How I Invest with David Weisburd
Episode E334: Texas Tech CIO—How We Find Asymmetric Bets
Date: March 26, 2026
Guest: Tim, CIO of Texas Tech’s Endowment
Host: David Weisburd
Overview
This episode delves into Tim’s approach as Chief Investment Officer of Texas Tech’s endowment, covering how his team identifies asymmetric opportunities (especially in maligned sectors like office real estate), the power of governance and nimbleness, the shift away from traditional endowment models, co-investment strategy, constructing resilient and compounding portfolios, talent management philosophies, and navigating hedge fund fees. The conversation is candid, features practical frameworks, and highlights “anti-consensus” institutional investing.
Key Discussion Points and Insights
1. Asymmetric Bets in Unpopular Asset Classes
Main Theme: Sifting through negative headlines to find overlooked opportunities.
- Office Real Estate Contrarian View
- Tim is bullish on high-quality office assets in specific Texas markets, despite negative headlines about the sector nationwide.
- Focuses are on trophy assets in growth areas (e.g., Dallas, Plano), which trade at discounts and benefit from a flight to quality.
- Quote:
- “Our job as investors is to dig beneath that headline and see if there really is opportunity… we think there's a unique opportunity to buy at a discount to replacement cost.” — Tim (00:11)
- Identifies the classic rule: real alpha often lies one or two layers beneath the prevailing narrative.
- Quote:
- “If we can talk about real estate… just about any asset class you're thinking about, the pain part… is usually talked about pretty quickly… that's the canary in the coal mine for an investor to go look at his portfolio.” — Tim (01:08)
- Quote:
2. The Critical Role of Governance
Main Theme: Governance structure enables rapid, conviction-led investing.
- Texas Tech’s endowment governance structure empowers the CIO directly—allowing for swift trades (including co-investments and shifts into new strategies).
- Quote:
- “We don't go to an investment committee for approval… we're able to quickly do a co-investment if one comes across our play that we really like or if we want to go into office, we can do that.” — Tim (02:14)
- Contrasts with the slow-moving processes of larger, more bureaucratic funds, giving Texas Tech’s team a critical edge.
- Accountability is at the total portfolio level benchmarked against a global 65/35 portfolio, not at the sub-asset level.
3. Portfolio Construction: Departing from the “Endowment Model”
Main Theme: Purposeful deviation from rigid endowment norms.
- Texas Tech is pivoting away from venture capital in favor of lower middle market buyouts for more stable and underwritable returns.
- This approach leads to less volatility and greater consistency, both to satisfy stakeholders and to manage portfolio risk relative to benchmarks (ACWI + 100 for growth assets).
- Quote:
- “We actually don't even like that model. So we're probably anti-endowment in that regard. And we're lowering our venture capital exposure pretty dramatically in favor of what we think is a more consistent returning asset.” — Tim (06:58)
- Candid admission that venture’s spikiness is politically stressful and not ideal with their benchmarking and governance structure.
4. Manager Selection and Co-Investment
Main Theme: Partnering deeply with managers and rigorously filtering opportunities.
- Senior team members are in frequent dialogue with managers (quarterly or more), seeking best ideas and evaluating market intelligence.
- Quote:
- “The manager selection and partnering with managers is probably one of the most critical things that we do. Right. That's how we get our alpha…” — Tim (08:55)
- Example of getting GP economics and co-investment rights by seeding a small European secondary manager (09:12).
- Emphasis on seeking asymmetric co-investments—locked-in contracts, clear upside, downside limited (not the venture “zero or 10x” lottery).
- Recent focus: fewer but higher conviction co-invests with actual asymmetry (e.g., technical manufacturing with DOD contracts—“sticky money”) (12:35).
- Avoids co-investments likely to yield “zeros”—prefers downside in single digits, upside of 30-50% IRR or 3-5x, rare attempt at 10x.
5. Consistency vs. High Variance
Main Theme: Portfolio stability > chasing lottery returns.
- Maintaining stakeholder trust and personal job security means prioritizing consistent outperformance over benchmarks.
- Benchmarking structure avoids the pressure to track the peer group’s sub-asset allocations (e.g., no forced 30% venture exposure).
- Quote:
- “What they want to see is consistent outperformance over the benchmarks. And as soon as you introduce a ton of venture, that volatility… creates a lot of stress on the time and a lot of political stress.” — Tim (15:05)
- References sustainability of strategy as underrated; spiky portfolios risk abrupt, value-destructive transitions during leadership change (16:48).
6. Contemporary Portfolio Tools: Portable Alpha
Main Theme: Portable alpha demystified, and its governance implications.
- Portable alpha: synthetically gaining market exposure (e.g., via swaps) while allocating freed-up capital to uncorrelated hedge funds and Treasuries.
- Ensures portfolio robustness—stresses downside risk and low correlation over chasing maximum return.
- Quote:
- “When you build an alpha pool, you build it based on drawdown, risk and correlations. You don't build it to maximize returns.” — Tim (24:12)
- Requires governance latitude to dial beta exposure down rapidly during market crises.
- Not everyone can execute this—governance and risk infrastructure are must-haves.
7. Leveraging Size—The Goldilocks Advantage
Main Theme: Being “just big enough” offers major investing advantages.
- At $3.3B, Texas Tech can move the needle with niche managers and strategies that are too small for mega-funds, but are meaningful to the portfolio.
- Quote:
- “We almost have a Goldilocks portfolio. I think anywhere around 3 to 5 billion is an amazing portfolio to run… we can do a lot of things that move the needle...” — Tim (25:48)
- Size and governance allow for rapid, nimble investments in off-the-run opportunities.
8. Team Structure and Talent Philosophy
Main Theme: Building for total portfolio thinking and cultural fit.
