A close friendship and similar bond management styles brought about the creation of the second largest African American-owned fixed-income firm.
New York-based UCM Greystone Capital Management Inc. was formed late last year when one African American-owned bond manager, Utendahl Capital Management Inc., New York, bought another - Greystone Capital Management, Hartford, Conn. Both firms are institutional: Utendahl brought about $3.3 billion in assets to the deal; Greystone, $400 million.
John Utendahl, founder and chief executive officer of the eponymous firm, and Wayne Moore, founder and CEO of Greystone, have been friends for more than 20 years. They were in each other's weddings, and even their children are friends. They also both manage bonds conservatively, with an overweighting in high-quality corporate issues, going for steady, predictable bond returns. The matchup of the companies made a lot of sense, Mr. Moore said.
But rather than remaking the newly combined company in the image of its two components, Mr. Moore said the company has designed a new model.
"We will not have our hand out for any reason other than superior performance," he said. "We are not going to be a minority-owned manager. Embracing the affirmative action model hasn't worked in money management. Look at a very well-respected African-American manager like John Rogers at Ariel: He has great performance and a sterling reputation. So why does he only have $6 billion or $7 billion under management after 20 years? Then look at a firm like MetWest. They got $18 billion in the blink of an eye. We want a MetWest look and feel. We don't want to be at $6 billion after 20 years."
In fact, UCM Greystone wants to emulate a really big bond manager like PIMCO, Western Asset Management or BlackRock, Mr. Moore said. "We can't replicate them - they're too big. But we can make our platform look like theirs."
So UCM Greystone is significantly ramping up its technical risk-management analysis and attribution capabilities.
It also retained The Whitney Group, New York, to search for non-investment staff. The firm has ambitious growth plans, Mr. Moore said, and it needs a very senior institutional marketer to target corporate institutional investors. Once hired, that person will seek a second institutional marketer. The firm is also looking for two more bond analysts, he said.
"There will be no change in portfolio management," Mr. Moore said, "but we are bringing in business people to run this investment firm as a business."