CAMBRIDGE, Mass. — Numeric Investors LLC, a quant firm roiled by succession issues in the past, appointed Citigroup Asset Management veteran Michael Even as president and chief executive officer.
The move will free up founder Langdon Wheeler to focus on investments and sets the stage for an eventual generational transfer.
Calling Mr. Even "one of the best managers in our industry," Mr. Wheeler, in an interview, said Numeric's new chief will take the reins in June just as new strategy launches are ratcheting up the level of management skills needed to run the business.
Competitors predict Mr. Even, who became an executive vice president and head of institutional asset management at Legg Mason Inc. in November when the Baltimore-based giant acquired Citigroup Asset Management, will prove an asset.
Mr. Even is "a great catch," said Theodore R. Aronson, managing principal of Philadelphia-based Aronson+Johnson+Ortiz LP, who first met the executive about 15 years ago at a quant ethics panel. He'll make "Numeric even better, and they were already pretty good," said Mr. Aronson.
Mr. Wheeler, who turned 59 on May 7, said succession planning at smaller firms "isn't always well thought out," but with Mr. Even's appointment Numeric has set the stage for an orderly transition.
Succession had proved a thorny issue for the firm in the past. In 1999, John C. Bogle Jr., a high-profile Numeric partner and managing director 12 years younger than Mr. Wheeler, bolted to launch Newton, Mass.-based Bogle Investment Management LP. Mr. Wheeler conceded that misunderstandings at the time about his own plans at Numeric were a contributing factor.
Left the firm
A number of other senior executives — including Mark Engerman, a chief investment officer and manager of value strategies; James G. Sloman, a managing director and director of portfolio strategies; Richard H. Harjes, director, research; and Andrei B. Pokrovsky, a managing director, U.S. market neutral team — have left the firm since 1989 when Numeric became the first emerging manager incubated by Arlington, Va.-based Strategic Investment Group on behalf of the California Public Employees Retirement System.
"I had never believed you could have (that degree) of high-level partner turnover and survive, delivering value added to your clients, but they have proven me wrong," said Hilda Ochoa-Brillembourg, Strategic Investment Group's president and chief executive officer.
Ms. Ochoa-Brillembourg said Numeric's "very driven" nature makes it a stressful place to work, but Mr. Even — whom she brought to Mr. Wheeler's attention more than 10 years ago — should prove "a great match" for the firm. "I hope that Michael will smooth what are the pressure points that come from a highly charged competitive environment," she said.
Mr. Wheeler said Numeric had set a midterm goal of bringing in a next-generation leader, and the management committee pounced when the Legg Mason-Citigroup deal put Mr. Even in play. It was important to have "an increasingly skilled manager … with a longer time horizon than I will have," and Mr. Even, 45, stood out as "a very good manager of complex organizations," he said.
In a telephone interview, Mr. Even said joining a firm with a "great culture" and "tremendous momentum" — and one small enough to let him lead the management committee and contribute on the investment committee — was an opportunity "to go back to my roots." Mr. Even cut his teeth as a quant manager and executive with Boston-based Independence Investment LLC.
Some observers say they'll be watching to see if the arrival of a veteran of huge money management operations — both CAM and Legg Mason separately had more than $400 billion in assets under management — is a sign that Numeric is poised to raise its marketing game to a new level.
Measured gains
In contrast to the explosive growth in assets under management enjoyed in recent years by quant firms such as Acadian Asset Management Inc., INTECH and LSV Asset Management, Numeric has seen steady but more measured gains. Today's $11.6 billion in assets is up from $10.8 billion at the end of 2005; $9.5 billion in 2004; and $7 billion in 2003.
Mr. Wheeler, however, is well known for painting the limiting of asset inflows as a moral issue for money managers. Numeric's focus on delivering "dollars of excess return" — a concept Mr. Wheeler illustrates on Numeric's conference room blackboard with graphs to show just where a money manager begins lining his own pockets at the expense of existing clients — has led the firm to close strategies to new money early.
All six of Numeric's existing market-neutral strategies, which boast a combined $3.3 billion in assets, are closed. Of its 14 long-only strategies, another six — microcap, small-cap value, core and growth, and the firm's Europe and Japan core, with a combined $3.8 billion in assets — are closed. That leaves eight strategies with combined assets of $4.4 billion still open: core aggressive, core, large-cap core, growth, value aggressive and midcap as well as large-cap and small cap long horizon.
Mr. Even, who called himself "an action guy," said he's comfortable joining a firm that's "adamant about closing early rather than late."
New products and initiatives at Numeric will give Mr. Even plenty to work with, Mr. Wheeler said.
Numeric will launch two new products during the next few months:
ca 130-30 strategy for which the firm is now raising money for an "imminent" launch, said Managing Director Edward R. Goldfarb. The strategy will have an initial capacity ceiling of $1 billion.
ca market-neutral global macro strategy being set up by Que Nguyen, who joined Numeric last September from Morgan Stanley Investment Management, that will use derivatives to make bets among world stock, bond and currency markets. Mr. Goldfarb said that product, which will launch July 1, can accept up to $3 billion.
A third product set for a September launch is a global large-cap market-neutral strategy that will have an initial capacity target of $1 billion.
Mr. Wheeler, who will take on the title of chairman when he bequeaths Mr. Even the president and CEO positions, said the stage is now set for him to eventually hand over his CIO duties and become less involved in day-to-day affairs. For the coming few years, he said he's excited about the prospect of managing the firm's research staff, which accounts for just more than half of its 61-person lineup. n
