Episode summary
Texas Tech CIO: How We Find Asymmetric Bets
How I Invest With David Weisburd
· · Hosts: David Weisburd · Guests: Tim Barrett
Summary
Tim Barrett argues that the best opportunities often sit just below the headline fear, which is why Texas Tech is willing to look at office assets even as most investors are fleeing the sector. He says the team avoids weak second-tier office, but sees attractive risk-reward in trophy assets in growing Dallas and Plano submarkets, where buildings can trade at discounts to replacement cost and benefit from tenant migration.
A major theme is governance. Barrett says Texas Tech’s investment committee has delegated enough authority that his team can move quickly on co-investments and strategy shifts without waiting for repeated quarterly approvals. That flexibility, combined with a benchmark that is managed at the portfolio level, lets the endowment pursue asymmetry rather than forcing itself into every fashionable asset class.
He also explains why the portfolio is moving away from venture capital and toward lower middle market buyouts, which he views as easier to underwrite and more consistent. The same logic drives manager selection, portable alpha, and hedge fund usage: use specialists for true idiosyncratic return, keep the team generalist, and preserve a stable structure that can compound over time.
Key takeaways
- Barrett says Texas Tech likes certain Dallas and Plano office trophy assets because they can be bought at a discount to replacement cost and may benefit from tenant migration.
- He says governance is a hidden source of alpha because Texas Tech can approve co-investments and portfolio shifts without a slow committee process.
- Barrett says the endowment is reducing venture exposure and favoring lower middle market buyouts because they are more consistent and easier to underwrite.
- He says co-investments have to show asymmetry and contractual visibility, otherwise the returns tend to be middling.
- Barrett says portable alpha works only when the beta sleeve, hedge fund sleeve, and treasury cushion are structured around drawdown and correlation, not just return maximization.
Notable quotes
“we think that there's a unique opportunity to buy at a discount to replacement cost and in some cases a meaningful discount trophy assets in growing areas”
“governance is the hidden thing that nobody really talks too much about and it can radically impact your ability to manage a portfolio successfully”
“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”
“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”
“we really look for that asymmetry and we really look for locked in contractual income that we know is going to come in those deals and we'll go bigger on those”
How the episode opens
So Tim, you're the CIO of Texas Tech Endowment and out of the hundreds and hundreds of conversations I have with Allocator, you're the only one really taking a deep dive on Office Space today. Why are you so bullish on Office Space?
Right. I think if you pull the curtain back and look at Office Space in general, it's an abysmal story. And that's the headlines you see everywhere.
Our job as investors is to dig beneath that headline and see if there really is opportunity. Are we hitting the turning point? When we think about office now, the vast majority of office, especially second tier cities, etc., we don't want to touch, but we think that there's a unique opportunity to buy at a discount to replacement cost and in some cases a meaningful discount trophy assets in growing areas.
We specifically like certain areas of the Dallas market and the Plano market. We think there's a lot of opportunity there to pick up high-end trophy assets with a population that's growing in that area. And you'll see people migrate from these call class B or A minus buildings to these trophy assets.
There's a lot of opportunity there. Is that just a rule in asset management in general where some of the best trades are one or sometimes two levels below the headline? So the headline says do not touch this asset and then when you dig down that's where the alpha is made.
I would say that's almost a a quintessential rule of investing, right? If if you we can talk about real estate, we can talk about private equity, private credit, just about any asset class you're thinking about the pain part of that asset class is is usually talked about pretty quickly.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- contrarian office assets
- endowment governance
- manager selection
- portable alpha
- lower middle market buyouts
Companies and tickers mentioned
- Texas Tech University Endowment
- AlphaSense
Watch the episode
Watch “Texas Tech CIO: How We Find Asymmetric Bets” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
