Clear-Eyed Capitalists: The Next Generation of Local Leaders

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The sky fell. The ground shook. Fissures opened in the earth. From the beginning of 2008 until mid-2009, investors watched in disbelief and wailed in dismay as cascading Wall Street catastrophes–a veritable apocalypse–gripped the nation’s financial system. Investment bank Bear Stearns tanked, and then merged into JP Morgan Chase. Bank of America successively gobbled spiraling Merrill Lynch and Countrywide Financial. Lehman Brothers disappeared without a trace. The stock market plummeted. Credit evaporated. Layoffs proliferated. Toxic assets became toxic waste. Amid all these economic calamities, uber-investment manager Bernie Madoff’s multi-year $65 billion Ponzi scheme unraveled.

Gradually, though, stability returned, aided by government bailouts (GM, Chrysler, AIG, all the largest banks) and a more cautious investment approach by chastened–and, perhaps, chagrined–Wall Street executives. During and after the turmoil, many in the financial-services sector and related areas worked tirelessly to abet the healing. Here is a quintet of locals whose instinctual savvy and innovative strategies give hope that the recklessness that reigned in the previous decade has, temporarily at least, been replaced by responsibility.

Ashton Newhall (35), co-founder and manager of venture capital management firm Greenspring Associates

 

In the most benign sense of the expression, Ashton Newhall is to the manner born in terms of his profession–predestined to a career as a venture capitalist. His grandfather, Charles Newhall II, worked as an investing partner with Laurance S. Rockefeller (the spiritual Rockefeller brother: crop circles! UFOs!) for that family’s venture-capital firm, Rockefeller & Co. (now Venrock Associates), while his father, Charles W. “Chuck” Newhall III, co-founded Baltimore-based venture-capital behemoth New Enterprise Associates in 1977. Not forgetting Ashton’s younger brother, Adair, a venture capitalist with the healthcare-focused Domain Associates. 

In 2000, after a stint at T. Rowe Price, Ashton Newhall co-launched Montagu Newhall Associates, which ultimately morphed into Greenspring. The Owings Mills-based firm manages venture-capital partnerships that seek out high-value opportunities for pension funds, endowments, and foundations, while also giving its clients access to direct venture-capital investments in the holy trinity sectors of  technology, life sciences, and technology-enabled. To date, Greenspring has provided both direct and indirect exposure to 359 initial public offerings and 272 mergers and acquisitions events valued at more than $100 million each.

 “What distinguishes Greenspring Associates,” notes Newhall, “is that we are the only global venture fund-of-funds in the greater Baltimore area, and one of only a few in the world. Through our platform, we offer our clients primary fund investments, secondary fund investments, direct co-investments, and secondary direct co-investments on a global basis.

We sit at the nexus of the venture capital ecosystem and provide value-added capital that fuels many of today’s leading venture-capital firms and most innovative companies.”  

Jacob Hodes (30), chief operating officer of the private equity group at Brown Advisory

 

Launched in 1993 as an affiliate of the city’s 200-year-old, snap-to-attention-when-you-hear-its-hallowed-name Alex. Brown & Sons, Brown Advisory evolved into an independent, employee-owned investment firm in 1998, and, at present, boasts client assets of approximately $25 billion, with offices in Washington, D.C., Boston, London, and the mothership HQ here in Fells Point. Somewhat unusually then, Brown Advisory stitches austere venerability to start-up verve.

In 2009, Jacob Hodes signed on as an analyst with Brown’s private equity business, weighing the pros and cons of private investment funds for the firm’s clients. Last year, Hodes ascended to COO in the firm’s private equity division; also in 2010, he joined the business team of BrownSavano, a Brown-related investment fund that provides partial liquidity and asset diversification to individual shareholders in later-stage private companies.

Hodes packs an eye-popping resume, brimming with all the right names. A graduate of the Woodrow Wilson School at Princeton University, he worked as an investment-banking analyst on Wall Street at Goldman Sachs, before earning a law degree at UCLA. That led to a post in the corporate department at legal leviathan Skadden, Arps, Slate, Meagher & Flom, LLP, where he handled corporate finance deals, mergers and acquisitions, corporate governance issues, and restructurings.

“I’ve been very fortunate to work at two unbelievable, client-first organizations: Goldman and Skadden,” Hodes says. “However, I’ve never been at a place that is more client-oriented, client-focused, and client-driven than Brown Advisory.”

