Bob O'Donnell,
BS 65, MBA 66:

 

Lifelong Learning, Lifelong Giving

Twenty years ago, midway into his career as a mutual fund manager, Robert G. O'Donnell, BS 65, MBA 66, began meeting an inspiring group of future UC Berkeley students. One had lived on the streets for years before graduating from high school. Another student who O'Donnell didn't think would make it at Cal ended up graduating with honors in biology, going to Harvard Medical School, and becoming a doctor.


All of the students had participated in a program that gave full scholarships and support to one economically disadvantaged graduate from each of the UC-qualified San Francisco public schools. When O'Donnell first found out about the program, he and his wife, Sue, donated money and then O'Donnell served on the search committee.


The experience was "a reprise for me of what Berkeley can do," says O'Donnell, who was the first in his family to attend college.

 

"I came from a suburban middle-class background," O'Donnell explains. "Berkeley was an eye-opening experience for me because the university offered so much. It broadened my horizons and made me a more complete person."


He adds, "I feel both love and a sense of
obligation to the university to give something back and maintain its preeminent position. I want future students to have the same opportunities I had."


So give he has. Since his initial involvement in the San Francisco program, O'Donnell has gone on to serve on the UC Berkeley Foundation and UC Berkeley Library Advisory Board.


A strong believer in educational opportuni-ties for all, O'Donnell also is involved in a charter school; the Young Entrepreneurs at Haas program for economically disadvantaged middle and high-school students; and of course Haas, where as a lecturer he shares his 39 years of money management experience with MBA students. In recognition of his tireless com-mitment to extending to others the same opportuni-ties he enjoyed at Cal, the Haas School is honoring O'Donnell as Business Leader of the Year this year.


"Bob O'Donnell has been a true leader in his pro-fession, in philanthropy, and in his volunteer roles at UC Berkeley," says Scott Biddy, vice chancellor of UC Berkeley University Relations. "He has a deep understanding and appreciation of UC Berkeley's mission, and he has contributed his time, his talent, his wisdom, and his funds towards ensuring that this mission will be sustained into the future."


Developing Strategies in Education


A list of O'Donnell's volunteer activities takes up nearly half a page of his C.V. They include serving as a director of the Sequoia Hospital Foundation; a member of the San Francisco Symphony's Planned Giving Committee; and a member of the Investment Committee for the Irvine Foundation.


He also is a director of the nonprofit Summit Public Schools, which started two charter high schools in Redwood City, in 2003 and 2009, and opened two more in San Jose this fall. In June, Summit Prep was named one of America's ten most transformative public high schools by Newsweek magazine.


"Bob has been instrumental in developing our strategy," Summit CEO Diane Tavenner says of O'Donnell, whom she describes as "passionate about public education." At a time when all nonprofits face a challenging funding environment, Tavenner adds, "Bob has used his financial knowledge to navigate that landscape."


At Cal, O'Donnell is most proud of his accom-plishments leading the UC Berkeley Foundation Board of Trustees, which he continues to serve as an emeritus board member. In addition to fundraising and overseeing a nearly $900 million endowment, the board advises the chancellor and campus overall.


When O'Donnell led the foundation as vice chair and then chair from 2003 to 2007, he focused on improving coordination between the foundation's trustees and campus deans.


"Sometimes the deans and others working in the units have too insular a view of how their priorities translate to the outside world," explains O'Donnell. "One thing we tried to do was to get the deans, the chancellor, and the provost to understand donors' priorities and then figure out how to get donors more invested, not just financially, in the goals of the campus units."


Indeed, during his tenure, O'Donnell greatly
increased the connections between the trustees and campus academic leaders, says Biddy, who also serves as president of the UC Berkeley Foundation. "Bob's thoughtful leadership, along with his willingness to listen and to collaborate, allowed him to bring deans and donors together in true partnership."


In addition to giving his time to Cal, O'Donnell has made substantial gifts to support athletics, Doe Library, Young Entrepreneurs at Haas, and Cal's Incentive Awards Program for low-income students.


Teacher and Mentor


O'Donnell also has come to campus regularly for the past nine years in another capacity: as a Haas lecturer sharing his insights and lessons from a successful career in investment management. In April, he retired as senior vice president and director of Capital Research and Management Company after working there nearly four decades and leading the management of a $50 billion mutual fund.


Teaching was actually O'Donnell's first job after earning an MBA. He was in ROTC at Cal and, after receiving his MBA and commission, was assigned to teach accounting to Army personnel. While well prepared for that assignment, little in life had readied him for his next duty: notifying families that loved ones had been killed in Vietnam. "It's the sort
of thing that does focus the mind," he recalls.


After discharge, O'Donnell landed his first professional job, a senior accountant for Arthur Andersen & Co. He joined American Express Investment Management in 1972 and stayed when that company was purchased by Capital Research three years later.


During his time as an investment manager, O'Donnell evaluated thousands of companies with an unbiased eye, looking for the story behind the numbers. Jeff Lager, a senior vice president, recalls a meeting with the CEO of a hot Silicon Valley firm looking for investors. After listening quietly as the executive outlined growth targets, O'Donnell spoke up: "You've never done that before. What makes you think you can achieve that now?"


The CEO argued, but as always, "Bob had the facts and the numbers on his side," Lager says. The Capital team left without investing, in retrospect the right decision since the company's stock has yet to do well.


That performance was vintage O'Donnell. "You wouldn't want to walk into his office with a half-baked idea. You always wanted to be on your game; if not, he'd call you on it," says Lager. "He read everything and if line 20 had a typo, he was the guy that would catch it."


Indeed, colleagues say they looked to O'Donnell as a teacher and mentor.


"Bob made me a better analyst," says Anne-Marie Peterson, a vice president at Capital. "Most folks would offer a generic 'great report' or 'I disagree.' Bob's feedback was always rich—it was insightful and specific and almost always asked another question that was critical to the investment case. This would cause me to do more digging and led to a greater understanding of the companies and investing."


Despite an impressive track record, however, O'Donnell's dedication to the long view keeps him from evaluating his own career too highly.


"We'll see how the fund does over the next five years before judging," O'Donnell says, referring to the $50 billion American Balanced Fund he oversaw for Capital Research. He neglects to say, until pressed, that the fund enjoyed a compound annual return of 10.8 percent, with much less volatility than the overall market, during the 35 years he helped manage it.


The Black Swan


Now on his 10th year teaching at Berkeley-Haas, O'Donnell notes that investing is less of an exact science than today's math-oriented "quants" might argue.


"We are often fooled by randomness," says O'Donnell, a fan of Nassim Nicholas Taleb, author of The Black Swan, which holds that many events in history and economics are unpredictable. A "black swan" has become Wall Street shorthand for an unexpected event that moves markets.

 

Taleb is one of the thinkers featured in the 500 page reader that O'Donnell prepared for Berkeley MBA students in his Investment Strategies and Styles class. "I want to drive home to my students the power of uncertainty," O'Donnell says. "They have a difficult time when dealing with opposing points of view. They want clear takeaways."

 

Teaching and philanthropy are just two of the ways that O'Donnell will use his free time in retirement. An advocate of lifelong learning and history buff, he started a master's degree program in the liberal arts at Stanford this fall.


For his Stanford application, O'Donnell wrote an essay on the battle of Gettysburg and how it is remembered.


Does he have any misgivings about enrolling at Cal's longtime rival? "No, I've gotten through that," laughs O'Donnell, who lives near the university. "Stanford is three miles down the road, so it's certainly convenient. But I'll still be wearing blue and gold in the third week of November."

 

 

 

 

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