamental research, coupled with consistent use of a proprietary Relative Growth Valuation Model, provides the framework for stock selection and risk management at Stralem. The investment approach is centralized, disciplined and dynamic and has delivered strong performance across varied markets. Berkshire Taconic invested with Stralem in April 2008.

TAMRO Capital Partners LLC
Alexandria, VA
Tamro capital Partners, LLC has assets under management of $1.6 billion. Tamro seeks to provide long-term capital appreciation by investing in small capitalization stocks ($250 million to $2.75 billion). Tamro attempts to identify companies experiencing positive dynamic change that is not yet reflected in their stock price. Tamro builds its portfolio around companies it believes have sustainable competitive advantages and attractive valuations. An initial screen scores stocks on valuation and improving earnings expectations creating a focus list for industry research. Candidates for further analysis are categorized on industry dynamics as Leaders, Laggards, and Innovators. Tamro calculates the potential reward and risk to each position and invests in only those whose upside potential is 3x greater than the downside risk. Stocks are sold as the reward-to-risk ratio diminishes, should Tamro lose confidence in the management team, or if more attractive opportunities arise. The portfolio has on average 50 to 70 holdings.

Thornburg Investment Management
Santa Fe, NM
Thornburg, located in Santa Fe, New Mexico has $44 billion in assets under management. The international portfolio consists of 80% developed countries (55% EAFE ex-Japan, 9.2% Japan, 16.7% US and Canada) and 20% emerging markets. The investment discipline is bottom-up, conservative and fundamental. They are looking to uncover promising companies with sound business fundamentals at a time when their intrinsic value is not fully recognized (out of favor). Berkshire Taconic hired Thornburg in December 2007.

The Vanguard Group
Wayne, PA
Berkshire Taconic invests in a variety of Vanguard funds to meet diversification needs. Vanguard Inflation-Protected Securities Fund seeks to provide inflation protection and income consistent with an investment in inflation indexed securities. The fund invests in high-quality inflation-indexed bonds issued by the U.S. Treasury and government agencies as well as domestic corporations. Principal and interest payments are adjusted quarterly in response to changes in inflation. The fund maintains a dollar-weighted average maturity of 7 to 20 years.

Vanguard Emerging Markets ETF invests in stocks of companies in emerging markets around the world such as China, Brazil, Taiwan and South Africa. The goal of the fund is to track the return of the FTSE Emerging Transition Index.

Vanguard’s FTSE Social Index Fund is a low cost fund that seeks to track a benchmark of large – and mid-capitalization stocks that have been screened for certain social, human rights, and environmental criteria. Berkshire Taconic’s Socially Responsible Investment Pool is 60% invested in this fund.