February 1, 2009
Field of Dreams
Eugene Profit’s firm is at a crossroads. The CEO of Profit Investment Management (No. 14 on the be asset managers list with $1.36 billion in assets under management) wants to diversify his client base to gain more corporate clients while boosting the firm’s coffers to $2 billion. Accomplishing either goal will be a challenge given the condition of the financial markets.
Currently some 65% of the assets Profit Investment manages are accounts from public institutions, but Profit thinks it’s time to target more corporate clients and endowments. As with many companies its size, “it sometimes seems as if we’re too big to be a small firm and too small to be big,â€ says Profit. That’s because at just under $1.5 billion in assets, it’s hard to approach pension fund trustees and investment officials at the controls of the biggest public and corporate funds. As a result, Profit still relies on large investment advisory companies, or funds of funds, to funnel new money his way–which they do at a cost.
The firm invests funds for 53 accounts, the vast majority of which are pension funds for government employee groups and corporations, including Abbott Laboratories, Calvert Mutual Funds, New York City Retirement Systems, Illinois Board of Investments, and the San Francisco City and County Employee Retirement System. Profit offers his clients three investment products, portfolios focused separately on large-, medium-, and small-cap stocks. Additionally, Profit oversees a mutual fund, the Profit Value fund (PVALX), with some $7 million in assets.
These days, entrepreneurs do whatever they can to drum up business, and Profit is no exception. He brought in a new marketing team this spring and, like many money managers, spends a good portion of his time traveling. He meets with investors to do the requisite handholding as he explains results, talks shop, and tries to allay concerns they might have about the current market. Meanwhile, Profit runs a lean operation with 14 employees in two offices: a headquarters in Silver Spring, Maryland, and another in Chicago. In the midst of a recession you’re either lean or you’re out of business, and Profit knows this well.
Since beginning his career in finance as a broker with Legg Mason in 1994, Profit has developed a company that ranks among the largest black-owned businesses in the U.S. In the world of asset management, it’s performance that counts, and Profit scores there as well. Despite the losses in 2008’s turbulent market, Profit’s mutual fund maintains a 10-year total return of 2.94% versus his peer group’s loss of 1.84%.
PATIENCE IN THE POCKET
Also serving as portfolio manager for the company, Profit, a former professional football player, applies some of the skills he developed on the gridiron–hard work, focus, analysis, and determination–to business. As a cornerback with the NFL’s Washington Redskins and New England Patriots, he exercised patience. At the start of each play, Profit would hold back for a split second so he could determine just what the opposing quarterback, running backs,