RENO, Nev. -- When Barron Hilton begins to invest the $700 million in trust money he reaps from the sale of his 24 million shares of Hilton Hotels Corp., he might use the $500 million portfolio of the Conrad N. Hilton Foundation as a basis for his choices.
Mr. Hilton, chairman of Hilton Hotels and the sole trustee of a charitable trust that until now held only Hilton stock, filed plans with the Securities and Exchange Commission earlier this month saying he would liquidate the trust to diversify his holdings.
Mr. Hilton receives 60% of the trust's income, while the Conrad N. Hilton Foundation, named after his father, receives the remaining 40%. Upon Mr. Hilton's death, the foundation will receive all the assets in the trust, but not before 2009.
Mr. Hilton declined to be interviewed.
Pat Modugno, vice president of the Reno-based foundation, said that, as a trustee, Mr. Hilton might coordinate his investment strategy with that of the foundation.
"Once the trust's assets are invested, we might modify how we have ours invested. Since we have interests in common, we'll watch how he is investing." Mr. Modugno said he expects Mr. Hilton might consult with the foundation's consultant, Cambridge Associates, so there would be some coordination between the two portfolios.
The added income that flows to the foundation from the sale will be used for operations and annual grants, Mr. Modugno said. The mandate of the foundation, which was started in 1944, is to give grants amounting to 5% of assets each year.
The foundation's portfolios are managed externally by six investment managers. The foundation's current overall asset allocation is 25% fixed income and 75% equities.
The managers are: Miller Anderson & Sherrerd, which is running $105 million in fixed income; Grantham, Mayo, Van Otterloo & Co., which manages $129 million in a variety of equity strategies in pooled funds; Westcap Investors, $16 million in a convertible preferred strategy; William D. Witter, $48 million in small-cap growth; Dalton, Greiner, Hartman, Maher & Co., $80 million in a balanced strategy with a growth bias; and Pacific Financial Research, $130 million in a balanced portfolio with a value bias.
Miller Anderson has been given wide latitude to invest in a range of fixed-income investments, Mr. Modugno said.
"It's their call whether to move into corporates, mortgage-backed or international bonds, but there are limitations as to how much they can put in each strategy," he said.
The foundation has no specific international allocation, but Grantham Mayo has the authority to invest as much as 25% of its portfolio in international assets.
In 1997, the foundation's investments returned just less than 25%, compared with Cambridge Associates' index of 50 foundations, which returned 16.9% for the year.
The foundation gives away $20 million to $25 million each year to support causes that help alleviate human suffering.
Some of the bigger projects that have been beneficiaries of the foundation are the Perkins School for the Blind; international water development in Ghana; model legislation on domestic violence; and Project ALERT, a substance abuse education program.