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Kevin Lenaghan On What It Takes To Be A Successful Entrepreneur

 Kevin Lenaghan was born in Washington, DC and grew up on the Jersey Shore. When he was growing up, he excelled at math and music and played classical and jazz piano. Kevin attended the University of Pennsylvania, studying Economics and Finance at the Wharton School, with a minor in Music History. He started his career […]

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Kevin Lenaghan
Kevin Lenaghan

 Kevin Lenaghan was born in Washington, DC and grew up on the Jersey Shore. When he was growing up, he excelled at math and music and played classical and jazz piano. Kevin attended the University of Pennsylvania, studying Economics and Finance at the Wharton School, with a minor in Music History.

He started his career in real estate investment banking at Banc of America Securities, which provided a solid technical foundation in financial modeling and securities analysis. Kevin Lenaghan then joined FTI Consulting, where he developed further expertise in valuation analysis and sophisticated econometric techniques.

Kevin Lenaghan returned to the Wharton School of the University of Pennsylvania to further develop his network and transition his career into more of a market-facing role.

Following the completion of his MBA in Finance and Entrepreneurial Management in 2009, Kevin Lenaghan joined Cliffwater LLC, where he was a member of the hedge fund research team. Kevin built out coverage of several hedge fund strategies and expanded the firm’s global footprint. He also participated in the firm’s thought leadership in several areas, including portfolio construction, disaggregation of returns, tail risk hedging, alternative risk premia, and volatility strategies

Kevin Lenaghan was recruited to join Clocktower Group in 2017 as a Managing Director, the Head of Hedge Funds, and the Co-Head of Asset Allocation. As the head of hedge funds for the firm’s seeding and investment advisory businesses, he managed the entire hedge fund life-cycle, including sourcing, due diligence and monitoring of all macro-oriented hedge funds. Furthermore, Kevin served as the key external client representative for all Clocktower clients, which consisted of leading global institutional investors.

Kevin Lenaghan co-founded Ivy Academy LLC in early 2020 and the firm has two primary business lines: admissions counseling and investment advisory.

The admissions counseling division is primarily overseen by Kevin’s partner and co-founder. Ivy Academy primarily works with accomplished and ambitious Chinese students who are applying to universities and graduate programs in the US. The firm provides high-touch, bespoke consulting services to guide our clients through all aspects of the admissions process. Importantly, Ivy Academy emphasize excellence and integrity at all times, while pushing our students to improve themselves, explore their passions, and target optimal schools.

Ivy Academy’s investment advisory division works with high net worth and family office investors with an emphasis on bespoke advisory services that are customized for the client’s individual circumstances. In particular, the firm provides strategic and tactical asset allocation, adding value through tactical tilts that are driven by proprietary macroeconomic and market views, as well as the intelligence from our external investment partners. Ivy Academy also helps clients construct and manage alternative asset portfolios, with an emphasis on sustainable alpha strategies, dislocated asset classes, co-investments and other strategic partnerships. The firm’s clients benefit from Kevin Lenaghan’s deep and diverse exposure to hedge funds and other alternative asset classes across many different strategies, geographies, and firm types. Where appropriate, Ivy Academy also works with other external advisors on topics like tax efficiency, estate planning, and charitable giving.

Kevin Lenaghan currently lives in Los Angeles, California, with his wife Linda and two young children: Benjamin (4) and Emma (2). He also regularly contributes his time and resources to charitable and community organizations. Kevin currently serves as a teaching fellow and advisor to Musical Mentors Collaborative, a great charity that matches talented musicians with deserving students for one-on-one music instruction. 

Why did you decide to create your own business?

If you had asked me five years ago whether I would be starting my own business in the middle of a global pandemic, I would have thought you were crazy. However, after working for over 10 years at a couple of innovative, entrepreneurial investment firms and developing a really strong network, I felt that the time was right to assume greater ownership for developing investment recommendations and achieving client results. 

What do you love most about the industry you are in?

What I love most about the hedge fund industry is the amazingly intelligent and diverse group of investment professionals who have gravitated to the field. The industry is extremely heterogenous, with high-performing, competitive people scouring global markets for dislocated asset classes and security prices. Throughout my career, I have covered a wide range of investment styles, from traditional long/short equity and credit to more exotic volatility-oriented, reinsurance and emerging market strategies. Working and interacting with these amazingly talented individuals, while observing their successes and struggles, has been incredibly rewarding.

Where do you get your inspiration from?

I am a voracious reader with an endless intellectual curiosity who has had the good fortune of being exposed to leaders in both the investment and musical worlds.

On the investment side, I am inspired by experienced and creative investors who continually strive to assess the machinery behind highly complex global markets. These investors combine a broad, macroeconomic perspective and are relentlessly searching for idiosyncratic alpha opportunities, while maintaining deep respect, and humility, for global markets. I am particularly inspired by legendary investors like Howard Marks from Oaktree, Paul Singer from Elliott, and Sir Michael Hintze from CQS, as well as younger, up-and-coming managers with bright futures.

