"It's hard to get recognition," bemoans Scott Sterling Johnston. "But it's worse when we blow it ourselves."
Mr. Johnston, chairman and chief investment officer of Sterling Johnston Capital Management Inc., San Francisco, was lamenting how hard it is for small fish with limited resources like his own money management firm to get noticed in the sea of prospective pension fund and other tax-exempt institutional clients.
Opportunity to get some notice arrived in the quarter ended March 31, with superb returns for the Sterling Johnston microcap equity strategy. Its microcap composite returned 40.28% for the quarter and 217.15% for the year ended March 31. The performance would have earned Sterling Johnston a No. 1 ranking in the Pensions & Investments' Performance Evaluation Report, in both the overall managed equity and the growth managed equity categories for the quarter. The composite would have ranked second in both categories for the 12 months.
But because of an oversight, one of the staffers at the firm neglected to account for $5 million in new business the money manager had won recently for the portfolio, which would have raised its then $9.6 million in assets far beyond the $10 million minimum needed to qualify for inclusion in PIPER.
"I'm just kicking myself," Mr. Johnston said, "because it's rare someone gets a chance to be No. 1. It's really disappointing."
"I take the blame," he added.
"It takes time to build a firm. Consultants want three or four years of a track record.
"This is a sophisticated business. Regardless of how well you've done, it still takes that critical mass."
With a staff of only six, the firm manages a total of $225 million, including the microcap strategy with $25 million, all from tax-exempt clients. Its small-cap strategy, with $145 million, already appears in PIPER.
The microcap strategy will start appearing in PIPER in the second quarter. But whether it will ever achieve that top ranking depends on how well it performs and, of course, how carefully the staff fills out the PIPER survey.