The entrepreneur Steve Hardy is, ah, retired. Long live his successor, Kemmons Wilson Cos.
Kemmons Wilson acquired Zephyr Associates Inc., a firm founded by Mr. Hardy and renowned for bringing William F. Sharpes returns-based style and performance analysis to the institutional investment community. Zephyrs StyleAdvisor, often called a consultant in a box, was the first commercially developed software based on the academic idea, using investment returns to determine a mangers effective style and generate benchmarks for evaluating performance, risk and other attributes.
With the buyout, Mr. Hardy retired. He plans to relax, focusing on woodworking, reading, and enjoying myself, after selling his company April 26, he said.
Most clients might not realize a change in ownership has occurred. Charles E. Martin, senior vice president and chief investment officer of Kemmons Wilson who has also become chairman and CEO of Zephyr Associates, said he informed a few clients we know well and I was close to. Kemmons Wilson plans to issue a news release about the acquisition this week, Mr. Martin said.
The company the Memphis, Tenn.-based family office for the heirs of Kemmons Wilson, founder of the Holiday Inn hotels is developing a presence in money management.
In the last three years, Kemmons Wilson acquired large minority ownership positions in two investment advisers: Centennial Partners LLC, a hedge fund of funds, based in Memphis, with $700 billion under management from institutional and high net worth clients; and Two Rivers Capital Management LLC, a small-cap value manager, based in Chicago, with $100 million under management primarily from family offices, including Kemmons Wilson.
It is also majority owner of newly formed Sharpe Investment Advisors LLC, based in Memphis (and having no connection with Mr. Sharpe). Mr. Martin expects SIA to open for business in August. It plans to focus on the underserved small- to midsized foundations ranging from $5 million to $100 million in assets, Mr. Martin said. This is a market poorly served and paying retail prices for money management and generally without access to a broad range of portfolio management strategies, he said. Sharpe Investment hopes to bring diversified strategies and institutional fees, he said.
At Zephyr, nothing really meaningful will change other than clients will notice a renewed enthusiasm, Mr. Martin said. Kemmons Wilson a Zephyr client since 1997 plans to infuse the firm with more capital, with Mr. Martin leading plans to expand Zephyrs analytical products and market reach, including opening offices in Europe by the end of the year, he said.
All the staff, except for Mr. Hardy, will stay. It will continue to be based in Zephyr Cove, Nev. I will be spending a good part of my life in the Lake Tahoe area for the foreseeable future, Mr. Martin said.
Mr. Hardy founded Zephyr in 1994, based on his acquisition of StyleAdvisor, which was developed by his former firm, Balch Hardy Scheinman & Winston Inc. Zephyr has grown to almost 1,000 clients, including 200 of the largest corporate and public pension funds. Zephyr has significantly enhanced the original StyleAdvisor, making it more robust, and developed other investment analysis programs. Zephyr also in recent years received a U.S. patent for a graphical interactive analytical tool, Mr. Hardy said.
Mr. Hardy talked about selling Zephyr with a number of private equity firms and competitors. But we wanted to keep the company, the management, the culture intact and remain in Lake Tahoe, he said.
I think Kemmons Wilson wants to take the company to the next level, he said.