University of Michigan, Ann Arbor, will invest up to $35 million from its $8.5 billion long-term endowment portfolio in long/short equity hedge fund Brenner West Capital Partners, managed by Brenner West Capital Advisors.
UM regents approved the investment at their meeting Thursday, according to meeting materials.
The hedge fund uses a long-biased, value-oriented strategy with low to no leverage and is fairly concentrated, holding 15 to 20 mostly U.S. and European equities, said Timothy P. Slottow, the university's executive vice president and chief financial officer, in an investment recommendation to the board of regents.
Also approved by regents was an initial $20 million commitment to Merlone Geier Partners XI, a real estate fund focused on U.S. retail properties on the West Coast, according to a report from Mr. Slottow.
Mr. Slottow recommended the hire of Fischer Francis Trees & Watts to actively manage the U.S. Treasury inflation-protected securities within the university's operating capital pool. Regents approved the move, which shifts the TIPS portfolio to active management from passive.
A telephone message left for Erik Lundberg, UM's chief investment officer, about the size of the TIPS portfolio, the previous manager of the passive strategy and the size of the operating pool was not returned. The message was passed to Rick Fitzgerald, a university spokesman, who did not provide the information in response to several e-mail requests.
Regents also received information about a total of $30 million in commitments to alternative investment funds that were made by the endowment's investment staff, according to a meeting report from Mr. Slottow.
UM committed $15 million to Phoenix Property Investors V, managed by Hong Kong-based Phoenix Advisors, Mr. Slottow said in his report. The fund will invest in diversified properties in Asian cities including Hong Kong, Taipei, Macau and Singapore. An additional $10 million was approved for possible co-investment opportunities.
Yorktown Energy Partners X was awarded a $15 million commitment, according to Mr. Slottow's presentation, for private equity investments in a “broad range of energy companies, primarily in the exploration and production, transportation, marketing and other midstream and manufacturing sectors.”