2020 Knowledge Brokers

Anita Ng

Managing Director, Private Investments
Cambridge Associates
San Francisco, California

Anita Ng, managing director of private investments at Cambridge Associates, is watching the climate change for limited partners (LPs). Since the Global Financial Crisis, there was a short period where things were more LP-friendly, but it quickly shifted back in favor of general partners (GPs), and LPs had to become competitive to work with the best managements. Investing was getting frothy. Yet after the pandemic, Ng is starting to see areas becoming attractive for the near term.

“The secondary and the distressed side will become more attractive. I certainly have my radar up looking for ideas in those two areas for clients today,” said Ng. Broadly, in the private credit space, but she noted there will also be opportunities in the turnaround space, where GPs will be seeking more control.

Located in her native San Francisco area, a region she calls “the headquarters for venture investing,” she continues to find early-stage venture capital an attractive, cycle-independent area to invest. “Regardless of where we are in the economy and the cycle, I think next generation companies consistently are formed during recessions,” she said. Generally, she finds her tech picks perform well during downturns.

Ng began her first industry job in Hong Kong, covering mainland China for Merrill Lynch, and eventually returned to the United States to complete her MBA at Stanford, and work in technology investment banking for six years at firms such as Credit Suisse, Montgomery Securities, and CIBC. She has retained quite a few of her relationships, and finds them useful now that she’s on the investor side at Cambridge, listening to information about the types of firms she once pitched herself as a banker. 

What are some of the qualities she’s listening for? Team dynamics, collaboration, whether their strategy has a success record, (and whether both managers and junior associates can articulate it somewhat consistently), hunger, introspection, and continual improvement. 

CIO: What (actionable thing) have you learned over the course of your career that has proven itself this year?

Ng: Early in my career, I had an internship at a VC firm. The partner I worked for gave me some advice: When investing, it’s very easy to say “no”; it’s much harder to find the reasons to say “yes.” While he was referring to early-stage VC investing, I believe this extends more broadly and has guided my approach over the last 14 years at Cambridge. While there is a role and place for more proven, sleep-at-night investment strategies/groups, many of my best performers have required a leap of faith. With emerging groups or strategies, there are a lot more unknowns to get comfortable with (where it would be easy to say “no”) but the work comes in understanding a team’s edge and ability to execute and evolve, the attractiveness of the strategy, and the team dynamics that are just forming, in order to get to the “yes” and use judgement in deciding if these reasons outweigh the concerns. In this uncertain COVID environment, I’m being particularly cautious in adding new managers to my programs, but I have already added a couple of new names and am looking at more in the pipeline. 

CIO: What investments (specific securities or sectors) look good to you now? And why?

Ng: I’m a bit of a shopaholic, and I love a good sale. I’m naturally drawn to strategies like secondaries and turnaround/distressed opportunities that invest at discounts to intrinsic value.  These areas have not been attractive for the last decade, until now. It’s been a seller’s market for secondaries with narrow discounts for a long time, but we expect discounts and pricing to become more attractive beginning later this year or early next as more forced sellers come to market. Similarly, for turnaround/distressed opportunities, the environment has been benign for the last decade when the US was in its longest economic expansionary period in history, but this area is now a focus for me in the near-term.

I also continue to like growth equity in this environment. By definition, this strategy invests in companies that are fast growing organically and are cash-flow positive (or near cash-flow positive). The risk/return characteristics are attractive. The underlying industry focus for growth equity is biased to technology and health care, industries that historically have performed well in good markets and proven more resilient in downturns. 

CIO: What ones don’t? And why?

Ng: I really try not to rule out anything. I build long-term private programs that are balanced and have an appropriate amount of diversification. Also, the return dispersion of the private asset classes is the widest, so I place a larger emphasis on bottom-up manager selection. It’s more important to me to find the right groups that are able to generate alpha in their space over time. Having said that, I have made very few investments in the traditional private energy space in recent years, but I’m seeing some attractive niche groups emerge now with more operational capabilities.

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