A rock-solid, fundamental valuation process for stocks has been the mainstay of Perkins Investment Management LLC since its founding 32 years ago. But it's not widely known that the company applies a very similar approach to recruiting and retaining its staff — emphasizing the quality of their abilities and opinions.
Robert Perkins opened the firm in 1980 with money from family and friends — mostly his blue-collar neighbors — with a confidence he maintains to this day “that I can do better than these guys can do for themselves by using a disciplined investment approach that provides downside protection and maximizes returns through compounding.”
Mr. Perkins, a portfolio manager, has retained all of his original clients who are still living. The firm gradually expanded into managing money for institutional investors; about 40% of its $18 billion in assets now comes from institutions. The balance of assets comes from mutual fund investors, including defined contribution plans.
Mr. Perkins owns 20% of the firm and Janus Capital Group Inc. owns the balance.
The firm's employees have exhibited the same loyalty.
“Voluntary turnover (among investment professionals) has been zero” since the firm's inception, said Peter Q. Thompson, CEO, a statistic he attributes to “a very flat organization. Titles don't mean very much within these walls.”
Portfolio managers, including Mr. Perkins, and analysts are on equal footing, Mr. Thompson said. Both are compensated on the performance of their portfolios, with analysts judged on the track record of their best ideas paper portfolios, and portfolio managers on returns of their separate accounts and commingled and mutual funds.
Stock investment ideas are shared and debated by portfolio managers and analysts all day, every day and because of this collegial atmosphere, “disagreements are rare and when they happen, the PM tends not to make the trade,” Mr. Thompson said. “There is no room for oversized egos and superstars in a culture where everyone's opinion is valued equally.”
Fancy digs are not important to Perkins' staffers, although the information technology systems have to be top notch. Nearly all of Perkins' employees work in a modest office in a Chicago high rise — dubbed a “Taj Mahal compared to our old office” by Jeffrey Kautz, the chief investment officer. Most of the art on the walls was created by a former receptionist.
“Controlling costs is part of our employee culture,” Mr. Kautz said, noting that Mr. Perkins himself epitomizes getting value for the money: He purchases lunch from Subway almost daily, where he assiduously accumulates points toward free sandwiches.
Company trips generally are paid for by employees, including weekend golf outings and tickets to Chicago White Sox games. (Messrs. Perkins and Thompson both grew up in Sox territory on Chicago's South Side.)
“We generally like being with each other,” Mr. Thompson said.
“The work culture and interpersonal relationships are fabulous relative to other places I have worked,” one employee said in comments on Pensions & Investments' Best Places to Work survey.
Employees also are very supportive of their colleagues' personal endeavors. For example, portfolio manager and ex-U.S. Army Ranger Ted M. Thome has gained a huge measure of respect from co-workers for the 13 Iron Man triathlons he has completed, earning himself the nickname The Thome-inator.
“Ted did an all-Ranger Iron Man race in very mountainous terrain with a 50-pound pack on his back,” Mr. Kautz said with considerable awe.