managing director

Bruce Zimmerman, CEO of UTIMCO, met with UTIMCO board members Thursday morning. The conference covered topics such as UTIMCO investments and how foreign oil activities may affect the University’s endowment and the Permanent University Fund.
Photo Credit: Griffin Smith | Daily Texan Staff

University of Texas Investment Management Company officials released a report Thursday detailing the effects of falling oil prices on the Permanent University Fund (PUF). 

The PUF is an endowment containing 2.1 million acres in West Texas that was created by the Texas Constitution in 1876 to benefit the UT and Texas A&M University systems.

According to Mark Warner, managing director of natural resources investments, falling oil prices over the course of the last four months slightly hampered the assets UTIMCO manages, which total $34.5 billion. Domestic oil prices declined by 60 percent from a peak in late April 2014 before bottoming out in late November 2014. However, over the five months, the endowment maintained a return of 4 percent.

Bruce Zimmerman, UTIMCO chief executive officer and chief information officer, said the investments made under UTIMCO are made safely to protect the funds that support the UT System schools.

“Our first line of defense is a diversified portfolio because, generally, not everything is going up at the same time, and, generally, not everything is going down at the same time,” Zimmerman said.

Zimmerman said falling oil prices from April to November could actually help raise the endowment’s value.

“Our best guess, our best projection, is that the supply shock — excess supply, lower prices — is actually a slight positive for the endowment,” Zimmerman said. “Now, it’s clearly a negative for the energy industry, clearly a negative for the state of Texas … but this really gets at around 10 percent of our exposure is in energy; 90 percent is outside of energy.”

Zimmerman said only 10 percent of the total investments made by UTIMCO are in the energy industry. The other 90 percent of investments are made in sectors of the economy that ordinarily improve when oil prices decline. For consumers, lower oil prices mean cheaper gas, cheaper goods and more spending money to stimulate the economy.

“Our investment returns, we think, will be slightly helped by the reduction in oil because there are more consumers than producers, and the consumers get a benefit,” Zimmerman said.

Warner, the managing director of natural resources investments, said he looked at the correlation between the value of the energy portfolio, the investments in the energy industry and the price of oil. The report established that, when the price of oil drops, the value of the portfolio drops 10 percent of the price. 

Warner said he has watched the energy industry’s downturn closely.

“What I can tell you is that we’ve looked back at history, particularly the ’08-’09 time frame, and this is historic by any measure,” Warner said.

According to Warner, lenders are more willing to make investments in the current economy because it is much healthier than it was during the 2008 recession. Warner said this makes him feel optimistic about the energy portfolio’s future value.

“We’re hoping our partners are able to be opportunistic; this way, they have the money to do it,” Warner said. “We’re very encouraged by where we are in the cycle and by the partnerships that we have.”

Louise Epstein, a former Austin City Council member and entrepreneur, was named the managing director of the Cockrell School of Engineering’s Innovation Center on Thursday. Launched in 2011, the center guides faculty and students through the process of creating a start-up company and aims to to help UT become a major entrepreneurial campus.

Photo Credit: Amy Zhang | Daily Texan Staff

After being appointed managing director of the Cockrell School of Engineering’s Innovation Center on Thursday, Louise Epstein plans to make entrepreneurship a bigger part of the school.

The center, launched in 2011, provides support to students and faculty, primarily from the engineering school, through the process of establishing a startup company. The center offers a variety of programs, including seminars, labs and mentorships. 

“What started out as a class and a lab has grown to [a center with] businesspeople and faculty,” said Epstein, former City Council member. ”I’m just here to take it to the next level.”

Bob Metcalfe, engineering professor and faculty director of the Innovation Center, said the center created the new managing director position to ease the expansion of ongoing programs. Metcalfe, who is also a co-inventor of Ethernet, said Epstein will be responsible for managing staffing, budgeting and fundraising for student and faculty startup projects.

“We’re scaling up,” Metcalfe said. “We’re developing new programs, and we need more horsepower, in particular someone who can run things as opposed to someone who is mentoring and teaching students.”

Epstein hopes the center helps to turn UT into a major entrepreneurial campus on par with Stanford University or Massachusetts Institute of Technology. According to Epstein, the growing entrepreneurial community in Austin and the support from UT are vital to the success of the center. 

