Michigan Endowment Plans to Invest in Litigation Fund

Photo by Andrew Harrer/Bloomberg
By Janet Lorin, Bloomberg News

The University of Michigan plans to invest $50 million with a fund co-founded by Boaz Weinstein and Lee Drucker that specializes in litigation strategy.

Lake Whillans Fund I, based in New York and Palo Alto, California, provides funding for commercial litigation involving breach of contract or trade secret misappropriation, according to the agenda of the public school’s Feb. 16 board of regents meeting. The fund will receive a portion of the proceeds from successful cases. The endowment’s value is $10.5 billion as of Dec. 31.

The average annual return for college endowments as of June 30 was a loss of 1.9 percent, according to an industry survey.

In a low-return environment, schools often look for investments that aren’t correlated to markets.

Diversifying Portfolio

“The risk of this strategy lies solely in Lake Whillans’ ability to properly underwrite the merits of the cases in which they invest,” wrote Kevin Hegarty, executive vice president and chief financial officer. “The strategy will be diversifying for the portfolio in that the returns are almost entirely independent of movements in the capital markets.”

Weinstein and Drucker co-founded Lake Whillans Capital Partners in 2013.

In addition, the endowment will add money to five investments approved by the school last year, which include real estate, credit and energy funds. Among those is Redding Ridge Holdings, a co investment with New York-based Apollo Global Management, that issues and acquires interests in collateralized loan obligations. The university invested $50 million in the fund in October.

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