- Generalist model: Team members cover multiple asset classes, enabling dynamic capital allocation and avoiding sector “tunnel vision.”
- Quote:
- “If I have a specialist in health care, health care is always going to look good… he's not thinking about industrials, he's not thinking about real estate… What we want is the best risk adjusted return.” — Tim (27:03)
- Quote:
- Deep partnership with external (hyper-specialist) managers, but in-house, broad generalists drive total portfolio strategy.
- Recent learning: Technical skills are table stakes; culture and drive are the differentiators he now emphasizes in hiring (“I can teach someone how to invest… what is hard to teach is culture and fit,” 29:27).
- Open, flat communication structure and team-based incentive scheme: bonuses tied to multi-year outperformance, sharp ratio, individual behavior/cultural fit.
- Quote:
- “Everybody comes to work for me and says hey, this is important. 30% of your bonus is going to be based on how you operate as a team member… If I don't see that, you don't get that bonus.” — Tim (31:44)
- Quote:
9. Hedge Fund Fees & Efficient Alpha
Main Theme: Fees are justifiable—if net, uncorrelated alpha is real.
- Happy to pay for “true idiosyncratic” returns—uncorrelated alpha that can’t be reproduced with beta exposure.
- Not willing to pay high fees for simple beta or “pseudo-alpha.”
- Quote:
- “If somebody can really deliver true IDO return, that's worth paying for… what's not worth paying for in my mind is hiring a high yield manager to just give me high yield exposure…” — Tim (33:18)
- Net return, not sticker price, is what matters.
10. Avoiding Tactical Asset Allocation
Main Theme: Tactical overlays are value-light, brain-drain heavy.
- Previous attempts to tactically time the market (e.g., 3-6 month horizons) yielded minimal consistent value and a lot of energy spent.
- Now prefers to let portfolio structure and selected managers handle dynamism; allocates brainpower to sourcing and manager relationships.
- Quote:
- “We found that just being more stable and letting structure win is an easier way to do it. So portable alpha is just a structure. I'm going to always create my alpha on top of it...” — Tim (35:20)
- Quote:
- Outsources tactical decisions to multi-strat hedge fund managers within his portfolio.
11. Long-Term Consistency and Personal Lessons
Main Theme: Focus on getting the “middle” consistently—avoid heroics.
- Endowment returns aim for steady second/third quartile performance, rarely swinging for the fences or hitting extremes.
- Biggest early-career lesson: take jobs at small “unwanted” organizations for rapid training and authority.
- Quote:
- “Be willing to go get your experience at all or shops where you're going to get more authority and faster trained up because it's not a massive organization… All of a sudden I was running it as a young, very young person. Probably shouldn't have been, but I got that opportunity.” — Tim (39:19)
- Quote:
- Endowment has been following this steady, yield-cushioned, diversified approach for 17 years.
Memorable Quotes (with Timestamps)
- “If you pull the curtain back and look at office space in general, it's an abysmal story … our job as investors is to dig beneath that headline and see if there really is opportunity.” — Tim (00:11)
- “Governance is the hidden thing that nobody really talks too much about. And it can radically impact your ability to manage a portfolio…” — Tim (02:14)
- “We're probably anti-endowment in that regard. And we're lowering our venture capital exposure pretty dramatically in favor of what we think is a more consistent returning asset, which is lower middle market buyout.” — Tim (06:58)
- “The manager selection and partnering with managers is probably one of the most critical things that we do.” — Tim (08:55)
- “As soon as you introduce a ton of venture, that volatility… creates a lot of stress on the time and a lot of political stress. From my standpoint, that's probably the main driver of wanting to push that direction.” — Tim (15:05)
- “When you build an alpha pool, you build it based on drawdown, risk and correlations. You don't build it to maximize returns.” — Tim (24:12)
- “We almost have a Goldilocks portfolio. I think anywhere around 3 to 5 billion is an amazing portfolio to run.” — Tim (25:48)
- “What I've found is that even if you hire really smart investment guys, if your culture gets fractured...that creates way more havoc than having somebody that might not be quite up to speed in investing.” — Tim (29:27)
- “If somebody can really deliver true idio return, that's worth paying for… what's not worth paying for is hiring a high yield manager to just give me high yield exposure.” — Tim (33:18)
- “We found that just being more stable and letting structure win is an easier way to do it.” — Tim (35:20)
- “We're in second and third quartile in Nikubo all the time… We're trying to get the middle of that distribution of returns and be consistent and it shows up in our data.” — Tim (40:21)
Notable Timestamps for Key Segments
- Office Real Estate Contrarianism: 00:00–02:00
- Governance Structure: 02:00–05:45
- Portfolio Construction & Benchmarking: 05:45–08:43
- Manager Selection Strategy: 08:43–10:56
- Co-Investment Lessons & Asymmetry: 10:56–13:49
- Shift to Consistency/STH from Venture: 13:49–16:48
- Portable Alpha Explained: 21:51–25:36
- Goldilocks Portfolio Advantage: 25:36–26:56
- Generalist Team Design: 26:56–29:18
- Talent Management Learnings: 29:18–31:38
- Incentive Structures: 31:38–33:07
- Hedge Fund Fee Philosophy: 33:07–35:15
- Tactical Asset Allocation Lessons: 35:15–37:44
- Portfolio Construction Philosophy: 37:44–39:09
- Career/Life Advice: 39:09–40:46
Final Thoughts
This episode is a practical playbook for institutional investors seeking to sharpen their edge by questioning narratives, maximizing governance, seeking true alpha, and building enduring cultures. Tim’s disciplined, unflashy approach—focusing on compounding, avoiding “hero” bets, and leveraging unique size and governance—offers a masterclass in running an institutional portfolio for both performance and sustainability.