Cloverlay, a $1.3 billion asset manager with a successful niche in esoteric strategies, including investing in airplanes that fight wildfires, is attracting pension funds and other institutions looking for less-correlated portfolio holdings.
One of Cloverlay's successes is wildfire mitigation. Amid volatile weather patterns, the firm has invested in a fleet of planes that douse wildfires around the U.S. and other countries.
Cloverlay funds aim to return 15% annually and offer institutions a point of entry for investments less correlated to stocks and bonds. The manager is keen on small, inefficient transactions outside the scope of traditional private equity.
"There's no Sharpe ratio for what we do," said Jeffery N. Collins, managing partner. "Everything we invest in is very niche positions, but on a portfolio-wide basis it's independent of markets ripping or dropping. It's a slow steady walk upward, instead of being whipsawed by public marks."
The $14.9 billion New Mexico Educational Retirement Board, Santa Fe, invested $150 million in 2019 in a Cloverlay co-investment separately managed account and an additional $150 million the next year. The joint boards of the Fresno (Calif.) City Employees Retirement System and Fire and Police Retirement System, which oversee $3.6 billion, invested $35 million in Cloverlay Fund III last year. About 60% of Cloverlay's investors are pension funds, and another 30% are family offices and advisers.Mr. Collins, Cory Pulfrey and Christopher Rodzewicz founded the Conshohocken, Pa.-based firm in 2015. Today, partners Kendra Corbett and Mr. Collins are running the investment program. Mr. Pulfrey is a partner on the investment team who, prior to co-founding Cloverlay, was the head of 180-person, $35 billion division at Morgan Stanley Investment Management, and head of private equity at Weyerhauser's corporate pension fund.