This month’s $5 million gift to the Orange County Performing Arts Center by Newport Beach’s Jane and Jim Driscoll was made possible by hedge funds.
Jane Driscoll is cofounder, chief executive and managing partner of Irvine-based Pacific Alternative Asset Management Co., which manages $8.5 billion from pension funds, endowments and financial institutions.
The firm invests in hedge funds on behalf of clients such as the California Public Employees’ Retirement System and the Ohio Public Employees Retirement System.
Pacific Alternative doesn’t run hedge funds itself but invests in them, acting as what’s known as a “fund of funds.”
The firm is larger than Morgan Stanley’s hedge fund division for institutional investors, according to Driscoll.
She helped start the firm in 2000, after having worked for J.P. Morgan Investment Management in the 1980s and later Collins Associates Inc. of Newport Beach.
Driscoll has a finance doctorate from Harvard University and was a professor at Dartmouth College’s Tuck business school.
As an undergraduate at Yale University, she was an all-star high-jumper. She trained for the 1988 U.S. Olympic team but didn’t end up making it.
Driscoll and eight other partners have equal shares in Pacific Alternative, which employs 70 people in Irvine and another 15 at offices in London and Singapore.
So far this year, hedge funds overall are up about 7%, according to Channel Capital Group Inc.’s Hedgefund.net.
Pacific Alternative, which stays away from the riskiest investments, is doing well, according to Driscoll.
She declined to comment on returns.
In the past few years, the firm’s Moderate Multi-Strategy Asset Weighted Composite fund has seen about a 9% return, besting its benchmark, the London Interbank Offered Rate plus five percentage points, according to Institutional Investor magazine.
Rather than take big bets on China, for example, Pacific Alternative looks for arbitrage investments, Driscoll said.
That’s where hedge funds take advantage of varying prices for investments, say buying shares of a buyout target while shorting shares of a potential acquirer.
“My clients don’t want to take on big risk,” Driscoll said.
She said she spends a lot of her time traveling in search of hedge funds to invest in.
“It’s hard to find good managers,” Driscoll said.
Pacific Alternative gets its share of buyout offers, according to Driscoll. She said she and the other partners are more interested in running the business.
Driscoll said she gave to the Performing Arts Center out of a love of dance. She and her husband have attended performances at the center since 1999. Last year, they gave the center $1 million.
“As we got to know the center better, it’s what we wanted to do,” Driscoll said.
The Driscolls are the reverse of most center donors, the majority of which are guys who give on behalf of themselves and their wives, who might volunteer at the center.
In this case, Jim Driscoll stays at home and serves on the center’s board of directors. He’s also a volunteer track coach at Corona del Mar High School.
“Jim dedicates his time to things we care about, it’s part of our commitment of time and money. We can afford it,” Jane Driscoll said.
The money is set to go toward the $240 million cost of building the Ren & #233;e and Henry Segerstrom Concert Hall, which opened late last year. The center issued tax-exempt bonds to pay for construction as it seeks money from donors.
About $164 million has been raised, including the Driscolls’ gift.
“The Driscolls understand what the expanded center now means for generations to come,” said Roger Kirwan, vice chair of the center’s board and a key player in the concert hall’s financing.
The Driscolls were inspired by the center’s educational programs.
“It’s staggering to think for every performance given to the public there are four to six education related things going on,” Jim Driscoll said.
The center has held dance, music and theater workshops for more than 500,000 students.
The Driscolls also support St. Joseph Ballet, the Orange County High School of the Arts, Pacific Symphony and Human Options.
At the University of California, Irvine, the couple gave $500,000 for an administrative chair at the business school.
