Green Investing

Money manager Isaac Green's advice on where to put your money as the economy recovers

Photo: Jimmy Williams

Piedmont's Green has four key themes for his 2010 stock picks. (Photo by Jimmy Williams)

In the dot-com-crazed ’90s, a good number of investment firms chased big returns by employing high-risk strategies. As equity markets produced double-digit gains, portfolio managers seemed to view any tech venture as a boundless opportunity to reap huge profits. That is, until the dot-com boom went bust. “People in the ’90s invested their money in technology and dot-com stocks. They focused on returns and didn’t really think of the risk they were taking in pursuit of those returns,” recalls Isaac Green, a managing partner at Loomis Sayles & Co. in Bloomfield Hills, Michigan, at the time. “And that means people were concentrating their portfolios, not diversifying them, and not thinking much about risk management. That was more of the norm of the industry in the’80s and ’90s.”

While others followed the herd of tech-obsessed investors, Green devised a different approach to investing than his stock-picking brethren. And since starting Piedmont Investment Advisors (No. 10 on BE 100s Asset Managers list with $1.8 billion in assets under management) in 2000, his portfolio has consistently outperformed the benchmark S&P 500. Here’s how he got started, built his business, and most importantly—where he sees the investment opportunities in 2010.

RISK ASSESSMENT

At the end of the last century, equity markets were enjoying record gains, led primarily by high-tech and dot-com stocks. But Green knew the great 20-year bull market couldn’t last forever, and that institutional and individual investors were going to need to manage risk while pursing returns. So Green did what most folks with a revolutionary concept and entrepreneurial aspirations do—strike out on their own. He left the firm, headed to his hometown of Durham, North Carolina, and started his own asset management company.
In 2000, along with a band of former Loomis Sayles employees, Dawn Alston-Paige and Sumali Sanyal, he launched a small operation with a risk-aware investment strategy that stressed diversification and quality stocks to manage volatility while driving returns. “We built a real stock-picker’s portfolio—it typically has fewer than 40—and is diversified so that the results we achieved are a function of how good our stock picks are in each part of the market,” he says.

The Duke and Columbia University graduate had to contend with some lean years before his brainchild established credibility and a successful performance track record. Patience, as well as the firm’s cash reserve, was put to the test until clients were comfortable placing their trust in his fledgling firm. The turning point came when Green & Co. landed their first major accounts—the North Carolina State Treasurer’s office and General Motors Asset Management. “Those were big breakthrough accounts for us. Here are some of the biggest pension plans in the country, they’ve looked at what we’re doing and they think it’s attractive so we must be onto something here,” recalls Green.

Within a decade this upstart grew into one of the nation’s largest black-owned money management firm. Its large-cap equity portfolio (managed by Green), which was its first product, has for years outperformed the benchmark S&P 500 since inception. These days, the firm manages  44 clients and has a total of 68 accounts.

MANAGING A DOWNTURN

The past year was a roller coaster ride for nearly all asset managers. With volatility in the financial markets being the name of the game for much of the year and firms being paid based on ever-fluctuating assets under management, CEOs running businesses in this sector are facing a new series of loops and inversions. The recent economic downturn, however, has provided a business opportunity for the firm. In 2009, Piedmont, along with two other firms, was selected by the U.S. Treasury Department to collectively manage a securities portfolio worth roughly $218 billion that the federal government purchased though its TARP Capital Purchase Program (See “Piedmont to Manage Piece of TARP Pie”).

Through the program, Piedmont, New York-based AllianceBernstein L.P., and FSI Group L.L.C. of Cincinnati are expected to manage preferred shares, senior debt, and other securities to provide capital for more than 500 financial institutions. While Piedmont’s management would not comment on terms of the deal, their agreement with Treasury will run though April 20, 2014.

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  • marie gerald

    My husband was reading through the January 2010 issue and was very impressed with investing advise from Mr. Green and would like to do some investing but not sure how to get started and was interested in contacting Mr. Green but didn’t have any information on Mr. Green. Do you have a number or email address to contact him. Thank you.

  • http://kennedytravelassociates.globaltravel.com james kennedy

    my thoughts are same as the above reader I would like to know how to get in touch wit green . he offers some of the best advise on investiment that I have ever coame across.please if tere are anyone out there with hmr. green e mail address please advise. my email address is kenforcement 1 @yahoo.com . please please please if there are any one with mr green email address please let me know. I am looking into investiment b ut don;t have the slightest clue on how to start..

    Thank you.
    james kennedy

  • Moley

    I highly recommend that BEFORE YOU INVEST in real estate read the book “Oops People of Color Live There. This will prepare you and make sure you are able to sell your home to anyone. Poclt has information that provides the necessary proof. Too many Black people are misled because of a lack of information and real estate agents who do not know or will not disclose the truth. People of Color have a different deal in America. As non Privileged citizens of the U.S. “Oops People of Color Live There will help level the playing field.

  • Linda Richmond

    I’d like Mr. Green’s email address also, because I’d like to learn how to invest in the stock market. My name is Linda Richmond and my email address is LFK1960INVEST@YAHOO.COM Thank You.