On the musical front, there are really too many great musicians to name. However, pianists like Yuja Wang and Igor Levit are always impressive, and (pre-COVID), I would go out of my way to hear conductors like Yannick Nezet-Seguin, Esa-Pekka Salonen, and Sir Simon Rattle. In addition, I am involved with a wonderful charity called Musical Mentors Collaborative, where I teach piano lessons, and am inspired by a few eager young students.

Finally, I continue to be inspired on a daily basis by the learning and growth capabilities of my own young children: Benjamin (4) and Emma (2). They are already both bilingual, speaking both English and Mandarin and their capacity to learn and grow is extraordinary.

Who has been a role model to you and why?

Cliffwater’s founder and CEO Steve Nesbitt has been a tremendous leader and innovator in the alternative investment universe throughout his career. I was honored to work closely with him for over eight years, and he taught me countless lessons about asset allocation, portfolio construction, assessing investment risk & reward, serving as a responsible fiduciary for clients, and building a great business. He also empowered me to expand my own skill set and explore new investment areas that would be both intellectually challenging and rewarding for clients.

How do you maintain a solid work life balance? 

Maintaining a solid work-life balance is challenging for sure as I build my business with two young children at home during a pandemic! However, necessity is the mother of invention, and I have learned to be ruthlessly efficient with time management and prioritization. I also strive to carve out time to maintain my piano technique, while even occasionally learning a new piece, and working with students. And the occasional hot yoga session and downhill skiing excursion serve as well-deserved breaks from my hectic lifestyle.

What suggestions do you have for someone starting in your industry?

The investment management industry is endlessly fascinating and challenging. I firmly believe that most investors continue evolving and improving throughout their careers, which should result in better outcomes, so long as they stay motivated. However, no matter how experienced and intellectually astute an investor is, he or she will never “master” constantly evolving markets and there is always more to learn. This is exactly what can make the field such a rewarding career, both intellectually and financially.

For someone just starting in the industry, I highly recommend finding a role with great mentorship and real opportunities for growth. Many aspiring young finance professionals seek roles at large investment banks, which provide great training and technical foundation. However, I would encourage an aspiring investor to get this training and then promptly seek out a more entrepreneurial work environment with a flatter organizational structure. Being empowered with a mandate to explore new areas and make a real impact will lead to a tremendously satisfying career. Also, read, read, read! Both high quality publications like The Economist and books like Mastering the Market Cycle by Howard Marks are mandatory selections for any young investor’s reading list.

What trends in your industry excite you? 

The hedge fund industry is a constantly evolving and challenging business environment with an amazing concentration of talent, and no shortage of large egos. In the past, the industry was crowded with large, successful managers (what I call the “established” managers), where the principals had generated significant wealth. However, many of these established hedge funds had grown less innovative and generated underwhelming returns, essentially becoming a victim of their own success.

Over the past 3-5 years, the industry has grown increasingly competitive and a little less crowded, which is positive for investors. There are certainly still some very large hedge funds, but they are mostly large for a good reason, namely that they continue to generate above average returns for clients. At the same time, there is a broad group of hedge funds that recently underwhelmed, were probably past their prime, and were forced to shut down.

Now in terms of the newer, or “emerging”, managers, hedge fund launch activity continues to be quite strong, even though it is increasingly difficult to secure sizeable “day 1” commitments. The regulatory burden has materially increased, making it much more difficult to have a sustainable business early in the hedge fund lifecycle. That said, there will always be “rising star” managers, and while identifying these funds can be a bit like finding “a needle in a haystack”, this is one of the most exciting parts of the industry, and something that I spend considerable time focusing on.

I would add that investors have grown more discerning about the “quality” of returns and have increasingly demanded true “alpha” production in order to justify full hedge fund fees. The multi-year trend towards greater fiduciary responsibility and fee fairness also continues to progress, although supply-demand dynamics persist throughout the hedge fund industry, with some high-performing, in-demand managers continuing to charge above average fees.

Where do you see you and your company in 5 years? 

I think the next 5 years will be an exciting period of growth for both myself and my company. First of all, my children will be 9 and 7 years old in 5 years (as opposed to 4 and 2 currently), and I very much look forward to seeing what kind of young people they become. In terms of Ivy Academy LLC, we expect to significantly grow both the admissions counseling and investment advisory divisions over the next 5 years, in order to become meaningful players in both areas.

On the admissions counseling side, we will continue executing on our high-touch business model and delivering results for students, while working to expand our external advisor partnerships and thoughtfully scaling the business. For the investment advisory division, I expect to continue expanding my client base, research coverage, and employee base. The combination of “top-down” (asset allocation) and “bottom-up” (manager selection, portfolio construction, strategic opportunities) investment approaches is powerful, but the challenge is in constantly monitoring global markets and seeking new alpha opportunities. Therefore, over the next five years, I hope to continue finding new and more efficient ways to identify and access attractive investment opportunities, ideally those that are less followed by other global investors.

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