Richard Gadbois, one of the super brokers at Merrill Lynch & Co.’s Newport Beach office, is setting out on his own with two big Wall Street names.
By Labor Day, Gadbois said he plans to leave Merrill Lynch to be-come a partner in Vantis Eq-uity Associ-ates, a new investment firm he’s starting with hedge fund manager Steve Holzman and Home Depot Inc. co-founder Kenneth Langone.
“The company is coming together with my experience, Steve’s investment expertise and Ken’s knowledge,” said Gadbois, who’ll be president of the new firm.
Gadbois plans to look after the marketing, client relationship and administration of Vantis, which plans to have offices in Los Angeles and New York. Gadbois said he plans to work from a small Fashion Island office, as well as Los Angeles and New York.
Vantis plans to focus on long-term investments with an average holding period of three to five years, according to the founders. Gadbois is targeting $1 billion under management by the first quarter of 2002. The company will charge a flat fee of 1.5% to its investors.
“It is going to be a very simple model,” said Langone, who’s set to be chairman of Vantis and sits on the boards of General Electric Co. and the New York Stock Exchange. “We are going to invest in 30 to 35 companies.”
Holzman, the firm’s chief executive, said Vantis is “looking at a three- to five-year time horizon” for investments.
Prior to Vantis, Holzman was a managing partner at Los Angeles-based Cypress Funds LLC. Until earlier this month, Cypress had $1.2 billion under management. The firm and its partners decided to return most of the funds and are scaling down their operations because of market uncertainties.
“I became firmly convinced that managing hedge funds is going to become increasingly difficult,” Holzman said.
Besides his GE directorship, Langone is a Wall Street veteran who made his fortune by buying and holding stocks. He is one of the largest shareholders in Eli Lilly and Co., which he has held since late 1970.
Langone also has 18 million Home Depot shares valued at more than $750 million. His original investment in the Atlanta-based home improvement retailer was $100,000.
At Merrill, Gadbois is the top performing broker in the Western region with $6.3 billion in assets under management and an annual production of around $10 million. He has a team of eight people that work with him.
Gadbois and Merrill say their split is amicable: Gadbois said he will suggest that most of his clients stay with Merrill. His team will stay with Merrill too.
“We are pretty excited,” said Ronald Meraz, director and branch manager of the Newport Beach office. Gadbois “is a big supporter of Merrill.”
Merrill expects to work closely with Gadbois and Vantis, according to Meraz.
“We will be processing a lot of his firm’s business through Merrill,” he said.
“This is a great opportunity for Richard and for us as we will continue to do what we have been doing,” said Thomas Blanchfield, a Merrill vice president and senior financial consultant who is set to head Gadbois’ Merrill team.
Dan Reiner, chairman of Veradale, Wash.-based networking company Worldwide Packets Inc., said he has known Gadbois, Langone and Holzman for more than 10 years and plans to invest with Vantis.
“They are world class investors,” Reiner said. “You couldn’t ask for three better guys to be involved with.”
Vantis plans to invest using the same value-oriented, long-term approach that Langone has mastered and Holmes has used to manage money.
“Ken’s view is that we need to go to back to basics,” Gadbois said. “Buy and hold stock.” n
