Knowledge is Power.
Manager Selection and Due Diligence
Finding and collaborating with what we believe to be world-class managers.
You can never know too much about the people managing your money. Through our network—a network we’ve been building for over 50 years—Brockenbrough is connected to and invested with a select universe of successful and highly sought-after managers across the globe.
We believe this personal, often firsthand, knowledge is a unique and powerful asset. It is further enhanced by our relentless due diligence process.
Doing the Work
The power of continuous due diligence.
Our most fundamental job is to maximize the probability of positive outcomes for our clients. To do that, we continually engage in a consistent due diligence process that is fair but relentless and tough. We trust, but actively verify. We communicate and work together with our investment managers not as vendors, but as partners. We strive to have meaningful relationships and we work hard to get to know them as human beings and teams. We do this because it provides us with more information than most, and allows us to communicate this information honestly and clearly with you, our partners. Above all, we do this because we believe it’s the right way to do business.
Result: The Investment Memorandum
The culmination of our due diligence process is an Investment Memorandum that is distributed to every client’s Investment Committee. We want our Investment Committee partners to know exactly what they own, as well as why their portfolio owns it. We believe this transparency is integral to a lasting, trusting relationship between an Investment Committee and an OCIO. While it serves everyone well in good times and sunny skies, this trust is crucial for consistent portfolio execution during turbulent markets.
Manager selection at Brockenbrough.
We look carefully at both the people we invest with and the processes they depend on whenever we’re considering a new manager or firm to invest with.
Integrity and credibility
We carefully cross-check references from multiple, independent sources to consider and assess the character and integrity of the firms and/or their owners. We want the kind of people who treat others like they would like to be treated.
Tenured teams with aligned incentives
We look at the manager’s skill and investor incentives that encourage both prudent risk management and return generation. We seek firms where portfolio managers have invested a significant amount of their own capital alongside that of their investors.
Boutique firms with a single strategy
We prefer portfolio managers who employ an "essentialist" approach that is laser-focused on a singular investment strategy. We also prefer firms that are privately owned—ideally, entirely by the manager and/or their employees.
Repeatable, understandable processes
We seek managers who consistently apply understandable, repeatable, transparent investment processes to generate returns. We do not invest in “black box” systems, which can appear to produce solid results but conceal the mechanism by which they do it. We like to be able to understand how managers make money.
Team dynamics and culture
Before we invest with a new firm, we conduct at least one in-person or virtual due diligence visit to observe the team in action. This gives us a better sense of the culture and the team’s dynamics, therefore affording us a window into the venture’s likely sustainability.