“South By Southwest isn’t anywhere else,” Epstein said. “The people in this community who are actively promoting entrepreneurship and innovation is unbelievable.”

As managing director, Epstein said she will help with future programs at the Innovation Center and will be responsible for the management of the Innovation Center’s flagship program, Longhorn Startup. 

Epstein served on the Austin City Council in the early 1990s. In 1997, she founded Charge-Off Clearinghouse, a company that collects and sells portfolios of charged-off debt. In 2010, Epstein served as the entrepreneur in residence of the McCombs School of Business and later worked as a fellow at the IC2 Institute, a University think tank aimed at developing theories and practices around entrepreneurial growth.

Ben Dyer, the entrepreneur-in-residence at the Cockrell School of Engineering and a mentor for the Longhorn Startup program, said the center has started to explore new ideas for programs, although none are ready to be revealed to the public.

“[Epstein] is the first step toward a bigger vision,” Dyer said. ”We have a lot of thoughts on the chalkboard and lot of opportunities.”

WASHINGTON — The managing director of the International Monetary Fund said Tuesday that the global recovery is growing stronger but remains very fragile. She urged the international community to give her organization “more firepower” to help keep tottering economies from going under.

“We certainly need more resources,” Christine Lagarde told the annual meeting of The Associated Press, without specifying how much more was needed. Lagarde said the IMF would address that question at its spring meeting in two weeks.

The IMF currently has about $400 billion in resources that it can use to provide loans to countries in trouble. Lagarde has talked about expanding those resources to close to $1 trillion.

Lagarde said the global economy is making some advances in digging itself out of the worst downturn in decades, but the recovery remains particularly frail in Europe. She suggested cutting government spending too quickly in developed countries like the United States and larger European nations could make things worse, not better.

Policymakers on both sides of the Atlantic need “breathing space to finish the job,” she said. Lagarde also said that Europe’s faltering would quickly spread, and the U.S. recovery, slowly gaining strength, “might well be in jeopardy.”
“America has a large stake” in how Europe and the rest of the world fares,” Lagarde said.

The IMF official said it is important to continue and expand emergency programs among the 17 countries that use the euro to help heavily indebted countries there.

“We should not delude ourselves into a false sense of security,” she said. “The recovery is still very fragile. The financial system in Europe is still under heavy strain. Debt is still too high, public and private. Stubbornly high unemployment is straining the seams of society. ... Rising oil prices are clearly another cloud on the horizon.”

Lagarde’s remarks came after the Eurozone countries on Friday boosted their emergency bailout funds for heavily indebted countries by $1.1 trillion (800 billion euros). That was short of the $1.3 trillion (1 trillion euros) that Lagarde and other international leaders have said is needed to calm financial markets.

On Tuesday, she said, since the Europeans have moved first to raise their firewall, “the time has come to increase our firepower.” While short of what the IMF had hoped for, it was a good first step — and something she said the IMF could work with.

During a brief question-and-answer period, Lagarde was asked whether some of the more debt-burdened countries would be better off leaving the group.

“As to the size of the eurozone and whether Greece, Portugal and whoever else should or should not be in, you know, it’s a very deeply rooted sentiment that the Europeans, particularly from that area, have, that what they have built over the last 50 years or so, right after the second World War, is something that they are very, very attached to.

“And from discussions I’ve had with many leaders, including from the lead countries in the Eurozone, I don’t think that there is any political intention, disclosed or hidden, to actually break up that zone,” she said.

Lagarde also suggested that bold steps are needed such as those taken by the U.S. Federal Reserve and the European Central Bank to help “keep growth strong and steady.”

And she said that most countries are running deficits that are too high and “need to bring down debt over time.” And while “some countries under pressure have no choice but to cut deficits today...a global undifferentiated rush to austerity will prove self-defeating. Countries like the United States with low costs of borrowing should not move too quickly.”

Those remarks thrust her into the U.S. presidential debate, where Republicans are united in demanding deep cuts in federal spending, while President Barack Obama — who also addressed the meeting — and congressional Democrats are calling for more job-creating spending, along with raising taxes on the wealthy to help trim budget deficits now exceeding $1 trillion a year.

Lagarde noted that more than 200 million people globally, including nearly 13 million in the U.S., are without work, declaring that “jobs must be a priority.”