April 24, 2025 • 56 mins
Barry speaks with Jeffrey Becker, Chairman and CEO of Jennison Associates LLC. Prior to joining Jennison in 2016, Jeff served as the CEO of Voya Investment Management, formerly ING. He held various positions with ING including Vice Chairman, Chief Operating Officer, and Chief Financial Officer. He is a member of the Economic Club of New York and also serves as an Advisory Board member of Institutional Investor’s U.S. Institute. Additionally, he is Vice Chair of the AmeriCares Board of Directors, and Chair of the AmeriCares Free Clinics Board of Directors. On this episode, Barry and Jeff discuss his path through finance, managing risks in today's environment, and global trends and opportunities.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. This is Masters in
Business with Barry Ricolts on Bloomberg Radio.
Speaker 2 (00:17):
This week on the podcast. Jeff Becker chairman and CEO
of Jennison Associates. They're part of the Pigeum family of
asset managements. Jennison manages over two hundred billion dollars in assets.
Jeff has really a fascinating background, from Arthur Anderson to
Altus to ion G. Eventually he becomes CEO of Voya
(00:42):
when the parent company spun out the US holdings into
a separate entity. Really a fairly unique career path and
is sort of uniquely situated to look at the world
of investing. Jennison launched way back in nineteen sixty nine
(01:03):
as a growth equity shop. Their focus is on generating
alpha with high conviction concentrated portfolios. They've put off a
damn good track record over the years. I thought this
conversation was really interesting. There aren't many people who have
this sort of perspective and perch to see the world
(01:25):
of investing from both an institutional and insurance based perspective
and a long term retail investment perspective. I thought this
conversation was really interesting, and I think you will also
with no further ado my conversation with Jennison associates Jeff Becker.
(01:47):
So let's start with your background. You get a bachelor's
in economics from Colgate and then an MBA in finance
from n YU. Stern. Sounds like you had been thinking
about finance as a career right from the start.
Speaker 3 (02:02):
Quite the contrary, Berry, I had no idea what I
wanted to do in college or coming out of college.
I was a liberal arts major. My parents felt strongly
about getting you know, me a liberal arts degree and
having me learn how to read and write effectively, and
so that was the goal. I was in economics, an
English major. Econ was the closest thing you could get
(02:23):
to business in some of those schools, and so, you know,
that's what I majored in. You know, I had no
real guidance in terms of finance. Neither of my parents
were in the financial industry, and so I did what
most students did in those days. As you saw on
the board who was coming up to interview and potentially
hire undergrads, and I saw that what were in those
(02:47):
days the big eight accounting firms were coming up to hire,
and they had this program where they would hire Liberal
Arts graduates, have them work, and as part of the arrangement,
would pay for you to go to grad school. So
it was a combin find program through Arthur Anderson to
go to NYU. And they were originally paying for a
(03:07):
master's in accounting, but ultimately everyone parlayed that into an
MBA in finance.
Speaker 2 (03:12):
Huh. Really interesting And did you end up at Arthur
Anderson for any length of time?
Speaker 1 (03:16):
I did? I did.
Speaker 3 (03:17):
I ended up there for for seven years. It was
It was a terrific experience. It was a great company.
You know, in those days, these companies hired you know,
crops of undergrads, they trained them together. We learned everything
you know across from accounting, to auditing, to to UH
tax and valuation. I ended up in what was called
(03:38):
the Valuation Services Group, where we valued real estate and
businesses either for transactions or for m and A activity.
And it was a terrific company, a great learning experience.
They sent you out to clients very early on in
your career, and you also got people management skills pretty
early on.
Speaker 2 (03:55):
So learning to value real estate, learning to value companies
sounds like you're going into private equity and private credit
down the road, like that seems to be the path
these days. What was that experience like and how did
it affect how you look at investments today?
Speaker 3 (04:15):
You would have thought that I didn't know what private
equity or private credit really was. At the time I
had started to shift more and more into real estate.
The background of tearing apart financial statements and balance sheets
and discounted cash flow analysis was a great foundation really
for anything in you doing finance ultimately, So it was
a great experience in that regard. But I was starting
(04:38):
more and more to specialize in real estate, and as
a result, I got hired away by one of Anderson's clients,
which was ETNA, and ETNA had a very large commercial
real estate business. As you may recall, the insurance companies
had huge commercial loan portfolios in those days that they
were using to backstop long dated life insurance liabilities. It
(05:03):
seemed like the perfect match of asset and liabilities until
real estate valuations bottomed out and the life companies ended
up with a whole bunch of mortgage loans that were underwater.
That led to a terrific experience for me being part
of the workout of all of those loans in the
early nineties. So we did foreclosures, we did restructurings, we
(05:25):
did equity kickers, and we pulled up some of these
loans into CMBs deals and sold them through Wall Street.
It was really a terrific experience and really bred out
of a crisis.
Speaker 2 (05:36):
And I just want to emphasize we're not talking the
beginning of the pandemic in twenty twenty. We're not talking
about the financial crisis in eight oh nine. You're talking
about really the post SNL crisis late eighties, early nineties,
where a ton of commercial real estate suddenly took a
big hit. Eventually you become chief credit officer covering real estate.
(06:01):
Tell us a little bit about that.
Speaker 3 (06:03):
Yeah, I was. I was part of, you know, the
management that ultimately had to determine, you know, the valuation
and the credit approval of the different transactions that we
were working on. Whether that was originally putting out new
mortgage loans and determining whether it was a you know,
a good credit for the insurance company capital, or when
(06:23):
we got into the restructuring period, it was about was
this the right deal, Were these the right terms? You
know for us as we as we tried to salvage
the portfolio.
Speaker 2 (06:32):
And then following ANA, you end up at Altus Investment Manager,
your CFO there. What was that like, going from analyzing
credit to being chief financial officer for an investment firm.
Speaker 3 (06:46):
Well, one of the things we were doing by working
out the troubled mortgage loan book at ETNA is we
were also working ourselves out of a job. So the
job was to wind down the portfolio, and we were
actually given retention agreements that were two years in duration,
and at the end we essentially were out of jobs.
That was a little bit scary for an early career endeavor,
(07:10):
but by the same token, it was the first time
in my life I ever saw a six figure payment
come at one time, and it was quite rewarding at
an early stage in my career. So I knew I
was going to be out of a job. ATNA was
up in Hartford, Connecticut, so I was up there alone
as a young man, and I went to the head
(07:30):
of HR at ETNA, and I said, this has been
a terrific experience, but my gig is up and I'm
probably going to head back to New York City. Is
there anything that I should look at within ETNA. She
happened to be a Colgate grad. Took an interest in
me as a Colgate grad and said, yeah, we've got
this great little third party institutional investment manager named Altis
(07:52):
Investment Management. It runs pretty independently, has about one hundred
billion in assets. I'm going to send you over there
to meet the young Dynamic make CEO. There a guy
named John Kim. So I went over and met John.
We had a terrific three hour conversation and at the
end of the conversation, he said, you're hired. And I said,
I'm hired. What am I going to do? And he said,
(08:14):
I don't know, we'll figure it out, but I think
you're going to be CFO. And I said, well, I
know Arthur Anderson is on my resume, but I actually
have never practiced accounting and so I'm not sure that's
the right role for me. And he said, wow, we've
got a really strong finance team and a good strong controller.
I want you to be a more strategic CFO. I
want you to work on structured deals m and a
(08:36):
levers of profitability. And so that turned into a CFO role,
which again is a terrific experience for anything you do.
Really understanding how businesses make money and the levers of
profitability is a great experience.
Speaker 2 (08:50):
Huh. So how do you go from Altis to ING
Investing Management? What was that transition like?
Speaker 3 (08:57):
Well, in two thousand and three, I fired etna's financial
businesses and that was the life insurance, retirement and asset
management businesses, and so Altis went along with that. With
that acquisition, Ing had been on a buying spree around
the world and in the US, buying up insurers and
other businesses, and had ultimately ended up with about six
(09:20):
asset managers brands that are now all gone. Altis the
one I came to the party with Pilgrim Firm and Cells,
Lexington Partners, Relia Star Research, the original Ing Investment Management.
But Ing did not want to see these runs as boutiques. Ultimately,
in the long run, Ing had a very integrated model,
(09:43):
a mono brand approach to the world, and wanted to
bring all these asset managers together. So I was selected
to help lead the integration of these asset managers, which
was which was an interesting project. Each of these asset
manag had a CEO. These boutiques were pretty fiercely independent
(10:04):
and it was a bit of a bumpy ride as
we as we brought them together, but ultimately we did.
We you know, we started out in some cases with
four small cap equity teams, and in some instances we
selected one and not the others, and others instances we
might have combined teams, and in other instances we started
all over. So it was, you know, a multi year
(10:25):
project to really bring all of what were the acquired
asset managers into one integrated IG Investment Management, and ultimately
I was the CFO of that initially and then later
the COO, the CEO at the time, came to me
and said, you did a terrific job on the integration project.
(10:47):
You can be ce CFO or COO. Which one do
you choose? And I said, well, can I be both
and and he said no, I can't do that right now,
so you have to pick one, and I chose CFO.
And my rationale was the CFO is always at the
head table because there's always a financial implication to everything
you do. So that's where I started, but ultimately did
(11:10):
become COO as well.
Speaker 2 (11:12):
Eventually ING changes its name to Voya and everything is
now branded Voya that were either of these other pieces
or ING and you rise to the role of CEO.
How did that come about and what was it like
going from COO and CFO to CEO.
Speaker 3 (11:32):
Yeah, it happened because of another crisis in two thousand
and eight, the Great Financial Crisis. ING had gotten overexposed
in mortgages and had to take a loan from the
Dutch state to shore up their Tier one capital ratios.
And as part of that deal with the Dutch government,
ING agreed to sell off the US properties. If you
(11:55):
can remember back to the start of the financial crisis,
it was viewed as largely a US and so I
think there was a desire to shed the businesses that
you know where the where the subprime mortgage bubble had
burst ultimately, and so I was I was working for
the head of ING Investment Management. But when I decided
(12:16):
to take this loan, there was a change in leadership
and my boss became head of I in g America's
all of the insurance, retirement and life businesses, and I
became a CEO of ING Investment Management, which later became Voya.
The way I found out that I was becoming CEO
(12:37):
of I G I Am. Was a bit of an
interesting story. I was coaching my son at a U
twelve hockey tournament up in the Northeast and my cell
phone kept ringing while I was on the bench yelling
at kids to skate harder and get into the get
into the corners. And it kept ringing, and it was
my boss. And it was a Sunday, And eventually, in
(12:57):
between periods, I picked it up and and it was
my boss. At the time was a gentleman named Rob Leary,
a terrific mentor of mine, who said, I need you
to get down to my house tonight. I said, Rob,
I'm up in the Boston area. He lived in Greenwich, Connecticut.
He said, no, you have to be here, and I said,
am I fired? And because if so, I'm not coming down.
(13:19):
Just tell me now. I'm going to finish the game.
