This week we analyze the Texas Children’s Hospital Pension portfolio, a subset of Texas Children’s broader investment portfolio. The Pension’s investment activities have been managed by executive vice president and chief investment officer Keith Nelson since he assumed the role in 2018. He originally joined the organization as an investment director in 2013 after serving as a portfolio manager at the North Carolina Department of the State Treasurer in its retirement systems division.

Founded in 1995, Texas Children’s Pension serves all employees of the health system and its affiliated entities and maintains total assets of just over $679 million, with its investment portfolio valued at $661 million as of September 30, 2024.  

The pension’s asset allocation is below, with just under two-thirds of its portfolio invested in external managers (partnership interests):

It is worth noting that while a few of the managers that Texas Children’s has invested with do engage in private equity or venture capital, the Pension has primarily disclosed investments in hedge fund and public equity funds:

Below is a sample of the managers that the Pension has invested with:

Fourth Sail

Fourth Sail Capital, which first received a commitment from Texas Children’s in 2020, stands out in the Pension’s portfolio as its only Latin America-focused manager. The Sao Paulo-based investor was founded in 2018 by Ariel Merenstein following his decade-long career at Prince Street Capital, where he mostly recently served as a partner and portfolio manager overseeing its Latin America L/S fund.

Fourth Sail’s regulatory AUM has grown healthily since it launched with just under $400 million:

Its disclosed fundraising now totals roughly one-third of its total AUM, with notable fundraise disclosures of $474 million in 2022 and $448 million earlier in 2026. The McKinsey Retirement Trust and the Pattis Family Foundation are among other disclosed LPs (the full list can be seen by OWL users here).  

Fourth Sail currently discloses 33 public positions across a fairly diversified portfolio, with 19 positions each making up between 3% and 6% of its total disclosed portfolio.

According to OWL estimates, Fourth Sail’s position in Moura Dubeux Engenharia has generated its highest estimated percentage return on invested capital of 462% in the nearly six years since the manager initiated its position. Fourth Sail made a single purchase of 5.3 million shares of the Brazilian residential real estate company in June 2020 at a share price of around $1.40 and has not changed its position as the company’s stock has risen to $6.76 as of 4/15. The fund owns 6.2% of the company and the position is Fourth Sail’s fifth largest disclosed position.

As a reminder, we recently refreshed how several of our manager analytics are presented on manager profiles. Now users can go to a manager’s profile, click on the “Return Estimates” tab on the left-hand side, and see a list of the analytics options across the top of the page, including monthly returns, exposures, batting average, and various P&L measures.

Recent Buys & Sells

• Basic-Fit – Fosse decreased its short position in the Netherlands-based gym operator by 12% to $30 million on 4/14.  

• AAK – Hound initiated a $35.5 million short position in the Swedish food processing company on 4/9.  

• MoonLake Immunotherapeutics – BVF decreased its position in the biopharmaceuticals company by 19% to $298.3 million on 3/31. The manager is the largest disclosed shareholder, owning 22% of the company.

• Sweetgreen – Woodson increased its position in the restaurant and lifestyle brand by 12% to $34.8 million on 3/31. The manager is now the company’s second largest disclosed shareholder at 6% ownership.

• Metals Acquisition II – Mudita initiated a $25.2 million position in the blank-check mine acquisition company on 3/31. Mudita is the only disclosed shareholder and owns 11% of the company.

Other news

• Boston University hiring Director of Investments

• MS Capital secures $1bn China trading mandate

• Manager Selection Seen Driving Return Dispersion

• Alternative Views with David Stermerman (Centerbook)

• Viking, Lone Pine Alumni Shutter $2 Billion Alua Hedge Fund

• Thoma Bravo Winds Down Growth Equity to Focus on Owning Firms

• Retail investors are pulling back from private credit. CalSTRS CIO sees opportunity in their retreat.

• Sundheim’s D1 Hedge Fund Tumbled 6% in March as Biggest Stock Bets Soured

• As PE Deals Stall, Allocators Pull Back on New Commitments While GPs Stay Hopeful

• Wrong-Way Bets on Oil Had a Star Trader Hundreds of Millions in the Hole (Vitol)

• Boston University hiring Director of Investments

• Texas ERS Hiring High Yield Portfolio Manager

• Presbyterian Healthcare Services Hiring Director - Strategic Investments

• Community Foundation for Greater Atlanta Hiring VP for Impact Investing

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