Short Hero

1: Anatomy of a Successful Hire

Introduction

Manager A, a woman - highlight both an example of a successful business turnaround and sourcing of ideas.  The Progress team saw this manager as a highly capable MWBE investment firm whose business was expected to recover from an asset shortfall, but also continue to outperform, despite what may have looked like organizational dislocation.

The Challenge

In 2002, the firm’s assets under management shrank from approximately $665 million to $240 million, primarily due to the loss of a particularly large account for reasons unrelated to performance.  With the significant decline in AUM, there were immediate concerns about the firm's ongoing viability and the changes required to support the business and continue to produce good returns.  There was particular concern in this case, the manager offered several different investment products.

The Solution

After several meetings and on-site visits, Progress confirmed that the manager had made substantial investments in proprietary technology platform, which allowed the firm to manage efficiently through this challenging period of lower assets.  By capping other expenses, and with staff committed to the business, the manager appeared ready to return the business to an upward trajectory.

The Result

Progress initially selected Manager A for a $4.8 million commingled fund assignment, with an additional allocation several months later for $90 million in a separate account.  Within a year of the allocation, the firm had grown to $846 million in assets under management and had demonstrated continued outperformance relative to peers and the benchmark.  Since inception, its strategy has consistently outperformed their benchmark.  Progress has gone on to make several additional allocations to the manager’s flagship product, in addition to funding a number of the manager’s other, newer strategies.

Lessons Learned

This experience reaffirmed that things are not always as they appear. Unless one is willing to look beyond the obvious, an opportunity may very well be missed. Progress’ experience with “Manager A” is a testament to its ability to look past temporary set-backs an emerging manager may have, and to identify and realize valuable investment opportunities, which may be off the radar of traditional consultants and other institutional investors, by focusing on investment personnel, organization, and investment process.


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