And he said, no, you're not fired, but you have
to get down here. So I made my way down
to Greenwich, Connecticut, and I proceeded to learn that I
and G had taken the loan from the Dutch state
and that in the morning before we woke up, because
Europe's ahead, it was going to go public and my
boss would become the CEO of the Americas and I
(13:43):
would become the CEO of the investment management firm, and
we planned what was going to happen. The next morning.
I was going to have to assure our investment teams,
our clients, our pension consulting partners that everything was going
to be okay and that we were you know, we
were still in business. But as you can imagine, it's
(14:03):
incredibly hard to run an asset manager with a for
sale sign on your back. Because Ing had announced that
it would dispose of the US businesses. So another crisis
bred opportunity for me. I had to actually tell my
team of peers that I was now their boss. Because
it was so chaotic that no one came in to
actually deliver that message. I had to deliver it myself.
(14:24):
But it was a great team and we rallied together
and we built the business, grew it coming out of
the financial crisis, and then that ultimately became the business
that we spun out as Voya.
Speaker 2 (14:37):
So two questions that first, I have to get the
date of this, Like, was this right in the middle
of the crisis? Was it towards the tail ends when
did you get this Sunday hockey phone call?
Speaker 3 (14:50):
Yeah, I was about the middle of two thousand and nine.
So two thousand and eight, you know, as you remember Barry,
fourth quarter was chaotic. We were having global calls, trying
to preserve capital. Who knew what was failing next. And
then as we got into two thousand and nine, companies
were starting to sort out, you know, where they were,
and that's and it was about mid two thousand and
nine where Ing decided to take the state aid.
Speaker 2 (15:13):
But the second question is he couldn't have told you
that over the phone, Like, I know, they want everybody
in the room when you're planning, but now, no, this
is good news. You're getting a promotion. Get down here.
It's important. That's a stressful drive from Boston to granted
it was I.
Speaker 3 (15:30):
Think he was being extra cautious given it that it
was material, non public information and pretty significant information at
that and also we needed to be up and running
in New York Monday morning, and so he needed to
make sure I was down Sunday night.
Speaker 2 (15:46):
Gotcha. That's really that's really quite fascinating. How did you
end up going from Voya to Jennison Associates? What drew
you there.
Speaker 3 (15:55):
Yeah, I wasn't necessarily looking for a new role. I
was enjoying joining the role at Voya, being CEO of
the asset manager. I was on the executive committee. I
was learning new skills being part of quarterly earnings calls
and and and you know, helping grow that business as
part of a new company and new brand. But at
the same time, I was probably deep down ready for
(16:18):
a change. I had been with the company for twenty years,
but really it had changed around me, from Altus to
ETNA to two I n G and and then DA Voia,
and so I was ready for a change. I said
that to myself that if I left, it would not
be for another insurance or bank owned asset manager. And
(16:39):
no disrespect to those those businesses. I had terrific experiences
and opportunities presented to me there, but I just felt that,
you know, a new experience, maybe going back to something
more independent or private would would be the uh would
be the move for me. But I got the call
and from a recruiter, and Jennison was an intriguing company
(17:03):
to me. It's you know, just well known quality firm,
strong results, impressive client roster and I'd heard it had
a great culture, so I was intrigued and agreed to
have have some meetings and really really got quite interested
in the business. I thought the people were outstanding that
(17:24):
I met, They validated the culture, the client list and
roster truly was impressive. What you know, what I had
to get my head around is that it was owned
by an insurance company. However, part of pgm's multi boutique model,
and that was that was very appealing to me. I
(17:44):
think for this stage of the asset management industry, a
multi boutique model is a good model. You get the
asset class specialization, you get the entrepreneurialism in the boutique,
but you get the benefit of being part of a
large your manager that has access to wealth management platforms, capital,
global distribution. So it seemed like a very good business
(18:09):
model that allowed for sort of the best of both worlds,
and you know, I was therefore attracted to it and
really have not regretted the move one bit.
Speaker 2 (18:19):
Really interesting talk a little bit about Jennison. You mentioned
they had been around a while nineteen sixty nine. They've
been around for let's call it fifty plus, almost sixty years.
What sort of traditions and cultures made that longevity so
attractive to you.
Speaker 3 (18:39):
Yeah, it was all around reputation. And the history is
that Jennison, founded in nineteen sixty nine, was really one
of the first independent institutional asset managers. In those days,
all the institutional asset management was done out of the banks,
and there were seven founders who decided that maybe they
could do it better, and they left their banks and
(18:59):
they set up the business in the in the Drake
Hotel in New York City and they started to u
they started to invest. They they ultimately were growth investors,
but growth investing was not even known at the time. Uh,
you know, the Russell one thousand growth didn't even exist.
But the team started investing in what they believed to
(19:19):
be the fastest growing companies, the disruptors of the time,
and really became there for one of the earliest true
growth investors. And the founder that that that survived the
the you know, almost the entirety of the business and
and was there when I arrived was sig Sigalis, who
was an iconic investor again really one of the first
(19:41):
dedicated growth investors. He was an incredible investor but also
an incredible man.
Speaker 2 (19:47):
Uh.
Speaker 3 (19:47):
He worked right up until he passed two years ago
at eighty nine, literally until the week before. He was
never going to retire. He you know, he he was
someone who taught me a lot, He taught the firm
a lot. But at the end of the day, he
was an intense competitor who wanted to win. But he
was very values based. Everything was about the client and
(20:10):
about values. And he had a great saying, which was
do what's right for clients, and that'll always be right
for the business. And I think those are pretty pretty
sage words. And if you're serving your clients well, you're
going to both retain and get new clients. And in fact,
if you look at our you know our client roster,
two thirds of our clients have been with us for
(20:31):
more than ten years and forty percent more than twenty years.
Speaker 2 (20:35):
Wow, that's pretty substantial. I'm kind of intrigued by the concept.
And I mean I was a kid in nineteen sixty nine.
I think I was seven or eight years old, but
the idea that growth investing was like a novel concept.
I get the idea that, hey, this was kind of
(20:55):
the early days of a bear market that went on
for another decade. But tell us what does it mean
to be growth oriented investors when there's no such thing
as a typical growth index or a value index.
Speaker 3 (21:13):
And what growth investing has meant for Jennison and it
is it is the original legacy and uh an original
book of business for the firm. We've extended from there.
But growth investing for us has really been about high conviction,
deep fundamental research driven active management management. And you know,
we're we're concentrated manager. We take we take large positions
(21:35):
in in concentrated portfolios, and we're really striving to be
that high alpha equity manager for for pension plans and
for wealth allocators, and often we're part of an asset
allocation and you know, we're you know, we're the alpha
in the corners, if you will. And you know, I
think that's the right place to play as a fundamental
(21:58):
active equity manager because the hollow has been middled, because
the middle has been hollowed out. And you know, at
the end of the day, no one's going to pay
active management fees for two to three tracking error equity.
Speaker 2 (22:11):
Huh. That makes a lot of sense. So I got
to ask two questions about concentration and deep conviction. First,
what is a concentrated portfolio. I've seen a lot of
people describe themselves as concentrated portfolios and they're fifty sixty,
one hundred holdings. It doesn't really seem concentrated. What is
concentrated mean to you?
Speaker 3 (22:32):
Yeah? For us, fifty sixty would be the largest portfolios
that we manage in our in our growth book of business.
We do have down in our small cap and smid
cap of book of business, we do have larger holdings
down there, just to get some more liquidity and diversification.
But for our core franchise of growth portfolios, you know,
(22:54):
we have ten stock portfolios. We have twenty stock portfolios.
When we say something focused, it tends to be about
thirty and for us, you know, Flagship might be up
to fifty, but not typically more than that.
Speaker 2 (23:07):
And so when you say deep conviction, what does deep
conviction mean? Is that what leads to these ten stock
or twenty stock concentrated portfolios. Tell us a little bit
of what does deep conviction mean?
Speaker 3 (23:20):
Well, I think it starts with our investment research. You know,
we're a firm of four hundred people, seventy investment professionals,
about half pms and half analysts. They have very long
tenures with the firm, about thirty years of experience in
the industry, more than fifteen on average with the firm,
and they are doing very deep research by team. So
(23:44):
every team, our large cap growth team, our global growth team,
our small smid mid team, our value team, and our
fixed income team all have dedicated research analysts. So there's
no central research model, there's no house view, there's no
you know, mandated approach to seeking alpha. Every team has
(24:05):
the UH has the ability to seek alpha in its
own way. And what we have are very long tenured,
experienced career analysts. So our analysts and our firm ours
important as our portfolio managers. It's not necessarily a track
to portfolio management. In fact, we believe, you know, the
real UH secret, Sauce to to Jennison is the research
(24:28):
that that we do and what the teams do and
on the growth side, at the end of the day,
what we're looking for is innovative and disruptive businesses driving
structural shifts and industries. You know, business models with with
significant barriers to entry, secular demand trends driven by superior
product offerings, and these days you know, as you know,
(24:49):
that might be evs, autonomous UH driving, machine learning, obesity, drugs,
or luxury that's owned through the value chain, and all
of those tend to be superior your growers. They tend
to have moats around them and are the leaders and
the disruptors. And you know, as you know, Barry, history
has shown that market returns over time have been driven
(25:11):
by a narrow set of disruptors and consistent winners. And
Jennison has developed a reputation for identifying those companies.
Speaker 2 (25:18):
So the past fifteen years, those innovators, disruptors, companies with
moats have primarily been US based, right, And we see
the rest of the world, Asia, Japan, Europe primarily lagging
the US, although there seems to be a lot of
signs these days that that's starting to change. Certainly Q
(25:41):
one tw twenty five, Europe is dramatically outperforming the US.
How do you think about the relationship between US investing
and international investing. I know only about ten or fifteen
percent of your assets are invested overseas. What would it
take to make that change?
Speaker 3 (26:03):
Yeah, in terms of our our portfolios that are invested overseas.
And then I'll and then I'll answer your question about
how do I think about international versus US markets. We
have about twenty five billion of dedicated international and global portfolios,
but within our other equity portfolios across the firm, we
do hold a percentage of international assets, so that that
(26:26):
number ultimately is about forty billion of our one hundred
and fifty billion of equity, So it is a little
larger than it may may appear. And you know, at
the end of the day, unless we have investment guidelines
or restrictions from clients, you know, we seek alpha with
a bit of agnosticism to both the benchmark and the region.
(26:47):
So we are building portfolios bottoms up, company by company
and looking for what we you know, view are the
best companies for our strategy, whether that be you know,
intrinsic value, and you know what we think are our
undervalued companies or the disruptors and the growers. In terms
of international holdings per se as you mentioned the first quarter,
(27:11):
after a long drought of underperformance compared to the US,
international equities have had a nice run. You know, it's
primarily driven by policy shifts locally in some of those regions,
as well as reactions to current US policy shifts and
the uncertainty around that. So in Asia, you know, the
(27:32):
government is clearly priming the pump. In Europe, increased defense
spending has really ignited, ignited the markets over there, and
so I think the international markets might have some legs.
