Within the soaring JPMorgan Chase Tower in downtown Houston, you will find the spacious, elegantly appointed offices of Smith, Graham & Co. Investment Advisors L.P. (No. 5 on the BE ASSET MANAGERSÂ list with $5.6 billion in assets under management). It was founded some 27 years ago by Gerald B. Smith, a native Houstonian who has become a major influencer in business, political, and philanthropic circles.Â
Opening Doors in Houston
The Texas Southern grad was first introduced to high finance in the city while working at the now-defunct financial services firm Hibbard, O’Connor & Weeks before honing his skills on Wall Street as a vice president at the venerable investment bank Dillon Read & Co. After stints playing senior roles in the fixed-income arena for firms such as Underwood Neuhaus & Co. and Westcap Corp., Smith decided to strike out on his own in the H.
“I always felt that Houston, for me, would be a fertile place to start a business, primarily because I had access to some of the most important people here in the city in the CEO suite and also within city government,â€ he says. “Having those relationships, I thought, would assist me in being able to open doors and to leverage those relationships that would be beneficial in the long run.â€
Staying Strong During the Great Recession
Smith proved to be prescient in making such moves. Strategic and focused, the firm continues its growth trajectory. In fact, Smith Graham had proven to be so viable that it made an acquisition at a time when most firms were reeling from the devastation of the financial meltdown of 2008. In February 2009, BE reported that the company expanded its product line and client base as well as increasing its assets under management by purchasing New York-based Ark Asset Management firm.
Now, the firm has made another pivot to alternative investing as traditional asset management is not delivering returns required by public and corporate pension funds, foundations, and university endowments. “When we started the firm, the basic asset allocation of a large pension fund was 60% equities and 40% bonds. If you roll the clock forward, that has changed tremendously,â€ Smith maintains, citing that today, institutional clients not only invest in stocks and bonds but also in private equity, hedge funds, and real estate.
Attracting one of the Most Powerful Women in Business
Its recent acquisition of Five Mile Capital Partners fits that bill, allowing the firm to offer real estate debt products for the first time ever. “The acquisition, or the lift that we closed on the end of February, will help transform the firm to move more into being a solutions-oriented organization that caters to the needs of the client and then comes up with the right solution to meet their goals.â€
Such innovation comes from recruiting talent. While all new hires may not be based in Houston, Smith was able to attract Donna Sims Wilson, one of BE’s Most Powerful Women in Business, who was installed as the firm’s president more than 18 months ago. As evidence of Smith’s assertion that the city values talent and ability over pedigree is the fact that Sims Wilson is already on the boards of the Greater Houston Partnership and United Way.
For more on black business in Houston, follow our coverage of the 2017 Entrepreneurs Summit, May 17—20 in Houston.