The new CEO of Brandes Investment Partners LP has a challenging assignment: show that the deep value equity money manager can produce positive returns and reverse five years and tens of billions of dollars in net outflows.
Brandes announced last week in a client letter that longtime CEO Glenn Carlson would be stepping down for “personal and professional reasons.” Mr. Carlson will be replaced on Feb. 1 by Brent Woods, the managing director of investments and a 17-year Brandes veteran.
Poor performance in its two largest strategies — international equity and global equity — fueled the big outflows. Assets under management at the San Diego-based firm plummeted to $29.8 billion as of Sept. 30, from $111 billion at the end of 2007, according to information from investment data provider eVestment Alliance, Marietta, Ga., and Brandes.
The markets have been unkind to value managers like Brandes since the financial crisis. In 2008, Brandes' AUM declined more than 50% to $52.9 billion. The slide has continued though 2012, although the pace has slowed.
The CEO change is unrelated to the drop in assets and was requested by Mr. Carlson, said Oliver Murray, managing director, portfolio management and client services, in an interview.
Mr. Murray said the company's succession plan involves several months of transition to ensure a smooth changing of the guard. Mr. Carlson will remain as one of 21 partners and a member of Brandes' investment oversight committee, Mr. Murray said.
“There is nothing surprising in this,” he said. “This is a normal evolution of our business.”
Top management changes at Brandes are rare. Mr. Woods will be only the third CEO in the privately held company's 38-year history. Charles Brandes, the founder and chairman, held the title until 2002, when Mr. Carlson took over.
Messrs. Brandes, Carlson and Woods declined requests for interviews.
The management change will not affect the firm's deep-value investment philosophy, Mr. Murray said.
“We believe that value investing really always wins, but there are cycles, and it takes a lot of discipline when you are in the down cycle like we've been in recently,” he said.
Brandes does not release revenue or profit numbers, but Mr. Brandes appears on several published lists of the richest Americans due to the financial success of his firm. Along with the decline in assets under management, 40 of Brandes' 431 employees were laid off in 2011.