We do still favor the US, you know, in the
medium term and longer term right now, but certainly international markets,
(27:53):
after being beaten down for years have come back strongly.
Speaker 2 (27:57):
So let's talk a little bit about risk management. I
know you guys employ the traditional sected diversification, geographic diversification,
different strategies, but talk a little bit about your risk
management and the downside protection you deploy to make sure
that volatility like we've been seeing doesn't hit the bottom
(28:18):
line too hard.
Speaker 3 (28:20):
Yeah, And you know, as we discuss Barry, we are
concentrated managers, high conviction managers, so you know, we're paid
to take risk and as a result, our portfolios do
tend to be more volatile than the benchmark, certainly and
many other managers who are more diversified. So you know,
we will have periods where we wildly outperform the benchmark,
(28:41):
in periods where we underperform the benchmark. We're looking typically
at a holding period in our names of you know,
three to five years and much longer, and so you
know we are long term investors. We want to align
interest with our clients who are long term investors and
try to filter out the quarter to quarter noise and
(29:02):
the volatility that comes in between those periods. So again,
if we can identify those companies early that are going
to be the longer term winners, that's that's where we go.
From a risk perspective, what we want to protect against
is unintended risk. So we're taking very deliberate and concentrated risk.
But we have every kind of risk management report that
(29:24):
you would expect in an asset manager to make sure
we don't have unintended risks, to check our dispersion, and
to make sure that at the end of the day,
the risks we're taking our stock selection risk and not
unintended risk around you know, sized geography sector.
Speaker 2 (29:41):
So I don't usually hear the phrase unintended risk. So
I certainly understand the risk of performance relative to a benchmark.
You over underperform, you're gonna outperform. What are some other
unintended risks? Is it strictly just sector concentration jigra a
concentration or is there a little more nuance to it.
Speaker 3 (30:03):
We want to make sure at the at the end
of the day that the risk we're taking is is
stock specific. That's that's who we are on the equity side.
We are we are stock pickers, and so we want
to make sure that you know what's what's coming through
our portfolio from a risk perspective is all based on
stock selection and not some of the more factor based
(30:24):
UH influences that can that can take shape in portfolios.
And as you mentioned, you know, sector and geography and
and UH and other.
Speaker 2 (30:33):
Exposures really interesting. So so given that PGEUM is the
parent company and they run a sort of multi boutique,
multi strategy approach, how does your concentrated alpha approach to
investing fit in. Do you have to think about, well,
(30:54):
maybe this group or that group is doing something similar,
or do you do your thing and it's up to
the pairing company to select the allocation they want.
Speaker 3 (31:05):
Yeah. The great thing about the multi manager model at
PGEUM is each of the affiliates as we call them
versus boutiques are free to pursue their asset class and
their specialty UH in their own way. Now to the
extent that there are multi asset portfolios put together, you
know within PGEUM that might select components of the different
(31:27):
affiliates or boutiques. You know, that'll be determined by the
multi asset team doing the acid allocation. You know, for
for Genison, given you know the high highly concentrated UH,
you know nature of our of our equity portfolios, we
fit into some of those multi asset products, but in
other cases we don't. We're too high octane UH for that.
(31:49):
But we are in a number of annuity and and
other acid allocation products throughout Prudential that that avail themselves
of our various capabilities. And the other thing that that
that Jennison can do is we have a small quantitative
equity team, not to be confused with PGIM Quantitative Services,
(32:10):
which is a sister company. Our team is there to
customize our fundamental alpha from our equity portfolios. So if
a client is looking for a targeted tracking error, a
targeted volatility, you know, likes what we do but maybe
can't quite take take the tracking error volatility, we can
manipulate the portfolio to fit within their requirements. They might
(32:33):
be someone who wants a sustainable portfolio and you know,
has some exclusions or types of industries they don't want
to include. So having this little quad group within Jennison
to customize our our outcomes for our clients as has
been a terrific addition of value that has allowed us
to get into some of these multi asset products. The
(32:55):
other great thing about the PGM multi manager model that
I'll come and on is that we have virtually no
overlap among the different affiliates or boutique. So Jennison is
the is the fundamental active equity manager. Uh, you know,
PGEUM Quantitative Services is the quant manager. Pageum fixed income
has you know, broad based fixed income capabilities. We have
(33:18):
private real estate, private credit, et cetera. And we're not
fighting with each other over shelf space in different products
because we're all experts in what we do.
Speaker 2 (33:29):
Now, it's taken me about ten years to stop saying
Prudential and start saying pgeum. You did mention Prudential. When
you think about the parent company, it traces back to
Prudential Insurance, which is still a giant brand. How does
the relationship between Genesis, How does the relationship between Jennison
(33:52):
and PGEUM and PGEUM Prudential just affect the nomenclature. It's
a lot of stuff to keep straight.
Speaker 3 (33:58):
It is you have you have the master brand of
Prudential one hundred and fifty years, you have the pGEM
brand a little over a decade old, and then you
have the brands underneath Jennison at fifty five years being
the oldest of the investment management brands. It's also why
Jennison tends to be the most independent of the of
(34:20):
the affiliates or boutiques. It was an acquired business. About
seventy five percent of the assets were sourced by Jennison
versus assets that have come through some of the Prudential
or PGYM channels. But you know, we do, you know,
we do have to be careful about the branding, and
sometimes it's at the product level. For example, PGUM runs
(34:46):
a lot of the you know, the consolidated platforms like
the mutual fund platform and in Europe the use it
platform that are you know, used to structure the funds
that are sold into the wealth management channels and there
for example, if you want to buy Jennison in a
(35:06):
growth fund through the through the PGAM mutual fund company.
It's the Pgmjennison Growth Fund, So sometimes we have multiple
brands at play.
Speaker 2 (35:14):
Huh, really interesting. So let's talk a little bit about
the current environment. It certainly has been a chaotic first
quarter with tariffs on and off. Again, you guys are
deep fundamental investors. How do you think about newsflow and
all this noisy stuff when you're looking at the fundamentals
(35:37):
of companies.
Speaker 3 (35:39):
It's it's hard to do, but it really comes down
to focus. At the end of the day, we have
to try to filter out the noise. Now we can't
we're not macro investors, but we have to be macro aware.
We have to understand if policy shifts or you know,
anything in the macro environment will ultimately affect the environ
(36:00):
in which our companies operate. So we always bring it
back to the fundamentals. You know, we can't put blinders
on and say this is a great company, but if
if the landscape in which they operate changes, it can
affect the fundamentals of the company. So, you know, we
work very hard to try to separate the you know,
the noise from the fundamentals. But at the end of
the day. Sometimes that macro environment can affect the fundamentals.
Speaker 2 (36:24):
So when it starts affecting the fundamentals, how do you
manage it? I'm assuming since you're the alpha managers, you
don't have an option of saying we're going to go
to cash or we're going to go to bonds. Is
in a matter of saying, hey, Europe seems to be
doing better, we're going to rotate shift some of our
exposure from the US two overseas. How do you deal
(36:45):
with the macro once it starts affecting the fundamentals.
Speaker 3 (36:50):
Yeah, it's exactly as you described. We're paid to invest
in a certain strategy for a client, so we hold
very little cash just forquidity and trading. We're paid to
be fully invested, and so you know, as we see
either a sector or a supply chain or a company's
fundamentals coming under pressure, will will either underweight or get
(37:12):
out of the company completely and look for the next
best opportunity.
Speaker 2 (37:16):
Really kind of interesting. You had a piece recently at
Jennison titled is value investing debt? Tell us a little
bit about that.
Speaker 3 (37:27):
Well, Well, growth indexes have certainly outperformed value for for
well over a decade. I think we're all aware of that.
That's that's been good for Gennison two thirds of our
equity assets or our growth oriented assets, and and we've
we've benefited during this period and also outperformed and raised
money and new clients. So, you know, a lot of
(37:47):
that has been has been a great tailwind for our business.
But we also have a high performing value team that's
that's put up some very good numbers. The way we've
uh the way we manage in value is called an
intrinsic value approach, which is very opportunistic. It's not deep
value or a Fallen Angel type strategy. We look for
(38:09):
companies with temporarily depressed earnings versus a permanent situation. We
try to identify those, and periods of short term volatility
can actually favor our approach if we can, if we
can decipher, you know, which companies have hidden inflection point
and get into those early and hold them long term.
(38:29):
Now the market has broadened out recently from the mag
seven and some of the you know, the most concentrated
positions that have that have led the market, and and
we're being rewarded, you know, for executing in the value space.
There's still good companies and good growth in value. I
don't think investors really think about growth versus value investing
(38:52):
like they used to. I think they think about it
as portions of the portfolio, stable growers maybe with dividends,
versus as innovators and disruptors that that might lead the
way in the future.
Speaker 2 (39:04):
That's really that's really kind of interesting. It's funny because
you're talking about your approach to intrinsic value, and I
would imagine that as the mag seven and traditional growth
equity falters, the volatility of this market would be great
(39:24):
for an opportunistic intrinsic value investor. Tell us how the
value guys are salivating these days over what the state
of markets are with volatility spiking up close to thirty.
Speaker 3 (39:40):
Yeah, I think volatility actually can be good on the
growth side as well. So I think I think when
you're a fundamental stock picker, you you want number one
is as little correlation as possible. If everything goes up,
it's hard to differentiate yourself when market's broaden out, you know,
when when volatility is UH is elevated, you know it,
(40:04):
really you really have to have skill to to differentiate
and to separate the noise, uh, you know, from the
fundamentals of the company, and so we think we can
benefit in these periods both on the value and the
growth side. Certainly, you know, on the growth side has
pulled back most recently in the first quarter. You're you're
starting to see that, uh shift back already. It appears
(40:28):
that mid March was perhaps the you know, the the
you know, the bottom, and we seem to be, you know,
starting to bounce off of that. I for one, UH
don't don't see a recession on the horizon, at least
not a not a severe one. So I think we
will continue to see as as you know, we filter
(40:50):
through the noise. We learned the tariffs may be a
little more targeted and forgiven in some instances that uh,
the supply chains don't get as disrupted as as we thought,
and we could see a good period for growth equity.
Speaker 2 (41:04):
Again, So you have large cap growth equity as a focus,
you have global equity opportunity. What are some of the
other areas where you guys focus in terms of looking
for alpha.
Speaker 3 (41:19):
Yeah, growth growth equity, as we've talked about, was the
foundation of the firm and the largest book of assets
about half the assets of the firm. We have a
global growth team that was built and extended off of that,
getting into global, international and emerging market equity, also following
a growth style and philosophy. That team leverages a lot
(41:42):
of the same research of our growth analysts. Then we
have a small smid mid cap team. They are a
little more growth managers, but a little more valuation sensitive there,
and we offer that in sort of growth and core portfolio.
