Page 42 - July JSF report

INVESTMENT COMMITTEE MEETING MINUTES (DRAFT) (5)
related strong inflows from MAP of $463,932, ARCM IV of $747,063 and True Green $787,419 accounting
for this unexpected situation. JSF is still budgeting for new monthly Private Capital outflows of $100,000.
7. Planned Investment Activity and Cash Flow Forecast – In June the previously approved sale of three Vanguard Equity ETFs totaling $4.5 mill will take place. These funds will be utilized to cover upcoming grant outflows. Funds from the final redemption from Cat Rock on June 30, 2023 totaling about $1.1 mill will be utilized to increase the Junto Capital hedge fund investment by $1 mill. A $1.2 mill top up investment in hedge fund Farallon Capital Offshore is planned for the 2023 year end. Prime is happy with JSF’s line up of four core hedge funds (low risk) plus a smaller position in OrbiMed – a biotech hedge fund.
The only new investment transaction recommended by Prime is the sale of the $4.3 mill Vanguard Short Term TIPS fund to increase JSF’s cash position. The TIPS investment has performed well over the last year and Prime favours holding zero risk cash with a yield of 5%+ currently. The Committee agreed with this recommendation.
JSF’s cash balance as at May 25/23 was $2.2 mill. Over the following five-month period cash outflows are expected to total $6.1 mill including: grants of $4.8 mill; net Private Capital outflows of $0.5 mill; and operating expenses of $0.8 mill. Funds raised from the redemption of the three Vanguard equity ETFs will total $4.5 mill plus $4.3 mill will be raised from the TIPS sale. This should leave the cash balance around $4.9 mill by the end of October 2023.
8. Regional Banking Crisis – The failure of three large regional US banks – Silicon Valley Bank, Signature Bank, and Republic National Bank is not expected to have a direct material impact on JSF. On a macro basis Prime expects:
- Due to funding issues credit availability from smaller regional banks to be constrained adversely impacting local economies;
- Regulation regarding regional banks to be tightened;
- Consolidation activity in the banking sector to increase; and
- Non regulated shadow banks to increase their lending activity in general.
9. Adage Manager Update – 9:45 to 10:30am – JSF’s investment in the Adage Capital Partners fund at $47.5 mill or 19.3% of the JSF portfolio is by far the Foundation’s largest single exposure. This investment, which dates back 14 years to 2009 has also been an exceptional performer generating an annual net return of 16.1% over this period outperforming its benchmark (S&P 500) by 2.3% annually. During this 14-year period Adage has only underperformed its benchmark twice on an annual basis. Among JSF’s various material investments only MAP comes close to the Adage performance record.
The Committee asked for and Prime (an early backer of Adage) arranged an in-person meeting with Adage who was represented by Dan Lehan, Partner and Chief Operating Officer and Daniele Serafini, Director of Client Services. Both have been with Adage since inception in 2001. They said this was their first out of office, in person client meeting in 3 years when COVID shut them down. Just as background
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