University of Michigan, Ann Arbor, invested or committed an aggregate $180 million to three funds run by money managers new to the school's $9.9 billion long-term endowment pool.
At a meeting Thursday, UM regents, who oversee endowment investment, approved the recommendations of investment officers to invest in two hedge funds.
Baker Brothers Advisors received $100 million for investment in the Baker Brothers Life Sciences fund, which focuses on finding opportunities in public and private life sciences companies.
“Baker Brothers will scale positions over time and concentrate the portfolio in companies where they see the potential for large capital appreciation,” said Kevin P. Hegarty, executive vice president and chief financial officer, in a report to regents.
Regents also invested $50 million in Spectrum Fund, managed by Kaleidoscope Capital. The hedge fund's strategy uses futures to trade put and call options on global equity indexes. Kaleidoscope's Spectrum team identifies options that are mispriced and takes long or short positions that will make money when the options move toward fair value or expire, said Mr. Hegarty's report about the fund.
Regents also approved a $30 million commitment to Grey Rock Energy Fund II, managed by Grey Rock Energy Partners. The fund will invest in non-operated working interests in core North American oil and gas properties.
Non-operated interests in oil and production wells often are held by many owners who pay pro-rata costs for drilling in exchange for a pro-rata shares of revenue, but declining energy prices mean many owners can't pay their share of drilling costs.
“Grey Rock is able to take advantage of the distress and acquire assets in attractive locations at discounted prices,” Mr. Hegarty's description of the fund said.