Our value team. We talked about our intrinsic value capabilities,
(42:04):
but you know, on the value side, we also have
certain sector funds infrastructure, utilities, energy and other things, and
including some of some strategies that are in demand in Europe,
like carbon solution strategy that's a sort of a brown
(42:25):
green strategy, if you will. And then we have our
fifty billion dollar fixed income shop based up in Boston.
They are really the antithesis of what we do in
high conviction focused concentrated equity. They are a high, high
quality credit shop staying in you know, the higher end
(42:49):
of the space there down the fairway core fixed income
manager managing for the largest pension plans in the world,
and also able value in LDI mandates. So it's also
a nice diversifier for the business. We have this very stable,
you know, core credit manager and this high conviction, high
(43:09):
alpha equity manager.
Speaker 2 (43:11):
So given that there seems to be a consensus at
your shop of higher for longer at least when it
comes to rates. Since you brought up fixed income and
you brought up credit, does this allow your clients to say, hey,
we could take a little off the table with equity
and focus a little more on on stable fixed income.
(43:33):
How does that balance work?
Speaker 3 (43:35):
Yeah, we've seen that over the last several years as
rates ticked up and there was something to earn in
fixed income. Again, we watch pension plans, you know, adjust
their their asset allocations. You know, one of the double
edged swords of being a high performing equity manager is
when the equity markets run up and you outperform the
(43:56):
benchmark you get allocated against, you're the one they take
the money away from from. So you know, we've we've
had that happen and have been a victim of our success,
if you will, in some of these areas. So we
have seen that over the last couple of years as
rates ticked up, where we did see some of our clients,
you know, maintain us, but shift sort.
Speaker 2 (44:15):
Of rebalanced falls from alpha generating concentrated equity into more stable,
lower yielding fixed income.
Speaker 3 (44:23):
Exactly exactly. I mean, we we do know. I'm not
one to call rates per se, but you know, I
agree with the base case out there that we'll probably
see two cuts. Hopefully they're you know, they're for the
right reasons and not bad news cuts, if you will.
Speaker 2 (44:39):
So that's interesting you say that because originally last year
Wall Street was looking for a lot more cuts than
we got, and the sort of pushback to the expectation was, Hey,
the economy is really robust. Consumers are spending, companies are hiring,
capex spending is up, revenue and profits are up. Why
(45:02):
are you guys expecting cuts? How does that transition? Now?
Where you know, I'm in your camp, I don't really
see an imminent recession, but at the same time, it
certainly appears that recession risks are ticking up. They're still
relatively low, but they're appreciably higher than they were at
(45:22):
the end of twenty twenty four. So if we're going
to get two cuts, is that because the FED wants
to normalize rates to where they've been over the past
twenty twenty five years as inflation sort of settles down,
or are we going to see cuts because the economy
is beginning to slow.
Speaker 3 (45:42):
Yeah, I agree with you completely. I hope it's the
former and not the latter. We are starting to see
some signs of some potential slowing of growth. I do
think we could see growth slow down from what it's been.
Speaker 2 (45:56):
And it's been red hot, and it's a couple of years.
Speaker 3 (45:59):
And it's been red hot. You know, there's still some
good signs out there. Housing starts are up, services pmis up,
you know, retail sales and manufacturing are down, consumer sentiments down.
The income and labor markets importantly are still are still decent.
I think that'll be a major determinant of where we go.
Inflation is stubborn, but it's showing signs of coming down
(46:22):
in key areas. Tariff's notwithstanding, and you know, I think
the tariff path will determine a lot of where we
go here.
Speaker 2 (46:29):
So it sounds like you guys stick to your knitting.
You do fundamental research, You focus on intrinsic value, but
you're certainly aware that, hey, what's going on in the
rest of the world. It could have an impact then
lead over if you're advising pension funds or foundations that
have a perpetual lifespan or at least future liabilities that
(46:55):
are decades off, is the best advice. Hey, it's gonna
get bumped for a while, but you have to look
past this, look to the other side of whatever happens
over the next one two, four years or is it
everybody manned their battle stations.
Speaker 3 (47:10):
Yeah, I think keeping a long term focus is good advice. Uh,
you know, for for the pension plans who obviously have
teams of experts, you know, focused on their asset allocation,
but also for the retail investor who who obviously has
the financial advisor as well. But you know, as you
know Barry, staying invested is key when people try to
(47:31):
time the markets and and exit, you know, they they've
they've always regretted that, you know, being in the market
during those key points of inflection when when markets take
up or missing that that last uh, that last large spike,
you know, it really can have a dramatically negative impact
(47:54):
on your returns overall.
Speaker 2 (47:55):
Yeah, We've seen a lot of studies that show the
worst days and the best days tend to come cluster together,
and it's very hard to miss one and catch the other. Absolutely,
so I know I only have you for a limited
amount of time. Let's jump to our favorite questions that
we ask all of our guests, starting with what's keeping
you entertained these days? What are you either watching or
(48:17):
listening to? What's your tell us about your favorite podcast? Netflix? Whatever?
You know?
Speaker 3 (48:25):
I'm always well behind where everyone else is. I didn't
watch the first episode of The Sopranos until until the
series was over, and I'm just starting Yellowstone, So that
tells you how up to date.
Speaker 2 (48:39):
You're ahead of me. And Yellowstone it's the next one
up in Mike queue. Are you enjoying it?
Speaker 3 (48:45):
I just started it, so so far, so good. I've
heard so many great things about it, so I'm looking
forward to it. I'm a bit of a history buff,
so I've been working my way through the ken Burns, uh,
Doctor Malarisa. I've seen the Brooklyn Bridge, the Statue of Liberty,
the Civil War, the Vietnam War, and the Great War.
And the next one up for me is Benjamin Franklin.
(49:07):
So I really enjoy ken Burns and how he approaches
you know, the documentary.
Speaker 2 (49:13):
Huh, really interesting. You You mentioned one of your mentors previously.
Tell us about the folks who helped shape your career.
Who were your mentors?
Speaker 3 (49:24):
Yeah, I would say, first, you know, it was my
mother from a values and from a work ethic perspective,
first generation college grad, went to got a master's at Georgetown,
worked in politics, ransom nonprofits, and then ultimately worked in education.
She's she's ninety years old and still alive and doing well.
(49:47):
And you know, she's been a great inspiration to me.
Again from a values and work ethic perspective. I've also
had the great opportunity to work for some great leaders
and manager I tried to learn from each one of
them along the way, take the styles or the characteristics
that I most admired of each of them and try
(50:08):
to incorporate that into my leadership style. And at Altis
it was John Kim and Scott Fox at at you know,
Bob Crispin, Rob Leary at I n g Uh and
then alone Cara Oagland at Voya to name a few.
Sig Sigalis who who I mentioned past about two years ago.
I worked with him for only about six years and
(50:29):
while you know he wasn't necessarily a mentor in the
sense of helping me do my job, which was terrific
when when when I came on board, Sig said, I,
I managed the money, you managed the firm. And he
he kept his word there and allowed me to do
what you know, we felt we needed to do to
help grow the business and set the strategy. And it
was a it was a terrific partnership. And UH, and
(50:51):
I have great admiration for him. So he was more
an inspiration to me, just the you know, his will
to win and and the way he impacted everyone around
him and the quality, UH and the values of the
firm that he built really inspirational.
Speaker 2 (51:06):
Really really interesting.
Speaker 1 (51:08):
Uh.
Speaker 2 (51:08):
Let's talk about books. What are you reading currently? What
are some of your favorites?
Speaker 3 (51:13):
Yeah, right, right now, I just started, UH, Leadership in
Turbulent Times, UH, from from Doris Kurrn's Goodwin. It seems a.
Speaker 2 (51:21):
Little apropos sure right now.
Speaker 3 (51:23):
And and UH, you know, it's a it's a book
about Lincoln, Teddy Roosevelt, FDR and UH and LBJ and
it kind of you know, takes you through their you know,
their administrations and UH and some of the challenges that
they faced. You know, it's a big book. It sat
on my coffee table for a few years and I
looked at it and I, you know, I've wanted to
(51:44):
kind of tap in, but it was four inches high,
and and finally I h I did tap in, and
I'm glad I did.
Speaker 2 (51:51):
Our final two questions, what sort of advice would you
give to a recent college grad interested in a career
in either investment, credit, finance, anything along the lines of
your career experiences.
Speaker 3 (52:07):
Yeah, I would say, first thing, you know, you know,
getting into finance. The path to finance starts so much
earlier than it ever did. And in our day, you know,
it was senior year, it was time to look for
a job, maybe had an internship, you know, the year before.
Speaker 1 (52:23):
But now.
Speaker 3 (52:25):
Undergrads going into finance, they need to be lining up
their internships sophomore summer, junior summer, senior summer. So so
it really starts a lot sooner. But once they're on
the job, my my advice to them is always builder
a resume of skills, not a resume of jobs. Try to,
you know, try to develop as many skills as you
(52:46):
can along the way, and ask questions early and often
you're not expected to know anything when when you're young
and in the job, but as you move on in
your career, you're expected to know more and it becomes
a little harder to ask questions and then ask for
experiences outside of your current duties. So if you see
something going on in the next department over, ask if
(53:09):
you can be exposed to that you know while doing
the job you were hired for, and try to get
more exposure, but don't expect anything to be given to you.
You own your career. Seek out mentors and try to learn,
But at the end of the day, you have to
take ownership of your career and your advancement will really
(53:30):
depend on the success of your current role, and if
you focus on that and do it well, you'll be recognized.
Speaker 2 (53:36):
Really good good advice, And our final question, what do
you know about the world of investing today? You wish
you knew thirty forty years ago when you were first
getting started.
Speaker 3 (53:47):
Well, as I mentioned, I didn't know anything about it
forty years ago when I was getting started coming out
of college. But in reflecting back, what I think would
be helpful would have been how many different types of
finance careers there actually are? Everyone thinks sort of Wall
Street investment banking, M and A. But but there's investment management,
(54:09):
there's wealth management, there's insurance, there's commercial banking, there's you know,
there's institutional banking. So many many careers in finance and
past that that that you can go down. I had
a very narrow view of the investment world. And you know,
my journey really, you know, happened because of the next
role that I got. In the next role that I got,
(54:30):
I didn't have a plan per se, and I think,
you know, I wish I knew more earlier on and
I might have set a plan. The plan turned out okay,
and and I've been happy with it, but you know,
who knows what the path would have taken had I
known a little more about it.
Speaker 2 (54:45):
Huh, really interesting stuff, Jeff, Thank you for being so
generous with your time. We have been speaking with Jeff Becker.
He's chairman and CEO of Jennison Associates, helping to run
the firm that manages well over two hundred billion dollars
in assets. If you enjoy this conversation, be sure to
check out any of the five hundred and fifty or
(55:07):
so we've done over the past eleven years. You can
find those at iTunes, Spotify, YouTube, Bloomberg, wherever you find
your favorite podcasts. Be sure to check out my new book,
How Not to Invest The Ideas, numbers, and behaviors that
destroy wealth and How to Avoid Them, out now at
(55:28):
your favorite bookseller. I would be remiss if I did
not thank the Cracked team that helps with these conversations
together each week. My audio engineer is Steve Gonzalez. Anna
Luke is my producer. Sean Russo is my researcher. Sage
Bauman is the head of podcasts at Bloomberg. I'm Barry
rud Haunts. You've been listening to Masters in Business on
(55:51):
Bloomberg Radio
Bloomberg Audio Studios, podcasts, radio news. This is Masters in
Business with Barry Ricolts on Bloomberg Radio.
