Because my dad was a petroleum geologist, I like to say that calculating risk has always been a part of my life. In a very real way, his love of the hunt for oil — processed through careful analysis and risk assessment – inspired my love of the search for great stocks.
We moved around the southwest a number of times, before finally settling in Arkansas when I was in elementary school. By my last few years of high school I knew that I wanted something more than the relatively slow-paced environment of southern Arkansas. With my parents’ support, I took off for Mount Holyoke College in Massachusetts. I loved the intellectual environment and intensity that I found in the northeast and by the end of my freshman year I had zeroed in on the study of economics.
The offer of a summer job at the investment counseling firm Scudder, Stevens and Clark in New York City was seminal. I began as a research associate and was assigned construction-related equities. I quickly discovered that analyzing companies required the ability to sort through complex and mercurial data, which I found enormously satisfying, and then there was the clarity and objectivity of performance measurement. I was smitten!! I convinced my boss to hire me full time and finished my remaining college credits at night. After earning an MBA at Wharton, I moved to Citicorp Investment Management as a technology analyst. I benefited enormously in my career by being assigned to volatile, difficult stocks. This provided early training in what could go wrong with investments and kept me humble.
My mentor from Scudder recruited me into Neuberger and Berman as a portfolio manager in 1987. Neuberger was a true stock picker’s paradise and exposed me to every investment style under the sun. My senior partner was a master at unearthing open-ended “10 bagger” stock ideas. I then joined Omega Advisors as a start-up partner and analyst. In 1992, I joined Chancellor Capital Management. While Neuberger was a firm of artisans, Chancellor was a process-driven and focused institutional money manager. I managed Large-Cap Growth portfolios throughout my years at Chancellor. I had a variety of management roles including Director of Research, Head of Large Cap Growth and Head of Equities. This meant a lot more people management and less stock-picking. At its peak, Chancellor managed over $35 billion. We sold Chancellor to Lichtenstein Global Trust in 1996 and the Chancellor team took over management of the combined North American operations.
My decision to join CastleRock Asset Management in 1998, founded by a former Neuberger colleague, was truly a calculated risk. The firm had $25 million in assets under management but offered the opportunity to return to pure stock picking and portfolio management in an entrepreneurial setting. Having spent years as a portfolio manager discerning winners from losers, I was also excited to develop my skills as a short seller. This move paid off as CastleRock grew to more than $1 billion in assets over the next several years.
After 15 successful years at CastleRock, I decided to leave with one of my partners to found a new firm, Hinoki Capital. Our goal was to combine the great stock picking we were known for at CastleRock with tighter asset allocation management and a lower net exposure profile.
We partnered with Daruma in 2012, working out of our Connecticut office and leveraging Daruma’s operational infrastructure. We spun amicably out of Daruma two years later to secure seed capital. After not reaching critical mass, we decided to close the fund in 2018. Upon hearing the news, Mariko asked me to consult for Daruma, working shoulder to shoulder with her to review the portfolio. It felt like coming home again to be working collaboratively in a collegial atmosphere, and doing primary research on investment ideas with multi-bagger potential over a long-term horizon. So when asked to join Daruma as a senior partner, I was delighted to say yes, and contribute to Daruma’s future success.