You earned a great reputation at Ariel. It seems you could have had your pick of jobs once you disbanded your own firm. Why Perkins? One-hundred percent the quality and caliber of the people here. I came over for a cup of coffee with (Perkins co-founder and portfolio manager) Bob Perkins and Perkins CIO Jeff Kautz and our half-an-hour cup of coffee turned into a three-hour discussion about friends, family, friends-in-common, South Side Chicago, the White Sox, all types of things. I had always known Bob's reputation and (Perkins portfolio manager) Tom Perkins' reputation and learned a little bit about Jeff over the years and their no-nonsense approach to investing.
What have been your biggest successes this year? I think our biggest success has been building our name and reputation in the institutional marketplace as a stand-alone brand. Historically, up until the beginning of this year, our products had primarily been branded under the Janus family name. ... It's been a wonderful first step for us to build our brand and reputation as a stand-alone firm.
Has that been tough in the last year? I don't know that the financial crisis made it tough, but coming out of relative obscurity in the institutional place has been the harder first step. I think once the consultants and plan sponsors understand ... the message and the story they are quick to realize who you are, but it's been harder to kind of get on the map in their minds.
What has been your biggest disappointment? My biggest disappointment isn't Perkins specific, but it's industry specific and that seems to be a healthy loss of trust in the investment management profession and in the industry by the marketplace and the general public. And I think it's beholden of us in this business —with our colleagues, our peers and most importantly our clients — to earn that trust back.
You recently said that large institutional investors are not buying midcap value equities. Is that still the case? I don't think I said they're not buying midcap equities. I think what I said was at the defined benefit level it's less common to see midcap as a stand-alone asset class than it is at the defined contribution plan level. It seems to me that there is growth and exposure to midcap equities in virtually all the defined contribution plans that we call clients or potential clients. But it seems to me that as the defined benefit plans have moved away from pure style-box investing, there's this notion that large-cap funds will dip down a little bit and get some exposure to the higher end of the midcap market; small-cap managers will capture some of the lower end of the midcap market and you'll have that space covered. I think that kind of more absolute-return type of approach to equity investing has many plan sponsors feeling that midcap's adequately covered.
Perkins' long-term flows were better than Janus' and INTECH's for the year ended June 30. How did that happen? I think that first of all ... portfolios have done what we've expected them to do during these difficult periods. We've been doing this and only this for 29 years. We have never lost a portfolio manager or an analyst from our firm from those strategies — small-cap value, midcap value, large-cap value — in 29 years.
What's the best thing about being owned by Janus? The ... structure allows us to focus solely on what we do best, and that's invest in small-cap, midcap and large-cap value stocks. ... Janus really helps us in all administrative and shared services, everything from finance to HR to legal; anything we need in those areas, we have world-class professionals in Denver helping us there. Technology is another great example. Clearly, we work in partnership on the client service side of the equation as well, so it's a really great partnership.
What's the worst thing? I wouldn't call it the worst thing. I would say communication is something I've been working hard on. We've got this relationship with a terrific company, but they're based in Denver, Colo. ... I've been spending lots of time in Denver as well as on the phone and on e-mail with my colleagues there, but making sure that we're keeping communication current and flowing has been something I'm working hard on.
What are your company's greatest strengths? I think first and foremost is the stability and the experience. ... Twenty-nine years of no professional turnover; same portfolio managers at the helm. ... I think secondly is the steadfast dedication to our no-nonsense approach to investing. Many stock pickers, fundamental investors talk about stories. They tell you, "Let me tell you about this stock and then you can understand the balance sheets and the financial statements." We do the exact opposite. Show us the numbers and we'll tell you the story, and that type of no-nonsense approach is wonderful.
What areas are you targeting for improvement? We've launched our large-cap value strategy ... as a mutual fund at the beginning of this year, so really growing that strategy and making sure the marketplace knows about that product is a real goal for us here at Perkins.