Speaker 2 (00:17):
This week on the podcast. Jeff Becker chairman and CEO
of Jennison Associates. They're part of the Pigeum family of
asset managements. Jennison manages over two hundred billion dollars in assets.
Jeff has really a fascinating background, from Arthur Anderson to
Altus to ion G. Eventually he becomes CEO of Voya
(00:42):
when the parent company spun out the US holdings into
a separate entity. Really a fairly unique career path and
is sort of uniquely situated to look at the world
of investing. Jennison launched way back in nineteen sixty nine
(01:03):
as a growth equity shop. Their focus is on generating
alpha with high conviction concentrated portfolios. They've put off a
damn good track record over the years. I thought this
conversation was really interesting. There aren't many people who have
this sort of perspective and perch to see the world
(01:25):
of investing from both an institutional and insurance based perspective
and a long term retail investment perspective. I thought this
conversation was really interesting, and I think you will also
with no further ado my conversation with Jennison associates Jeff Becker.
(01:47):
So let's start with your background. You get a bachelor's
in economics from Colgate and then an MBA in finance
from n YU. Stern. Sounds like you had been thinking
about finance as a career right from the start.
Speaker 3 (02:02):
Quite the contrary, Berry, I had no idea what I
wanted to do in college or coming out of college.
I was a liberal arts major. My parents felt strongly
about getting you know, me a liberal arts degree and
having me learn how to read and write effectively, and
so that was the goal. I was in economics, an
English major. Econ was the closest thing you could get
(02:23):
to business in some of those schools, and so, you know,
that's what I majored in. You know, I had no
real guidance in terms of finance. Neither of my parents
were in the financial industry, and so I did what
most students did in those days. As you saw on
the board who was coming up to interview and potentially
hire undergrads, and I saw that what were in those
(02:47):
days the big eight accounting firms were coming up to hire,
and they had this program where they would hire Liberal
Arts graduates, have them work, and as part of the arrangement,
would pay for you to go to grad school. So
it was a combin find program through Arthur Anderson to
go to NYU. And they were originally paying for a
(03:07):
master's in accounting, but ultimately everyone parlayed that into an
MBA in finance.
Speaker 2 (03:12):
Huh. Really interesting And did you end up at Arthur
Anderson for any length of time?
Speaker 1 (03:16):
I did? I did.
Speaker 3 (03:17):
I ended up there for for seven years. It was
It was a terrific experience. It was a great company.
You know, in those days, these companies hired you know,
crops of undergrads, they trained them together. We learned everything
you know across from accounting, to auditing, to to UH
tax and valuation. I ended up in what was called
(03:38):
the Valuation Services Group, where we valued real estate and
businesses either for transactions or for m and A activity.
And it was a terrific company, a great learning experience.
They sent you out to clients very early on in
your career, and you also got people management skills pretty
early on.
Speaker 2 (03:55):
So learning to value real estate, learning to value companies
sounds like you're going into private equity and private credit
down the road, like that seems to be the path
these days. What was that experience like and how did
it affect how you look at investments today?
Speaker 3 (04:15):
You would have thought that I didn't know what private
equity or private credit really was. At the time I
had started to shift more and more into real estate.
The background of tearing apart financial statements and balance sheets
and discounted cash flow analysis was a great foundation really
for anything in you doing finance ultimately, So it was
a great experience in that regard. But I was starting
(04:38):
more and more to specialize in real estate, and as
a result, I got hired away by one of Anderson's clients,
which was ETNA, and ETNA had a very large commercial
real estate business. As you may recall, the insurance companies
had huge commercial loan portfolios in those days that they
were using to backstop long dated life insurance liabilities. It
(05:03):
seemed like the perfect match of asset and liabilities until
real estate valuations bottomed out and the life companies ended
up with a whole bunch of mortgage loans that were underwater.
That led to a terrific experience for me being part
of the workout of all of those loans in the
early nineties. So we did foreclosures, we did restructurings, we
(05:25):
did equity kickers, and we pulled up some of these
loans into CMBs deals and sold them through Wall Street.
It was really a terrific experience and really bred out
of a crisis.
Speaker 2 (05:36):
And I just want to emphasize we're not talking the
beginning of the pandemic in twenty twenty. We're not talking
about the financial crisis in eight oh nine. You're talking
about really the post SNL crisis late eighties, early nineties,
where a ton of commercial real estate suddenly took a
big hit. Eventually you become chief credit officer covering real estate.
(06:01):
Tell us a little bit about that.
Speaker 3 (06:03):
Yeah, I was. I was part of, you know, the
management that ultimately had to determine, you know, the valuation
and the credit approval of the different transactions that we
were working on. Whether that was originally putting out new
mortgage loans and determining whether it was a you know,
a good credit for the insurance company capital, or when
(06:23):
we got into the restructuring period, it was about was
this the right deal, Were these the right terms? You
know for us as we as we tried to salvage
the portfolio.
Speaker 2 (06:32):
And then following ANA, you end up at Altus Investment Manager,
your CFO there. What was that like, going from analyzing
credit to being chief financial officer for an investment firm.
Speaker 3 (06:46):
Well, one of the things we were doing by working
out the troubled mortgage loan book at ETNA is we
were also working ourselves out of a job. So the
job was to wind down the portfolio, and we were
actually given retention agreements that were two years in duration,
and at the end we essentially were out of jobs.
That was a little bit scary for an early career endeavor,
(07:10):
but by the same token, it was the first time
in my life I ever saw a six figure payment
come at one time, and it was quite rewarding at
an early stage in my career. So I knew I
was going to be out of a job. ATNA was
up in Hartford, Connecticut, so I was up there alone
as a young man, and I went to the head
(07:30):
of HR at ETNA, and I said, this has been
a terrific experience, but my gig is up and I'm
probably going to head back to New York City. Is
there anything that I should look at within ETNA. She
happened to be a Colgate grad. Took an interest in
me as a Colgate grad and said, yeah, we've got
this great little third party institutional investment manager named Altis
(07:52):
Investment Management. It runs pretty independently, has about one hundred
billion in assets. I'm going to send you over there
to meet the young Dynamic make CEO. There a guy
named John Kim. So I went over and met John.
We had a terrific three hour conversation and at the
end of the conversation, he said, you're hired. And I said,
I'm hired. What am I going to do? And he said,
(08:14):
I don't know, we'll figure it out, but I think
you're going to be CFO. And I said, well, I
know Arthur Anderson is on my resume, but I actually
have never practiced accounting and so I'm not sure that's
the right role for me. And he said, wow, we've
got a really strong finance team and a good strong controller.
I want you to be a more strategic CFO. I
want you to work on structured deals m and a
(08:36):
levers of profitability. And so that turned into a CFO role,
which again is a terrific experience for anything you do.
Really understanding how businesses make money and the levers of
profitability is a great experience.
Speaker 2 (08:50):
Huh. So how do you go from Altis to ING
Investing Management? What was that transition like?
Speaker 3 (08:57):
Well, in two thousand and three, I fired etna's financial
businesses and that was the life insurance, retirement and asset
management businesses, and so Altis went along with that. With
that acquisition, Ing had been on a buying spree around
the world and in the US, buying up insurers and
other businesses, and had ultimately ended up with about six
(09:20):
asset managers brands that are now all gone. Altis the
one I came to the party with Pilgrim Firm and Cells,
Lexington Partners, Relia Star Research, the original Ing Investment Management.
But Ing did not want to see these runs as boutiques. Ultimately,
in the long run, Ing had a very integrated model,
(09:43):
a mono brand approach to the world, and wanted to
bring all these asset managers together. So I was selected
to help lead the integration of these asset managers, which
was which was an interesting project. Each of these asset
manag had a CEO. These boutiques were pretty fiercely independent
(10:04):
and it was a bit of a bumpy ride as
we as we brought them together, but ultimately we did.
We you know, we started out in some cases with
four small cap equity teams, and in some instances we
selected one and not the others, and others instances we
might have combined teams, and in other instances we started
all over. So it was, you know, a multi year
(10:25):
project to really bring all of what were the acquired
asset managers into one integrated IG Investment Management, and ultimately
I was the CFO of that initially and then later
the COO, the CEO at the time, came to me
and said, you did a terrific job on the integration project.
(10:47):
You can be ce CFO or COO. Which one do
you choose? And I said, well, can I be both
and and he said no, I can't do that right now,
so you have to pick one, and I chose CFO.
And my rationale was the CFO is always at the
head table because there's always a financial implication to everything
you do. So that's where I started, but ultimately did
(11:10):
become COO as well.
Speaker 2 (11:12):
Eventually ING changes its name to Voya and everything is
now branded Voya that were either of these other pieces
or ING and you rise to the role of CEO.
How did that come about and what was it like
going from COO and CFO to CEO.
Speaker 3 (11:32):
Yeah, it happened because of another crisis in two thousand
and eight, the Great Financial Crisis. ING had gotten overexposed
in mortgages and had to take a loan from the
Dutch state to shore up their Tier one capital ratios.
And as part of that deal with the Dutch government,
ING agreed to sell off the US properties. If you
(11:55):
can remember back to the start of the financial crisis,
it was viewed as largely a US and so I
think there was a desire to shed the businesses that
you know where the where the subprime mortgage bubble had
burst ultimately, and so I was I was working for
the head of ING Investment Management. But when I decided
(12:16):
to take this loan, there was a change in leadership
and my boss became head of I in g America's
all of the insurance, retirement and life businesses, and I
became a CEO of ING Investment Management, which later became Voya.
The way I found out that I was becoming CEO
(12:37):
of I G I Am. Was a bit of an
interesting story. I was coaching my son at a U
twelve hockey tournament up in the Northeast and my cell
phone kept ringing while I was on the bench yelling
at kids to skate harder and get into the get
into the corners. And it kept ringing, and it was
my boss. And it was a Sunday, And eventually, in
(12:57):
between periods, I picked it up and and it was
my boss. At the time was a gentleman named Rob Leary,
a terrific mentor of mine, who said, I need you
to get down to my house tonight. I said, Rob,
I'm up in the Boston area. He lived in Greenwich, Connecticut.
He said, no, you have to be here, and I said,
am I fired? And because if so, I'm not coming down.
(13:19):
Just tell me now. I'm going to finish the game.
And he said, no, you're not fired, but you have
to get down here. So I made my way down
to Greenwich, Connecticut, and I proceeded to learn that I
and G had taken the loan from the Dutch state
and that in the morning before we woke up, because
Europe's ahead, it was going to go public and my
boss would become the CEO of the Americas and I
(13:43):
would become the CEO of the investment management firm, and
we planned what was going to happen. The next morning.
