One year after the death of its leader, Lord Abbett & Co., New York, wants to be alone.
After the death of managing partner Ron Lynch last year, the firm's management analyzed its options, including independence vs. an affiliation with another firm, said Robert S. Dow, Mr. Lynch's successor.
Independence won out, he said; potential suitors, including United Asset Management Corp., have visited, but no offers have been entertained. Not having to please a parent company is better for internal operations and investment discipline, not to mention in terms of attracting talent, said Mr. Dow.
"We know what the (acquisition) numbers are and they don't make emotional sense," said Mr. Dow. "This way, we can do it our way."
Some believe Mr. Dow protests too much, however. He noted a client had terminated Lord Abbett because he was certain the firm would be sold within the year. That was over 18 months ago, he said.
The question was brought up by several clients during Mr. Lynch's illness, said Mr. Dow. But, he added, even before Mr. Lynch's death, management had succession plans in place and the firm had weathered several transitions in its 68 years in business.
Stability is a hallmark of the firm, said Mr. Dow. For example, he noted one client recently celebrated its 20th anniversary with the firm - and with the same portfolio manager.
But he added that doesn't mean Lord Abbett doesn't recognize the market changes and that it needs to adapt. The firm, started in 1929, manages $22 billion in assets, $12 billion of which is equity and another $10 billion in fixed income. Clients are mainly traditional defined benefit plans, although the firm is exploring new areas, according to its management.
The firm is expanding beyond its traditional large-capitalization value base into small-cap value equity and fixed income, said Daria L. Foster, senior marketing and service director. In fixed income, Lord Abbett is creating strategies that can use specialties such as convertibles, international and high-yield bonds around a core of traditional bond holdings tailored to the client's policy.
The firm opened an international fixed-income group and small-cap domestic product last year, and began offering U.S. clients an international small-cap equity fund managed by the London office of Fuji Investment Management Co., Tokyo.
Lord Abbett owns a 6% stake in Fuji, which has given the firm a chance to tap the Japanese market, said Mr. Dow. He noted Lord Abbett raised $350 million in convertible and high-yield bond accounts from Japanese clients during the first quarter of 1997 alone.
Lord Abbett is also expanding its marketing from the traditional defined benefit plan base to avoid being dependent on one line of business, said Ms. Foster. The marketing department is now exploring the endowment and foundation markets as well as hospital trusts and the insurance companies, she said.
The firm has added two marketing professionals and four associates in the marketing department over the past five years and plans to add another marketing professional during the second half of 1997, she said.