Lou Morrell wasted no time putting money into Convexity Capital Management LP after Jack Meyer, the former Harvard University chief investment officer, started the firm in 2005.
Mr. Morrell, who was CIO at Wake Forest University in Winston-Salem, N.C., flew to Boston to visit Mr. Meyer at his new offices. Mr. Meyer, flanked by top lieutenant David Mittelman, explained how they would offer strategies similar to those they used to quintuple assets from 1990 at the world's richest university.
“He brought Mittelman in there and talked about strategies and how the whole thing worked and the next thing we knew, we were an investor,” Mr. Morrell, who retired last year, said in a telephone interview. Mr. Meyer's fund “was totally committed in a few days,” Mr. Morrell said.
Since he began trading in February 2006, Mr. Meyer's returns have exceeded a group of market indexes by an annual average of about eight percentage points, or double Convexity's target, according to four investors. The firm, which attracted a record $6.3 billion from endowments and foundations as a hedge fund startup, had $11.1 billion in assets as of March 31, said the clients, who asked not to be named because the firm is private.
Harvard Management Co., which runs the university's endowment, had an annual average gain of 4.7% over the past five years, compared with a 3% increase for its internal benchmark.