I was going to have to assure our investment teams,
our clients, our pension consulting partners that everything was going
to be okay and that we were you know, we
were still in business. But as you can imagine, it's
(14:03):
incredibly hard to run an asset manager with a for
sale sign on your back. Because Ing had announced that
it would dispose of the US businesses. So another crisis
bred opportunity for me. I had to actually tell my
team of peers that I was now their boss. Because
it was so chaotic that no one came in to
actually deliver that message. I had to deliver it myself.
(14:24):
But it was a great team and we rallied together
and we built the business, grew it coming out of
the financial crisis, and then that ultimately became the business
that we spun out as Voya.
Speaker 2 (14:37):
So two questions that first, I have to get the
date of this, Like, was this right in the middle
of the crisis? Was it towards the tail ends when
did you get this Sunday hockey phone call?
Speaker 3 (14:50):
Yeah, I was about the middle of two thousand and nine.
So two thousand and eight, you know, as you remember Barry,
fourth quarter was chaotic. We were having global calls, trying
to preserve capital. Who knew what was failing next. And
then as we got into two thousand and nine, companies
were starting to sort out, you know, where they were,
and that's and it was about mid two thousand and
nine where Ing decided to take the state aid.
Speaker 2 (15:13):
But the second question is he couldn't have told you
that over the phone, Like, I know, they want everybody
in the room when you're planning, but now, no, this
is good news. You're getting a promotion. Get down here.
It's important. That's a stressful drive from Boston to granted
it was I.
Speaker 3 (15:30):
Think he was being extra cautious given it that it
was material, non public information and pretty significant information at
that and also we needed to be up and running
in New York Monday morning, and so he needed to
make sure I was down Sunday night.
Speaker 2 (15:46):
Gotcha. That's really that's really quite fascinating. How did you
end up going from Voya to Jennison Associates? What drew
you there.
Speaker 3 (15:55):
Yeah, I wasn't necessarily looking for a new role. I
was enjoying joining the role at Voya, being CEO of
the asset manager. I was on the executive committee. I
was learning new skills being part of quarterly earnings calls
and and and you know, helping grow that business as
part of a new company and new brand. But at
the same time, I was probably deep down ready for
(16:18):
a change. I had been with the company for twenty years,
but really it had changed around me, from Altus to
ETNA to two I n G and and then DA Voia,
and so I was ready for a change. I said
that to myself that if I left, it would not
be for another insurance or bank owned asset manager. And
(16:39):
no disrespect to those those businesses. I had terrific experiences
and opportunities presented to me there, but I just felt that,
you know, a new experience, maybe going back to something
more independent or private would would be the uh would
be the move for me. But I got the call
and from a recruiter, and Jennison was an intriguing company
(17:03):
to me. It's you know, just well known quality firm,
strong results, impressive client roster and I'd heard it had
a great culture, so I was intrigued and agreed to
have have some meetings and really really got quite interested
in the business. I thought the people were outstanding that
(17:24):
I met, They validated the culture, the client list and
roster truly was impressive. What you know, what I had
to get my head around is that it was owned
by an insurance company. However, part of pgm's multi boutique model,
and that was that was very appealing to me. I
(17:44):
think for this stage of the asset management industry, a
multi boutique model is a good model. You get the
asset class specialization, you get the entrepreneurialism in the boutique,
but you get the benefit of being part of a
large your manager that has access to wealth management platforms, capital,
global distribution. So it seemed like a very good business
(18:09):
model that allowed for sort of the best of both worlds,
and you know, I was therefore attracted to it and
really have not regretted the move one bit.
Speaker 2 (18:19):
Really interesting talk a little bit about Jennison. You mentioned
they had been around a while nineteen sixty nine. They've
been around for let's call it fifty plus, almost sixty years.
What sort of traditions and cultures made that longevity so
attractive to you.
Speaker 3 (18:39):
Yeah, it was all around reputation. And the history is
that Jennison, founded in nineteen sixty nine, was really one
of the first independent institutional asset managers. In those days,
all the institutional asset management was done out of the banks,
and there were seven founders who decided that maybe they
could do it better, and they left their banks and
(18:59):
they set up the business in the in the Drake
Hotel in New York City and they started to u
they started to invest. They they ultimately were growth investors,
but growth investing was not even known at the time. Uh,
you know, the Russell one thousand growth didn't even exist.
But the team started investing in what they believed to
(19:19):
be the fastest growing companies, the disruptors of the time,
and really became there for one of the earliest true
growth investors. And the founder that that that survived the
the you know, almost the entirety of the business and
and was there when I arrived was sig Sigalis, who
was an iconic investor again really one of the first
(19:41):
dedicated growth investors. He was an incredible investor but also
an incredible man.
Speaker 2 (19:47):
Uh.
Speaker 3 (19:47):
He worked right up until he passed two years ago
at eighty nine, literally until the week before. He was
never going to retire. He you know, he he was
someone who taught me a lot, He taught the firm
a lot. But at the end of the day, he
was an intense competitor who wanted to win. But he
was very values based. Everything was about the client and
(20:10):
about values. And he had a great saying, which was
do what's right for clients, and that'll always be right
for the business. And I think those are pretty pretty
sage words. And if you're serving your clients well, you're
going to both retain and get new clients. And in fact,
if you look at our you know our client roster,
two thirds of our clients have been with us for
(20:31):
more than ten years and forty percent more than twenty years.
Speaker 2 (20:35):
Wow, that's pretty substantial. I'm kind of intrigued by the concept.
And I mean I was a kid in nineteen sixty nine.
I think I was seven or eight years old, but
the idea that growth investing was like a novel concept.
I get the idea that, hey, this was kind of
(20:55):
the early days of a bear market that went on
for another decade. But tell us what does it mean
to be growth oriented investors when there's no such thing
as a typical growth index or a value index.
Speaker 3 (21:13):
And what growth investing has meant for Jennison and it
is it is the original legacy and uh an original
book of business for the firm. We've extended from there.
But growth investing for us has really been about high conviction,
deep fundamental research driven active management management. And you know,
we're we're concentrated manager. We take we take large positions
(21:35):
in in concentrated portfolios, and we're really striving to be
that high alpha equity manager for for pension plans and
for wealth allocators, and often we're part of an asset
allocation and you know, we're you know, we're the alpha
in the corners, if you will. And you know, I
think that's the right place to play as a fundamental
(21:58):
active equity manager because the hollow has been middled, because
the middle has been hollowed out. And you know, at
the end of the day, no one's going to pay
active management fees for two to three tracking error equity.
Speaker 2 (22:11):
Huh. That makes a lot of sense. So I got
to ask two questions about concentration and deep conviction. First,
what is a concentrated portfolio. I've seen a lot of
people describe themselves as concentrated portfolios and they're fifty sixty,
one hundred holdings. It doesn't really seem concentrated. What is
concentrated mean to you?
Speaker 3 (22:32):
Yeah? For us, fifty sixty would be the largest portfolios
that we manage in our in our growth book of business.
We do have down in our small cap and smid
cap of book of business, we do have larger holdings
down there, just to get some more liquidity and diversification.
But for our core franchise of growth portfolios, you know,
(22:54):
we have ten stock portfolios. We have twenty stock portfolios.
When we say something focused, it tends to be about
thirty and for us, you know, Flagship might be up
to fifty, but not typically more than that.
Speaker 2 (23:07):
And so when you say deep conviction, what does deep
conviction mean? Is that what leads to these ten stock
or twenty stock concentrated portfolios. Tell us a little bit
of what does deep conviction mean?
Speaker 3 (23:20):
Well, I think it starts with our investment research. You know,
we're a firm of four hundred people, seventy investment professionals,
about half pms and half analysts. They have very long
tenures with the firm, about thirty years of experience in
the industry, more than fifteen on average with the firm,
and they are doing very deep research by team. So
(23:44):
every team, our large cap growth team, our global growth team,
our small smid mid team, our value team, and our
fixed income team all have dedicated research analysts. So there's
no central research model, there's no house view, there's no
you know, mandated approach to seeking alpha. Every team has
(24:05):
the UH has the ability to seek alpha in its
own way. And what we have are very long tenured,
experienced career analysts. So our analysts and our firm ours
important as our portfolio managers. It's not necessarily a track
to portfolio management. In fact, we believe, you know, the
real UH secret, Sauce to to Jennison is the research
(24:28):
that that we do and what the teams do and
on the growth side, at the end of the day,
what we're looking for is innovative and disruptive businesses driving
structural shifts and industries. You know, business models with with
significant barriers to entry, secular demand trends driven by superior
product offerings, and these days you know, as you know,
(24:49):
that might be evs, autonomous UH driving, machine learning, obesity, drugs,
or luxury that's owned through the value chain, and all
of those tend to be superior your growers. They tend
to have moats around them and are the leaders and
the disruptors. And you know, as you know, Barry, history
has shown that market returns over time have been driven
(25:11):
by a narrow set of disruptors and consistent winners. And
Jennison has developed a reputation for identifying those companies.
Speaker 2 (25:18):
So the past fifteen years, those innovators, disruptors, companies with
moats have primarily been US based, right, And we see
the rest of the world, Asia, Japan, Europe primarily lagging
the US, although there seems to be a lot of
signs these days that that's starting to change. Certainly Q
(25:41):
one tw twenty five, Europe is dramatically outperforming the US.
How do you think about the relationship between US investing
and international investing. I know only about ten or fifteen
percent of your assets are invested overseas. What would it
take to make that change?
Speaker 3 (26:03):
Yeah, in terms of our our portfolios that are invested overseas.
And then I'll and then I'll answer your question about
how do I think about international versus US markets. We
have about twenty five billion of dedicated international and global portfolios,
but within our other equity portfolios across the firm, we
do hold a percentage of international assets, so that that
(26:26):
number ultimately is about forty billion of our one hundred
and fifty billion of equity, So it is a little
larger than it may may appear. And you know, at
the end of the day, unless we have investment guidelines
or restrictions from clients, you know, we seek alpha with
a bit of agnosticism to both the benchmark and the region.
(26:47):
So we are building portfolios bottoms up, company by company
and looking for what we you know, view are the
best companies for our strategy, whether that be you know,
intrinsic value, and you know what we think are our
undervalued companies or the disruptors and the growers. In terms
of international holdings per se as you mentioned the first quarter,
(27:11):
after a long drought of underperformance compared to the US,
international equities have had a nice run. You know, it's
primarily driven by policy shifts locally in some of those regions,
as well as reactions to current US policy shifts and
the uncertainty around that. So in Asia, you know, the
(27:32):
government is clearly priming the pump. In Europe, increased defense
spending has really ignited, ignited the markets over there, and
so I think the international markets might have some legs.
We do still favor the US, you know, in the
medium term and longer term right now, but certainly international markets,
(27:53):
after being beaten down for years have come back strongly.
