Grantham, Mayo, Van Otterloo & Co. LLC named a new CEO and discontinued its global equity team's fundamental stock selection efforts, which will result in the departures of senior executives following two years of net outflows, subpar performance and significant executive turnover.
A number of industry insiders have told Pensions & Investments that GMO's outgoing CEO Brad Hilsabeck's leadership style and decision-making process alienated clients, consultants and employees alike, contributing to client and executive departures.
Sources also suggest it might be possible that GMO's new interim CEO, Margaret “Peg” McGetrick, could steer the ship back on course — provided she stays on board as permanent CEO and is given the autonomy to set things straight.
But even if turnaround is possible, it won't be easy, and it won't be quick.
Ms. McGetrick, a portfolio manager on GMO's international active equity team from 1984 to 1996 and partner of the firm from 1988 through 1997, left the company to form her own asset management firm, Liberty Square Asset Management, which has closed. She rejoined GMO as a member of the boardin 2011.
Last month, Ms. McGetrick was named interim CEO. Beginning July 1, she will replace Mr. Hilsabeck, who is resigning effective June 30.
On June 2, it was announced GMO would be reorganizing its asset allocation division by discontinuing the fundamental equity group to focus on its quantitative investment process. This will result in a number of executives leaving the firm, such as Chris Fortson, head of fundamental research for the global equity team; global equity team co-head David Cowan; and asset allocation co-head Sam Wilderman.
Messrs. Cowan and Fortson will leave the firm June 30, while Mr. Wilderman will leave at the end of the year.
Industry observers as well as former employees say these changes have been a long time coming and are the result of major problems plaguing the firm.
GMO spokesman Tucker Hewes said executives at the firm do not comment on internal company matters.
GMO's assets under management are down on a year-over-year basis. Data from Marietta, Ga.-based eVestment LLC show GMO had $98.7 billion in worldwide AUM as of March 31, down 16.6% from the same period a year ago and down 17.1% from March 31, 2014.
Then there's the employee turnover. eVestment lists 24 senior executives as having resigned from the firm from 2014 through May 31.
And a number of GMO's strategies have been struggling with performance issues, which have led to clients either terminating the manager or putting it on watch. For example, the $12.1 billion Orange County Employees Retirement System announced in February it had put GMO on watch; the firm manages $194.7 million in global equity for the Santa Ana, Calif., system.