Los Angeles Single Family Office

Jun 14

Written By Shash S

UHNW Single Family Office takes anchor positions (investing $20M+) in emerging funds and spends more than a year completing diligence.

The insights below come from a conversation with the Principal of an Ultra-High-Net-Worth (UHNW) SFO based in Los Angeles. Source of wealth: real estate & technology.

Investment Philosophy

Infinite timeline: goal is to grow the wealth forever to support the philanthropic mission of the family.
Foundation: focuses on global health and education resources for children.
"More important not to lose money than to win deals."

Portfolio Construction

• 70% in public equities (all managed in-house by a team of 40 people)
- 40% muni bonds, etc.
- 30% US treasuries (30-day rolling)
- 20% S&P
- 8% individual stocks
- 2% puts on individual stocks (hedge to never lose money)
- Rebalance every year: Mark S&P on Jan 1 every year. If down more than 25%, take 50% cash reserves and invest in S&P. If down more than 35%, take the other 50% cash and invest in individual stocks. Ride up to break even and rebalance again.
10% private equity / buyout / venture / growth equity
10% private placement lending
10% real estate

PE / Venture Portfolio

4 seed & series A funds (to source Series B deals)
Anchor emerging managers (funds III+, $20M+ checks, take 15%+ stake)
Arbitrage EBIT multiples in PE deals, e.g., consolidate 1x multiple companies, streamline backoffice to gain higher multiples

Looking Forward

Luxury and commercial real estate
Sports & entertainment, e.g. sports team
Growth equity, e.g., automotive
May add another venture fund next year

Advice for LPs

Place higher priority on due diligence. Ask managers about

information rights they have
due diligence they do independently / through 3rd party
back door reference checks

🙏 Special thanks to the Principal of this SFO for sharing their insights (shared with their permission, on the condition of anonymity).

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Shash S