Speaker 2 (27:57):
So let's talk a little bit about risk management. I
know you guys employ the traditional sected diversification, geographic diversification,
different strategies, but talk a little bit about your risk
management and the downside protection you deploy to make sure
that volatility like we've been seeing doesn't hit the bottom
(28:18):
line too hard.
Speaker 3 (28:20):
Yeah, And you know, as we discuss Barry, we are
concentrated managers, high conviction managers, so you know, we're paid
to take risk and as a result, our portfolios do
tend to be more volatile than the benchmark, certainly and
many other managers who are more diversified. So you know,
we will have periods where we wildly outperform the benchmark,
(28:41):
in periods where we underperform the benchmark. We're looking typically
at a holding period in our names of you know,
three to five years and much longer, and so you
know we are long term investors. We want to align
interest with our clients who are long term investors and
try to filter out the quarter to quarter noise and
(29:02):
the volatility that comes in between those periods. So again,
if we can identify those companies early that are going
to be the longer term winners, that's that's where we go.
From a risk perspective, what we want to protect against
is unintended risk. So we're taking very deliberate and concentrated risk.
But we have every kind of risk management report that
(29:24):
you would expect in an asset manager to make sure
we don't have unintended risks, to check our dispersion, and
to make sure that at the end of the day,
the risks we're taking our stock selection risk and not
unintended risk around you know, sized geography sector.
Speaker 2 (29:41):
So I don't usually hear the phrase unintended risk. So
I certainly understand the risk of performance relative to a benchmark.
You over underperform, you're gonna outperform. What are some other
unintended risks? Is it strictly just sector concentration jigra a
concentration or is there a little more nuance to it.
Speaker 3 (30:03):
We want to make sure at the at the end
of the day that the risk we're taking is is
stock specific. That's that's who we are on the equity side.
We are we are stock pickers, and so we want
to make sure that you know what's what's coming through
our portfolio from a risk perspective is all based on
stock selection and not some of the more factor based
(30:24):
UH influences that can that can take shape in portfolios.
And as you mentioned, you know, sector and geography and
and UH and other.
Speaker 2 (30:33):
Exposures really interesting. So so given that PGEUM is the
parent company and they run a sort of multi boutique,
multi strategy approach, how does your concentrated alpha approach to
investing fit in. Do you have to think about, well,
(30:54):
maybe this group or that group is doing something similar,
or do you do your thing and it's up to
the pairing company to select the allocation they want.
Speaker 3 (31:05):
Yeah. The great thing about the multi manager model at
PGEUM is each of the affiliates as we call them
versus boutiques are free to pursue their asset class and
their specialty UH in their own way. Now to the
extent that there are multi asset portfolios put together, you
know within PGEUM that might select components of the different
(31:27):
affiliates or boutiques. You know, that'll be determined by the
multi asset team doing the acid allocation. You know, for
for Genison, given you know the high highly concentrated UH,
you know nature of our of our equity portfolios, we
fit into some of those multi asset products, but in
other cases we don't. We're too high octane UH for that.
(31:49):
But we are in a number of annuity and and
other acid allocation products throughout Prudential that that avail themselves
of our various capabilities. And the other thing that that
that Jennison can do is we have a small quantitative
equity team, not to be confused with PGIM Quantitative Services,
(32:10):
which is a sister company. Our team is there to
customize our fundamental alpha from our equity portfolios. So if
a client is looking for a targeted tracking error, a
targeted volatility, you know, likes what we do but maybe
can't quite take take the tracking error volatility, we can
manipulate the portfolio to fit within their requirements. They might
(32:33):
be someone who wants a sustainable portfolio and you know,
has some exclusions or types of industries they don't want
to include. So having this little quad group within Jennison
to customize our our outcomes for our clients as has
been a terrific addition of value that has allowed us
to get into some of these multi asset products. The
(32:55):
other great thing about the PGM multi manager model that
I'll come and on is that we have virtually no
overlap among the different affiliates or boutique. So Jennison is
the is the fundamental active equity manager. Uh, you know,
PGEUM Quantitative Services is the quant manager. Pageum fixed income
has you know, broad based fixed income capabilities. We have
(33:18):
private real estate, private credit, et cetera. And we're not
fighting with each other over shelf space in different products
because we're all experts in what we do.
Speaker 2 (33:29):
Now, it's taken me about ten years to stop saying
Prudential and start saying pgeum. You did mention Prudential. When
you think about the parent company, it traces back to
Prudential Insurance, which is still a giant brand. How does
the relationship between Genesis, How does the relationship between Jennison
(33:52):
and PGEUM and PGEUM Prudential just affect the nomenclature. It's
a lot of stuff to keep straight.
Speaker 3 (33:58):
It is you have you have the master brand of
Prudential one hundred and fifty years, you have the pGEM
brand a little over a decade old, and then you
have the brands underneath Jennison at fifty five years being
the oldest of the investment management brands. It's also why
Jennison tends to be the most independent of the of
(34:20):
the affiliates or boutiques. It was an acquired business. About
seventy five percent of the assets were sourced by Jennison
versus assets that have come through some of the Prudential
or PGYM channels. But you know, we do, you know,
we do have to be careful about the branding, and
sometimes it's at the product level. For example, PGUM runs
(34:46):
a lot of the you know, the consolidated platforms like
the mutual fund platform and in Europe the use it
platform that are you know, used to structure the funds
that are sold into the wealth management channels and there
for example, if you want to buy Jennison in a
(35:06):
growth fund through the through the PGAM mutual fund company.
It's the Pgmjennison Growth Fund, So sometimes we have multiple
brands at play.
Speaker 2 (35:14):
Huh, really interesting. So let's talk a little bit about
the current environment. It certainly has been a chaotic first
quarter with tariffs on and off. Again, you guys are
deep fundamental investors. How do you think about newsflow and
all this noisy stuff when you're looking at the fundamentals
(35:37):
of companies.
Speaker 3 (35:39):
It's it's hard to do, but it really comes down
to focus. At the end of the day, we have
to try to filter out the noise. Now we can't
we're not macro investors, but we have to be macro aware.
We have to understand if policy shifts or you know,
anything in the macro environment will ultimately affect the environ
(36:00):
in which our companies operate. So we always bring it
back to the fundamentals. You know, we can't put blinders
on and say this is a great company, but if
if the landscape in which they operate changes, it can
affect the fundamentals of the company. So, you know, we
work very hard to try to separate the you know,
the noise from the fundamentals. But at the end of
the day. Sometimes that macro environment can affect the fundamentals.
Speaker 2 (36:24):
So when it starts affecting the fundamentals, how do you
manage it? I'm assuming since you're the alpha managers, you
don't have an option of saying we're going to go
to cash or we're going to go to bonds. Is
in a matter of saying, hey, Europe seems to be
doing better, we're going to rotate shift some of our
exposure from the US two overseas. How do you deal
(36:45):
with the macro once it starts affecting the fundamentals.
Speaker 3 (36:50):
Yeah, it's exactly as you described. We're paid to invest
in a certain strategy for a client, so we hold
very little cash just forquidity and trading. We're paid to
be fully invested, and so you know, as we see
either a sector or a supply chain or a company's
fundamentals coming under pressure, will will either underweight or get
(37:12):
out of the company completely and look for the next
best opportunity.
Speaker 2 (37:16):
Really kind of interesting. You had a piece recently at
Jennison titled is value investing debt? Tell us a little
bit about that.
Speaker 3 (37:27):
Well, Well, growth indexes have certainly outperformed value for for
well over a decade. I think we're all aware of that.
That's that's been good for Gennison two thirds of our
equity assets or our growth oriented assets, and and we've
we've benefited during this period and also outperformed and raised
money and new clients. So, you know, a lot of
(37:47):
that has been has been a great tailwind for our business.
But we also have a high performing value team that's
that's put up some very good numbers. The way we've
uh the way we manage in value is called an
intrinsic value approach, which is very opportunistic. It's not deep
value or a Fallen Angel type strategy. We look for
(38:09):
companies with temporarily depressed earnings versus a permanent situation. We
try to identify those, and periods of short term volatility
can actually favor our approach if we can, if we
can decipher, you know, which companies have hidden inflection point
and get into those early and hold them long term.
(38:29):
Now the market has broadened out recently from the mag
seven and some of the you know, the most concentrated
positions that have that have led the market, and and
we're being rewarded, you know, for executing in the value space.
There's still good companies and good growth in value. I
don't think investors really think about growth versus value investing
(38:52):
like they used to. I think they think about it
as portions of the portfolio, stable growers maybe with dividends,
versus as innovators and disruptors that that might lead the
way in the future.
Speaker 2 (39:04):
That's really that's really kind of interesting. It's funny because
you're talking about your approach to intrinsic value, and I
would imagine that as the mag seven and traditional growth
equity falters, the volatility of this market would be great
(39:24):
for an opportunistic intrinsic value investor. Tell us how the
value guys are salivating these days over what the state
of markets are with volatility spiking up close to thirty.
Speaker 3 (39:40):
Yeah, I think volatility actually can be good on the
growth side as well. So I think I think when
you're a fundamental stock picker, you you want number one
is as little correlation as possible. If everything goes up,
it's hard to differentiate yourself when market's broaden out, you know,
when when volatility is UH is elevated, you know it,
(40:04):
really you really have to have skill to to differentiate
and to separate the noise, uh, you know, from the
fundamentals of the company, and so we think we can
benefit in these periods both on the value and the
growth side. Certainly, you know, on the growth side has
pulled back most recently in the first quarter. You're you're
starting to see that, uh shift back already. It appears
(40:28):
that mid March was perhaps the you know, the the
you know, the bottom, and we seem to be, you know,
starting to bounce off of that. I for one, UH
don't don't see a recession on the horizon, at least
not a not a severe one. So I think we
will continue to see as as you know, we filter
(40:50):
through the noise. We learned the tariffs may be a
little more targeted and forgiven in some instances that uh,
the supply chains don't get as disrupted as as we thought,
and we could see a good period for growth equity.
Speaker 2 (41:04):
Again, So you have large cap growth equity as a focus,
you have global equity opportunity. What are some of the
other areas where you guys focus in terms of looking
for alpha.
Speaker 3 (41:19):
Yeah, growth growth equity, as we've talked about, was the
foundation of the firm and the largest book of assets
about half the assets of the firm. We have a
global growth team that was built and extended off of that,
getting into global, international and emerging market equity, also following
a growth style and philosophy. That team leverages a lot
(41:42):
of the same research of our growth analysts. Then we
have a small smid mid cap team. They are a
little more growth managers, but a little more valuation sensitive there,
and we offer that in sort of growth and core portfolio.
Our value team. We talked about our intrinsic value capabilities,
(42:04):
but you know, on the value side, we also have
certain sector funds infrastructure, utilities, energy and other things, and
including some of some strategies that are in demand in Europe,
like carbon solution strategy that's a sort of a brown
(42:25):
green strategy, if you will. And then we have our
fifty billion dollar fixed income shop based up in Boston.
