The San Francisco-based value equities portfolio group of UBS Asset Management plans to tap an unusual resource for insight for its dividend-yield investment strategy. The group has assembled an advisory panel of retired corporate chief executive officers to seek their perspectives on the issues related to managing the portfolio.
Nancy Tengler formed the value equities group after joining UBS Asset Management, the New York-based subsidiary of Union Bank of Switzerland, last December.
"As good as analysts are at securities analysis, none of them has ever sat on any of the boards of Fortune 500 companies," said Ms. Tengler, managing director of the value equities group.
With Donna L. Weaver, a Hayden Lake, Idaho-based consultant to the UBS group, Ms. Tengler put together the panel of former CEOs. Its first meeting will be June 8 and 9 at UBS' San Francisco office.
The group hopes the panel of former CEOs will provide "valuable insight on how dividend polices are determined," Ms. Tengler said. "The advisory panel adds a reality check to our decision-making process that we expect will provide a performance edge - especially at turning points."
The former CEOs and their former companies are: James G. Affleck, American Cyanamid Co.; Phillip R. Boyce, Pacific Western Bancshares; Fernando R. Gumucio, Del Monte USA; Lyman C. Hamilton Jr., ITT Corp.; Charles R. Weaver, Clorox Co.; and Chauncey E. Schmidt, Bank of California.
The four-month-old value equities group manages $100 million in the dividend-yield strategy, half of which comes from discretionary tax-exempt investors. In all, UBS Asset Management has $33.9 billion under management from clients worldwide, including $9.1 billion in discretionary assets from U.S. tax-exempt clients.
Essentially, the value equities group's strategy seeks stocks offering high dividends relative to the market. "It's a discipline that allows you to decide when to buy and sell stocks," Ms. Tengler said. The strategy "isn't just a mathematical process," she adds. "You have to do fundamental research to complement this discipline."
Seeking new sources of research, the group created the former CEO advisory panel, hoping to gain insight on corporate dividend policy and financing. "I can't say the CEO panel will keep us from making mistakes," Ms. Tengler said. "But I'd rather have another research point to tap."
What do the former CEOs get in return for advising UBS? Ms. Tengler says the UBS group is paying the panelists, although she declined to disclose the terms.
Ms. Tengler said she plans to bring the advisory panel together for meetings with the value equities group three times a year. In addition, she said she and her staff will keep in contact with the former CEOs through phone and fax to tap their expertise individually on particular companies or industries.
While her track record at the UBS group, is short, Ms. Tengler is employing a similar investment strategy - but now tapping the former CEOs - she used at Spare Tengler Kaplan Bischel & Associates Inc. and at the Bank of California's Merus Capital Management, both in San Francisco. She co-founded Spare Tengler after she and other principals left Merus. Last year she sued the firm - now renamed Spare, Kaplan, Bischel & Associates - where she was president, claiming she was unfairly forced out.
So far, she and her colleagues at the UBS group have had a fine start. From Jan. 1 through April 30, the group's dividend-yield portfolio returned 13.76%, compared to the Standard & Poor's 500's 12.97%.
Clients, along with Ms. Tengler, will no doubt be eager to see if the former CEOs can help top that starting performance.