Page Six for Investors

Before the biggest allocator move of the year sent shockwaves through the industry — Britt Harris to UTIMCO! — Austin investors knew something was up at Texas Teachers. Here’s a guide to the gossip.


The life of a journalist is littered with crumbs — bits of information too small to publish, but too delicious to ignore. Covering this secretive industry well means that the vast majority of our conversations occur off-the-record, their contents unattributable in the press.

That said, enough crumbs make a cookie. Here are the whispers, observations, and bombshells that went into one Texas-sized example — Britt Harris’ jump from one of the most respected American public pension plans to one of the largest endowment pools on earth — told Page Six style.

Low-level rumblings that something was up at the Teacher Retirement System of Texas (TRS) began more than a month before the June 16 revelation that its long-time CIO was leaving. Britt Harris — seen by many as a “true believer” in TRS who would end his career there — was moving across town to fill the posts of CEO and CIO at the $40 billion University of Texas Investment Management Company (UTIMCO). On a mid-May trip to Austin, word among allocators was that Texas Teachers’ entire staff was on lockdown. A hedge-fund marketer who somehow kept a meeting at the fund’s offices also sensed something was off: Everyone seemed distracted. Journalists’ emails and calls — typically swiftly returned — met with radio silence.

With the UTIMCO job open, many insiders suspected Harris was moving. TRS’ team members closed ranks and would not confirm the rumored exit to the press, perhaps out of fierce loyalty to Harris — or desire to move with him.

Harris ostensibly faced competition for the UTIMCO job. Texas, and Austin specifically, is replete with institutional investing talent, especially on the allocator side of the house. Nearly every day, crumbs of intelligence passed over phone lines: This CIO was interviewing for the post, as was that one and that one. No one would admit to seeking the job, but nor would they deny it. The usual response was to laugh and change the subject — and perhaps request an introduction to super-recruiter David Barrett, the man leading the search.

Yet candidates who spoke of the process sensed a Kabuki-theater air to it all. As one Austin-area CIO recounted, “I went in for the interview, and it was pretty obvious to me that they had chosen their man — and I wasn’t it.”

Harris and UTIMCO would have been deep in negotiations at the time of that interview. Bloomberg obtained UTIMCO’s offer letter to Harris, and the package suggests he pushed hard: $750,000 in base salary (up from $551,000 at Texas Teachers), a $550,000 signing bonus, and $1.5 million payout if he’s terminated. Other benefits sweeten the deal, including initiation fees and club dues at the University of Texas Golf Club. (Text from a hedge fund manager: “Does Britt even like to golf?”)

UTIMCO’s board was reportedly unhappy that the terms of the agreement had been published so quickly, while no doubt expecting to disclose the basic compensation figures as a matter of public record.

Harris thus officially replaced the previous CEO/CIO Bruce Zimmerman, who supposedly left under tense circumstances. He had rubbed some team members the wrong way, insiders said. Others pinned blame on the board, calling it “unreasonable” at points.

The news of Harris’ hire met with shouts of glee throughout certain skyscrapers in Manhattan. Harris had pioneered a form of strategic partnership that involved Apollo Global Management, KKR, and Neuberger Berman managing billions of TRS’ dollars with a broad mandate to invest it on the pension fund’s behalf. Many tied to those arrangements hoped to begin anew at UTIMCO (and be maintained at TRS, of course). Press aides for one strategic partner CEO took to emailing Institutional Investor editors with lavish praise of Harris and his interim successor, longtime deputy Jerry Albright. An employee of another strategic partner, aping the loose talk of yesteryear, joked of “backing up the truck.”

As soon as Harris’ move had been announced, a parlor game emerged: Pin the successor on Texas Teachers. Albright’s swift appointment as interim leader barely quelled speculation. Some insiders gave Jase Auby, TRS’ chief risk officer, the inside edge. Others batted around the names Eric Lang (head of external private markets) and Chi Chai, who was head of internal public markets until he departed in July. And then, on July 13, it was made public: Albright, no longer interim, would officially take over the CIO role .

Rooting for crumbs can turn up a tasty morsel, now and then. One of TRS’ innovations, developed with Albourne Partners, was the ‘1-or-30’ hedge fund fee model, meant to ensure that limited partners receive at least 70 percent of produced alpha. Industry watchers immediately wondered how TRS’ managers would receive their new compensation structure.

Harris himself answered them: Within months, almost all existing managers accepted the new terms. At the time, five had not. They were either fired or too good to let go — and knew it.

But who was first? That critical initial partner to TRS could have an inside edge on working with the new leader of UTIMCO.

That brave cookie, confirmed by a second source with knowledge of the situation: Clint Carlson’s Carlson Capital, based in Dallas.