Sawtooth Capital
Our unique approach
To solve the issue of access to private markets and diversification within said markets, Sawtooth invests capital in a number of areas. Specifically, Sawtooth focuses on Multifamily Real Estate, Venture Capital, Private Equity, Private Credit and Secondaries. Sawtooth achieves its investment objectives through both partnerships with existing managers and funds (e.g., a Fund of Funds structure) and through direct investments. Our investment strategy as it relates to each asset class is detailed below.
Multifamily Real Estate
Multifamily Real Estate is a critical allocation within our fund due to its monthly cash flows and natural hedge for inflation coincident with its annual rent hikes. Consistently generating cash flow with adjusted risk is critical to our investment strategy because it offsets the lack of liquidity in the short term for other alternative asset investments.
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Sawtooth maintains partnerships with real estate firms in order to invest both directly in real estate properties and into funds.
Venture Capital
The Family and their funds have been a limited partner in some of the leading venture capital funds, as well as an Forbes Midas List direct investor in Venture Capital, since the late 1990s. These investments have yielded a high-return relative to indices, generating alpha for the Family.
We believe that technological innovation will continue to increase efficiencies and generate returns through the next decade and beyond. Our partners, many of whom are among the top VCs in the business, agree.
Private Equity
Sawtooth’s investment strategy within the Private Equity space revolves around relationships forged during Kevin McQuillan's years of experience as a private market investor. These relationships have enabled the Family to build a successful partnership with Siguler Guff & Company, LP, a multi-strategy private equity investment firm that has over $15 billion of assets under management. Siguler’s Private Equity division invests in small buyouts, emerging markets, opportunistic credit, real estate, and small business credit. With over 25 years of experience investing in private markets, Siguler seeks to generate strong, risk-adjusted returns by focusing opportunistically on their identified market niches.
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Maintaining Private Equity allocations within our portfolio will increase diversification and provide an attractive risk-return profile. This diversification benefits Sawtooth by allowing it to avoid some public market volatility, providing a variety of ownership and liabilities, aligning its with the company, and enabling it to take part in the PE asset classes outperformance and high rates of return and multiples on invested capital .
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Private Credit
Sawtooth’s investments in Private Credit will also mainly be sourced through the Family’s relationships and expertise developed during their time as investors. Sawtooth intends to utilize Private Credit in order to provide cash flow to the fund. Sawtooth will attempt to take advantage of attractive special situations and distressed debt opportunities through its selection of private credit funds.
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Sawtooth also invests in funds that may allocate capital to infrastructure debt, mezzanine debt and venture debt. Among these sub-strategies of private credit, Sawtooth will engage with managers who invest within those sub-strategies considering the market condition and the performance of other assets.
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Sawtooth's access to the top private credit funds allows it to diversify its portfolio while investing in an option that is lower-risk but high-return.
Secondaries
Secondaries are an area where there is a wide dispersion between the median manager and the top quartile / decile manager. Top quartile managers outperformed by a wide spread, especially during the strongest vintage years. Top secondaries funds performed quite well during the financial crisis, yielding IRRs of greater than 20%. As there is no database similar to Bloomberg or widely available market data on private funds, these top secondaries funds have typically built massive databases of fund and manager performance that they utilize in order to determine which assets are best to invest in.
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Given Sawtooth’s history in the private markets and deep base of connections, we are able to invest in the top secondaries funds and generate strong returns.
Direct Investments
Sawtooth allocates capital to direct investments as well as alternative investment managers. It uses Kevin McQuillan's expertise built through a long career of investing in private markets and venture capital in order to provide capital to winning businesses.
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These direct investments are a large source of returns for Sawtooth, as we are able to invest in some of the best companies within a given fund.
