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It sounds like the economy of a nation, but it’s really just the portfolio of Michael O’Kane ’67, who built his career in the investment field.
As senior managing director of TIAA-CREF’s securities division, O’Kane’s portfolio adds up to $108 billion, which he describes as “a lot of important people’s pensions.” After all these years, it’s bit daunting, even to him.
“It’s a huge amount of money, and it feels a little overwhelming at times,” says O’Kane, who sampled history and English before graduating with a degree in economics. “After a while, you get used to dealing in large numbers. But it’s a responsibility that I and everyone else here takes very seriously–the financial future of college educators.”
TIAA-CREF is Teachers Insurance and Annuity Association College Retirement Equities Fund, a New York nonprofit financial service provider that has historically focused on educational and research institutions.
In his position, O’Kane oversees a staff of 161, divided into 19 teams that specialize in different markets, taking interest accrued on the premiums paid by college professors, then deciding how to invest them. Although he now manages people rather than accounts, he got hooked on the business while doing the basic analytical work of his early years, the nuts-and-bolts sifting through facts and figures to gauge a company’s creditworthiness.
“Anytime anyone makes a judgment — not to use the term ‘bet’ — there’s a psychic reward to seeing that the judgment was sound,” O’Kane says. “The companies you invest in are happy, your company’s happy, everyone is happy.”
O’Kane notes that the Lafayette of his day didn’t teach business students about pensions. There and at Rutgers University, where he earned an MBA, classes focused on stocks.
At Prudential Insurance Co., where he worked after Rutgers, O’Kane found a job in private placements, in which Prudential directly negotiated with small and medium-sized companies that sought to borrow. Each transaction was unique, he says, and “almost a bit like a puzzle.”
“Every day was a little different. You were making a judgment about a company’s project. Hopefully it’s right. Once in a while you’re wrong,” says O’Kane. “It’s an axiom in the industry that if you haven’t had any losses, you haven’t taken enough risk.”
In addition, O’Kane says, the direct negotiations let him spend time with companies’ managements and ask them detailed questions about how they ran their businesses. “That’s what I liked about it, and why I stayed in it. Each company is different, and by investing money in them, I was attempting to provide a solution to whatever their problems were,” he says. “And it was pretty heady stuff for a kid just out of school to be able to dialogue with some of the smartest people in the country.”
As he moved on to jobs at Paul Revere Insurance, Westinghouse Credit, and ultimately TIAA, he found that he always liked working on individual investments. “It always provides the same rush when you reach a decision and it seems to work out,” he says.
Reading the crystal ball starts with avoiding obvious pitfalls, like not investing in buggies when cars are the future or cable when fiber optics own the day, O’Kane says. “We look at the financial statistics of a company. We review everything we can about a given industry, newspaper clippings and Wall Street research. We interview the management, look at their track record, their assets, and the depth of the management in case somebody dies.”
While every investment presents risks, O’Kane says a good investor determines what those risks are, analyzes them, mitigates them as much as possible, and, most important, gets paid for them in the form of a higher interest rate. “Rather than look at individual losses on bonds, an investor is supposed to look at a portfolio and ask, “Did my return on this portfolio justify the risks I took, or would I have been better putting my money elsewhere?'” he says.
Having moved up in the ranks, O’Kane is now a step removed from this work, as he manages the people who do it and helps set TIAA-CREF’s performance benchmarks.
“I’ve been in it for 33 years. It’s a little late to change now,” he comments. “The average stock person won’t agree, but this work is more interesting and harder. If I’m going to invest in a stock, there are about 10,000 choices. If I want to buy a bond, there are 4.5 million choices. There’s a bigger universe to choose from.”
Not a stereotypical workaholic, he puts in a workweek that’s unexceptional by New York standards. He aims to retire at 60, five years short of the company’s mandatory retirement age, joining his wife Rita, a retired schoolteacher. There’ll be much satisfaction in looking back on a career whose initial thrill of making the right investment decision sustained him all along.
“At one point, I left the business for about three years and tried different things. For two years, I was the chief financial officer for a small manufacturing company in Pittsburgh, and I also opened and ran a retail store called My Aching Back,” O’Kane recalls. “While each of those jobs was interesting in its own way, neither was as interesting or fulfilling to me as investments.”