Retired venture capitalist Charles “Chuck” Martin never quite left investing.
In recent years, he’s worked with business school students, advised the University of California endowment and published his own “Little Black Book” of investing.
Now Martin has started a hedge fund in which foundations, pension funds and rich folks invest millions.
Martin summarizes the fund this way: “It’s a sector-diversified portfolio of the best 20 to 30 public companies that exhibit strong growth.”
Don’t ask him for names because he won’t give them. What Martin will say is the companies tend to have market values of $1.5 billion to $15 billion and predictable earnings.
“The larger cap companies have a hard time meeting our growth requirements,” Martin said.
Martin, who is on the Business Journal’s Centimillionaires list of people who have a net worth of more than $100 million, put $25 million of his own money into the fund.
The fund has a heady parent company name, Mont Pelerin Capital LLC. It is set to open an office next month at 660 Newport Center Drive.
The name reflects a slice of economic history, according to Martin.
After World War II, Austrian economist Friedrich Hayek held a series of salons with a small group of economists, historians and philosophers, at Mont Pelerin, near Montreux, Switzerland, to discuss the fate of Keynesianism.
The theory from economist John M. Keynes advocated government spending to boost employment and was a major driver of Europe’s center-left postwar governments.
What emerged from the meetings in the Swiss Alps was a theory based on market economics. Some of Hayek’s followers have included former British Prime Minister Margaret Thatcher and Milton Friedman, who attended the salons.
For the past few years, 68-year-old Martin has been involved in philanthropic causes. He’s a trustee on the boards of Chapman University in Orange and the University of California, Irvine Foundation.
He made his mark as cofounder of Enterprise Partners Venture Capital, where he retired in 1999 as managing partner.
Since 2001, he has been partner emeritus with Costa Mesa-based Westar Capital LLC, a private equity firm he started with businessman George Argyros, former U.S. ambassador to Spain.
In the past year, Martin began an investment-mentoring program for second-year business school students at UC Irvine in which he kicked in $1.5 million for teams of five to six students to invest in the stock market. Each team got about $300,000 to invest, with winning team members each taking $12,000 in scholarship money.
Two of the teams posted returns in the 47% range. A new crop of teams this year is in the 74% range,besting 90% of the money managers on Wall Street, according to Martin.
Justin Vaicek, team leader of the third place finisher last year, has joined Martin’s hedge fund. Last week, he was at an investment conference in San Francisco checking out companies for possible inclusion in Martin’s fund.
Identifying Risks
During the mentoring program, Martin “quickly identified the risks of why some of our companies would not likely succeed, and take longer to succeed in the market than what we thought,” said Vaicek, a former chief financial officer with Newport Beach-based Kaenon Polarized LLC, a maker of sunglasses. “He showed us how taking a larger company with good management could get you similar returns with much less risk.”
Scott Riccardella, who was the leader of the winning team in the first year’s mentoring competition, said he didn’t smell victory until the last week of the competition. The team languished in the cellar the first six months, then “we worked our butts off,” said Riccardella, program manager with Santa Ana-based Powerwave Technologies Inc.