Jennifer Murphy (46), president and CEO of investment firm Legg Mason Capital Management LLC

 

Working in the extremely long shadow of Bill Miller–the Legg Mason Capital Management guru whose signature Value Trust mutual fund topped Standard & Poor’s 500 stock index from 1991 to 2005–probably cuts both ways, both blessing and curse. A curse because Miller’s remarkable 15-year high-wire run tends to obscure the essential contributions of his lieutenants–at least to the myopic media, and, by extension, to the general public; a blessing because his close associates can soak up the guy’s knowledge, perceptiveness, and insight.

Hired by Miller as a security analyst in 1986, Jennifer Murphy has ascended through the LMCM hierarchy, eventually taking over the president and CEO posts in 2009. Murphy’s investment philosophy reflects Miller’s approach. “We believe buying companies at large discounts to what they’re worth gives investors the best opportunity to build wealth over the long term,” she explains. “While this may sound pretty straightforward, it requires an independent point of view and the conviction to do what others won’t.” In short: Dare to zig when everyone else zags.
    
Specifically, Murphy adds, Miller has instilled in her the importance of “working with intensity, reading widely, and valuing people’s strengths.”

Apparently, Murphy also values the corporate climate at LMCM, given that she has spent nearly her entire career at the firm  “Because the future is uncertain and the competitive landscape changes constantly,” she notes, “a company’s culture and values are its most enduring assets.” 

Still, she manages to find her way outside the office, serving on the board of trustees at both the Walters Art Museum and the Glenelg Country School. “I also love working in Baltimore,” Murphy says. “It has so much to offer.”

John Linehan (46), vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

 

Over the course of its 74-year history (the past 25 as a publicly traded company), investment firm T. Rowe Price has established a reputation for personnel stability that belies the financial-services industry’s here-today-gone-tomorrow culture, where names and faces can change more frequently than Italian prime ministers or Orioles managers. John Linehan, head of TRP’s equity division and co-chairman of its institutional large-cap value fund, among other duties, exemplifies that rock-of-Gibraltar-ness, with 13 years service in the firm’s downtown sanctum sanctorum.

Linehan landed at TRP after earning a B.A. from Amherst College and an M.B.A. from Stanford University, then putting in nine years between Bankers Trust and E.T. Petroleum. In his various roles at Price, Linehan functions as administrator, mentor, and strategist.

For the equity division, Linehan strives to achieve a sort of unified field theory among people, process, and culture. “If we have good people, train them well, give them what they need to succeed and develop a special culture,” he explains, “then we should be successful over the longer term.”

For the large-cap value fund, he closely coordinates with TRP analysts to find “good companies trading at cheap prices. We are looking for companies with both positive fundamentals and valuation appeal. We take a contrarian approach; oftentimes the best time to buy is when others are bearish and the best time to sell is when others are bullish.

Doing well for my clients is my most conspicuous accomplishment. They have trusted me with their money, and I am proud that I have been able to deliver a long-term track record of investment success for them.”

Jeff Dicken (44), director of Baltimore Green Currency Association

 

Generally, the Secret Service takes a dim view when a group prints its own money, but in the case of Baltimore Green Currency Association, the T-men barely raised an eyebrow, given that the nonprofit BGCA issues BNotes rather than U.S. legal tender.

Launched this past spring in Hampden, the BNote initiative substitutes colorful paper scrip adorned with the images of abolitionist Frederick Douglass (flip side: an oriole) and poet/author Edgar Allan Poe (flip side: a raven) for the traditional green bills bearing the mugs of George Washington and Abraham Lincoln, respectively. Exchange $10 for 11 Bnotes, and then use them to make purchases at participating merchants–more than 100 to date citywide, from Mt. Washington to Fell’s Point.

“We are looking to help even the economic playing field in Baltimore,” explains BGCA Director Jeff Dicken. “People’s conception of money has become very rigid, and it’s important to remember its central purpose.  Value exchange takes many forms, and we can and should build systems that benefit people instead of corporations or banks.” (One immediate benefit: 10 BNotes buys $11 worth of goods.)

Similar scrip programs have succeeded in Western Massachusetts, Seattle, Toronto, and New Orleans, among many other communities, but BNotes marks the concept’s local debut. BGCA chose Hampden to roll out its effort because “it’s slightly isolated, giving it a small-town feel,” Dicken points out. “It has many small, independent merchants; it has a very strong sense of community; it’s also attracting new residents, especially younger Baltimoreans. All of these features make Hampden highly receptive to the idea of a new local currency.”

Merchants keep the notes circulating. Peggy Hoffman, co-owner of Hampden’s Minas Gallery, says, “We plan on spending the ones we take in at one of several great local participating restaurants.” 
 



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