They are really the antithesis of what we do in
high conviction focused concentrated equity. They are a high, high
quality credit shop staying in you know, the higher end
(42:49):
of the space there down the fairway core fixed income
manager managing for the largest pension plans in the world,
and also able value in LDI mandates. So it's also
a nice diversifier for the business. We have this very stable,
you know, core credit manager and this high conviction, high
(43:09):
alpha equity manager.
Speaker 2 (43:11):
So given that there seems to be a consensus at
your shop of higher for longer at least when it
comes to rates. Since you brought up fixed income and
you brought up credit, does this allow your clients to say, hey,
we could take a little off the table with equity
and focus a little more on on stable fixed income.
(43:33):
How does that balance work?
Speaker 3 (43:35):
Yeah, we've seen that over the last several years as
rates ticked up and there was something to earn in
fixed income. Again, we watch pension plans, you know, adjust
their their asset allocations. You know, one of the double
edged swords of being a high performing equity manager is
when the equity markets run up and you outperform the
(43:56):
benchmark you get allocated against, you're the one they take
the money away from from. So you know, we've we've
had that happen and have been a victim of our success,
if you will, in some of these areas. So we
have seen that over the last couple of years as
rates ticked up, where we did see some of our clients,
you know, maintain us, but shift sort.
Speaker 2 (44:15):
Of rebalanced falls from alpha generating concentrated equity into more stable,
lower yielding fixed income.
Speaker 3 (44:23):
Exactly exactly. I mean, we we do know. I'm not
one to call rates per se, but you know, I
agree with the base case out there that we'll probably
see two cuts. Hopefully they're you know, they're for the
right reasons and not bad news cuts, if you will.
Speaker 2 (44:39):
So that's interesting you say that because originally last year
Wall Street was looking for a lot more cuts than
we got, and the sort of pushback to the expectation was, Hey,
the economy is really robust. Consumers are spending, companies are hiring,
capex spending is up, revenue and profits are up. Why
(45:02):
are you guys expecting cuts? How does that transition? Now?
Where you know, I'm in your camp, I don't really
see an imminent recession, but at the same time, it
certainly appears that recession risks are ticking up. They're still
relatively low, but they're appreciably higher than they were at
(45:22):
the end of twenty twenty four. So if we're going
to get two cuts, is that because the FED wants
to normalize rates to where they've been over the past
twenty twenty five years as inflation sort of settles down,
or are we going to see cuts because the economy
is beginning to slow.
Speaker 3 (45:42):
Yeah, I agree with you completely. I hope it's the
former and not the latter. We are starting to see
some signs of some potential slowing of growth. I do
think we could see growth slow down from what it's been.
Speaker 2 (45:56):
And it's been red hot, and it's a couple of years.
Speaker 3 (45:59):
And it's been red hot. You know, there's still some
good signs out there. Housing starts are up, services pmis up,
you know, retail sales and manufacturing are down, consumer sentiments down.
The income and labor markets importantly are still are still decent.
I think that'll be a major determinant of where we go.
Inflation is stubborn, but it's showing signs of coming down
(46:22):
in key areas. Tariff's notwithstanding, and you know, I think
the tariff path will determine a lot of where we
go here.
Speaker 2 (46:29):
So it sounds like you guys stick to your knitting.
You do fundamental research, You focus on intrinsic value, but
you're certainly aware that, hey, what's going on in the
rest of the world. It could have an impact then
lead over if you're advising pension funds or foundations that
have a perpetual lifespan or at least future liabilities that
(46:55):
are decades off, is the best advice. Hey, it's gonna
get bumped for a while, but you have to look
past this, look to the other side of whatever happens
over the next one two, four years or is it
everybody manned their battle stations.
Speaker 3 (47:10):
Yeah, I think keeping a long term focus is good advice. Uh,
you know, for for the pension plans who obviously have
teams of experts, you know, focused on their asset allocation,
but also for the retail investor who who obviously has
the financial advisor as well. But you know, as you
know Barry, staying invested is key when people try to
(47:31):
time the markets and and exit, you know, they they've
they've always regretted that, you know, being in the market
during those key points of inflection when when markets take
up or missing that that last uh, that last large spike,
you know, it really can have a dramatically negative impact
(47:54):
on your returns overall.
Speaker 2 (47:55):
Yeah, We've seen a lot of studies that show the
worst days and the best days tend to come cluster together,
and it's very hard to miss one and catch the other. Absolutely,
so I know I only have you for a limited
amount of time. Let's jump to our favorite questions that
we ask all of our guests, starting with what's keeping
you entertained these days? What are you either watching or
(48:17):
listening to? What's your tell us about your favorite podcast? Netflix? Whatever?
You know?
Speaker 3 (48:25):
I'm always well behind where everyone else is. I didn't
watch the first episode of The Sopranos until until the
series was over, and I'm just starting Yellowstone, So that
tells you how up to date.
Speaker 2 (48:39):
You're ahead of me. And Yellowstone it's the next one
up in Mike queue. Are you enjoying it?
Speaker 3 (48:45):
I just started it, so so far, so good. I've
heard so many great things about it, so I'm looking
forward to it. I'm a bit of a history buff,
so I've been working my way through the ken Burns, uh,
Doctor Malarisa. I've seen the Brooklyn Bridge, the Statue of Liberty,
the Civil War, the Vietnam War, and the Great War.
And the next one up for me is Benjamin Franklin.
(49:07):
So I really enjoy ken Burns and how he approaches
you know, the documentary.
Speaker 2 (49:13):
Huh, really interesting. You You mentioned one of your mentors previously.
Tell us about the folks who helped shape your career.
Who were your mentors?
Speaker 3 (49:24):
Yeah, I would say, first, you know, it was my
mother from a values and from a work ethic perspective,
first generation college grad, went to got a master's at Georgetown,
worked in politics, ransom nonprofits, and then ultimately worked in education.
She's she's ninety years old and still alive and doing well.
(49:47):
And you know, she's been a great inspiration to me.
Again from a values and work ethic perspective. I've also
had the great opportunity to work for some great leaders
and manager I tried to learn from each one of
them along the way, take the styles or the characteristics
that I most admired of each of them and try
(50:08):
to incorporate that into my leadership style. And at Altis
it was John Kim and Scott Fox at at you know,
Bob Crispin, Rob Leary at I n g Uh and
then alone Cara Oagland at Voya to name a few.
Sig Sigalis who who I mentioned past about two years ago.
I worked with him for only about six years and
(50:29):
while you know he wasn't necessarily a mentor in the
sense of helping me do my job, which was terrific
when when when I came on board, Sig said, I,
I managed the money, you managed the firm. And he
he kept his word there and allowed me to do
what you know, we felt we needed to do to
help grow the business and set the strategy. And it
was a it was a terrific partnership. And UH, and
(50:51):
I have great admiration for him. So he was more
an inspiration to me, just the you know, his will
to win and and the way he impacted everyone around
him and the quality, UH and the values of the
firm that he built really inspirational.
Speaker 2 (51:06):
Really really interesting.
Speaker 1 (51:08):
Uh.
Speaker 2 (51:08):
Let's talk about books. What are you reading currently? What
are some of your favorites?
Speaker 3 (51:13):
Yeah, right, right now, I just started, UH, Leadership in
Turbulent Times, UH, from from Doris Kurrn's Goodwin. It seems a.
Speaker 2 (51:21):
Little apropos sure right now.
Speaker 3 (51:23):
And and UH, you know, it's a it's a book
about Lincoln, Teddy Roosevelt, FDR and UH and LBJ and
it kind of you know, takes you through their you know,
their administrations and UH and some of the challenges that
they faced. You know, it's a big book. It sat
on my coffee table for a few years and I
looked at it and I, you know, I've wanted to
(51:44):
kind of tap in, but it was four inches high,
and and finally I h I did tap in, and
I'm glad I did.
Speaker 2 (51:51):
Our final two questions, what sort of advice would you
give to a recent college grad interested in a career
in either investment, credit, finance, anything along the lines of
your career experiences.
Speaker 3 (52:07):
Yeah, I would say, first thing, you know, you know,
getting into finance. The path to finance starts so much
earlier than it ever did. And in our day, you know,
it was senior year, it was time to look for
a job, maybe had an internship, you know, the year before.
Speaker 1 (52:23):
But now.
Speaker 3 (52:25):
Undergrads going into finance, they need to be lining up
their internships sophomore summer, junior summer, senior summer. So so
it really starts a lot sooner. But once they're on
the job, my my advice to them is always builder
a resume of skills, not a resume of jobs. Try to,
you know, try to develop as many skills as you
(52:46):
can along the way, and ask questions early and often
you're not expected to know anything when when you're young
and in the job, but as you move on in
your career, you're expected to know more and it becomes
a little harder to ask questions and then ask for
experiences outside of your current duties. So if you see
something going on in the next department over, ask if
(53:09):
you can be exposed to that you know while doing
the job you were hired for, and try to get
more exposure, but don't expect anything to be given to you.
You own your career. Seek out mentors and try to learn,
But at the end of the day, you have to
take ownership of your career and your advancement will really
(53:30):
depend on the success of your current role, and if
you focus on that and do it well, you'll be recognized.
Speaker 2 (53:36):
Really good good advice, And our final question, what do
you know about the world of investing today? You wish
you knew thirty forty years ago when you were first
getting started.
Speaker 3 (53:47):
Well, as I mentioned, I didn't know anything about it
forty years ago when I was getting started coming out
of college. But in reflecting back, what I think would
be helpful would have been how many different types of
finance careers there actually are? Everyone thinks sort of Wall
Street investment banking, M and A. But but there's investment management,
(54:09):
there's wealth management, there's insurance, there's commercial banking, there's you know,
there's institutional banking. So many many careers in finance and
past that that that you can go down. I had
a very narrow view of the investment world. And you know,
my journey really, you know, happened because of the next
role that I got. In the next role that I got,
(54:30):
I didn't have a plan per se, and I think,
you know, I wish I knew more earlier on and
I might have set a plan. The plan turned out okay,
and and I've been happy with it, but you know,
who knows what the path would have taken had I
known a little more about it.
Speaker 2 (54:45):
Huh, really interesting stuff, Jeff, Thank you for being so
generous with your time. We have been speaking with Jeff Becker.
He's chairman and CEO of Jennison Associates, helping to run
the firm that manages well over two hundred billion dollars
in assets. If you enjoy this conversation, be sure to
check out any of the five hundred and fifty or
(55:07):
so we've done over the past eleven years. You can
find those at iTunes, Spotify, YouTube, Bloomberg, wherever you find
your favorite podcasts. Be sure to check out my new book,
How Not to Invest The Ideas, numbers, and behaviors that
destroy wealth and How to Avoid Them, out now at
(55:28):
your favorite bookseller. I would be remiss if I did
not thank the Cracked team that helps with these conversations
together each week. My audio engineer is Steve Gonzalez. Anna
Luke is my producer. Sean Russo is my researcher. Sage
Bauman is the head of podcasts at Bloomberg. I'm Barry
rud Haunts. You've been listening to Masters in Business on
(55:51):
Bloomberg Radio
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