(212) 729-5067 FAMILY OFFICE MONTHLY June 2015 Upcoming Family Office Conferences in 2015 Family Office CIO Summit elcome to the June edition of Family Office Monthly. We have compiled a number of August 6th, NYC Wgreat articles for this month’s edition. We are preparing for the August conference series, with the Family Office CIO Summit and Real Estate Allocator Summit being held on August th6 th and 7 , respectively. Real Estate Beyond the events, we hope you access our extensive family office resources such asFamily Allocator Summit Office Monthly, database solutions, family office training programs, webinars, and more. If you th would like to learn more about how we can work with you and your family office, please contact August 7 , NYC our client services specialists at [email protected] and by phone (212) 729-5067. Family Office Chasing the Blood in the Streets The Business of Private Service Super Summit It has been interesting to watch institutional Administratively, I had never thought of December 1st & 2nd, and family office investors’ reactions to the myself as particularly skilled. I was indeed an sharp drop in oil prices this year. This has entrepreneur, and had a very clear vision of Miami served as another reminder to me of how what I was to accomplish, but the administra- important it is for investors to look around at tive ... Page 6 what their peers are investing in... Page 2 Family Offices Advocate Clean- Thyssen Family Office Acquires Tech to White House Reserve your seat today Majority stake in Petrolvalves The wealthy individuals and families that back www.WilsonConferences.com TBG Holdings, a family office investment ve- the world’s family offices are often capturing hicle linked to the Thyssen-Bornemiza family, headlines but it is rare to see several family has inked a deal to acquire the Italian valve offices uniting to publicly advocate a position. maker Petrolvalves... Page 4 ...Page 7 www.FamilyOffices.com E-Mail: [email protected] CHASING THE BLOOD IN THE STREETS The Single It has been interesting to watch institutional and family office investors’ reactions to Family Office the sharp drop in oil prices this year.This has served as another reminder to me of how important it is for investors to look around at what their peers are investing in. You can order your copy of this Single Family Office book on Amazon here: http:// www.amazon.com/The-Sin- gle-Family-Office-Investments/ dp/1503345033/ If you want to listen to one of the interviews included in this book, visit SingleFamilyOffices. com/audio2 to download a free mp3 recording. Looking to meet other single family offices in person? The Family Offices Group hosts While it is almost painful to write “buy low, sell jobs, and protecting their portfolio against the many live conferences through- high” or “invest when there is blood on the streets” as unknown and against a further drop in value. out the year in great locations it may feel overly simplistic and a lesson pulled One endowment fund said “we follow the other big like Manhattan, Singapore, and from Investing 101. Yet it can be easy to aban- endowments funds and allocate to large asset managers, Miami. At least once a year, we don such a time-tested principle in today’s 24/7 the board can’t really fire us for doing what everyone else host an exclusive gathering for financial news cycle, where alarmist stories repeat is doing.” single family offices and affluent in the echo chambers online, on-TV and in the families to meet, share experi- newspapers. Over the last 6 months, I have spo- A $5B+ private equity fund said in response to ences, and build relationships. ken to over 50 institutional investors and family a manufacturing business for sale that served offices regarding their oil and gas investments, the oil and gas space “we are over-exposed there, with the majority of these investors manage over the recent drop in oil prices we are investing elsewhere.” $1B+ in assets. Finally, another family office literally laughed out- loud during a discussion of whether an oil and My conversations with these investors took place gas services business would be a good invest- at our live quarterly conferences, over coffee, ment at this time; the executive acted like it was dinners, and meetings with CIOs in their offices. ludicrous to even talk about given what has just When asked, less than 10% of these investors happened. were still allocating into the oil and gas industry at all, or had a plan for navigating it, the rest were To each investor their own opinion, but as some- If you would like to be con- simply turning their backs, selling, or had hit the one who gets to consistently speak with alloca- sidered for membership (free pause button for now on that portion of their tors, it is fascinating to see how few sophisticated to single family offices) please direct investment portfolio. portfolio managers want to navigate an industry contact us: which has taken a beating. A sparse few investors One would think that portfolio managers would are willing to either buy at a lower price, or price E-Mail: see investing after a big drop as a good time to risk of further oil price drops or revenue stability [email protected] invest, but most groups from $1B+ corporate into a deal—or even have that conversation. Telephone: (212) 729-5067. venture funds to large endowment fund man- agers were more worried about keeping their Most seem more interested in waiting for another 2 | Family Office Monthly (212) 729-5067 steady-and-sure momentum play led by the It is obvious that a 3rd generation oil and mega funds and allocators. There have been gas industry family could navigate the oil a few examples of large private equity and and gas business better than a diversified hedge funds entering the market, hoping to and under-resourced endowment fund CIO. scoop up distressed assets like several firms What is not obvious is how a cutting-edge FAMILY did in the financial crisis and the housing endowment fund or diversified family office collapse. can tap into that 3rd generation exper- tise the next time there is a collapse in a OFFICE Carlyle Group, for example, is looking for commodity price or shakeup within a niche opportunities to buy cash-strapped energy industry. companies, in a bet that oil has bottomed. Instead of diving into other areas, Carlyle Sometimes piggybacking on another inves- TRAINING raised a $2.5 billion energy fund so that tor’s expertise is attempted through niche it has plenty of dry powder available to private equity and hedge fund offerings, put to work in energy. In a June interview separately managed accounts, co-investment Did you know that you can with Bloomberg, Carlyle Group’s president and club deal structures, or independent access great family office inter- Glenn Youngkin, remarked of oil’s more sponsors. Many times though, the opportu- than 50% price plunge, “Everybody concluded nity to collaborate is missed due to the fees, views and other training resourc- it’s the opportunity of a lifetime.”1 According to lack of credible options, and inefficiencies es with your enrollment in the the Global Private Equity Barometer, a 2015 involved in each of those options. Qualified Family Office Profes- survey by Coller Capital, nearly half of U.S. sional (QFOP) program. investors in private equity expect to allocate In short, it is easy to talk about investing money into oil and gas funds over the next when there is “blood on the streets,” but these The QFOP is the only family 3 years.2 investments are rarely made in my experi- ence working among institutional investors. office training program designed These examples show that some investors I have no magical formula or solution to for family office professionals, by are willing to look seriously at the sector, in pitch, and I never make investment recom- family office professionals. stark contrast to my recent conversations mendations without considering the suit- with wealth managers and family offices ability of the investment to the investor, but who hardly consider the sector at all now. it is interesting to see everyone’s reaction to what has happened in the oil industry lately. Naturally, this pullback is partly due to these portfolio managers being investors in the oil In times like these, it’s worth reflecting on and gas space, but not experts or industry the impact of having niche industry exper- veterans of it. That reluctance connects tise on your investment team and consider- to another trend I’ve written on several ing how your team is allocating capital and times before: that out of the 70+ billionaire valuing opportunities. families I know, many of the most success- Our goal is to provide as much ful families have made their wealth in 1-2 Please note: I have no value investing angle education and resources on the industries and have continued to grow their to push, I have no oil and gas holdings at family office industry as possible wealth most aggressively by dominating the time of this writing, I do not represent and the QFOP is the most com- those same niche industries. an oil and gas fund, I have no oil and gas prehensive family office training conferences coming up, I have no embed- platform available. 1. Carey, David; Schatzker. “Carlyle’s Youngkin Feels Short Next to ded interest in promoting the industry, I Blackstone’s ‘Wizards.’” June 4, 2015.