If you want to find some of the top money managers in the country, your search could end right here in Newport Beach,not New York, Chicago or Los Angeles.
Two Orange County money management firms were listed by the Nelson Investment Manager Database in its latest World’s Best Money Managers ranking.
Street Asset Management LLC, based in Corona del Mar, ranked among the top investment managers in the U.S. in four different categories, while Newport Beach-based Metropolitan West Capital Management LLC was listed in three areas.
Street Asset is a start-up firm formed about a year ago by four industry professionals: Chris Street, the namesake founder, Kurt Stable, Raymond Pentz and Donald Sheetz. For the fourth quarter, Street Asset came in at No. 2 in Nelson’s U.S. Large-Cap Growth & Value Equity category. Port Chester, N.Y.-based Nelson, a unit of Thomson Financial, ranked 125 money management firms and mutual funds in the category.
The firm gave an 8.59% return to investors in the fourth quarter, while the average return given by 125 firms and funds on the list was a negative 6.81%.
“The fourth quarter was spectacular for us,” said Stable, Street Asset’s chief investment officer.
In the Growth & Value Equity category, the firm was ranked as the sixth best-performing money manager for the fourth quarter. Its 8.59% return compared with a negative 6.09% average return given by 274 other firms and funds.
To be sure, Street Asset benefited from the changing climate on Wall Street last year. The money manager invests in stocks using the growth and value approach, in which it buys stocks of fast-growing companies with reasonable price to earnings ratios compared to their peers. With the collapse of dot-com and other technology stocks, valuation-based investing is back in vogue.
While Street Asset invests in growth companies, Metropolitan West invests in traditional “old economy” stocks.
“Up to last year it was very difficult for a value manager,” said Steven Borowski, managing partner at Metropolitan West. “For a number of years, value was not in favor. The last time value outperformed growth was in 1995.”
Street Asset also takes a balanced approach. Its portfolio is a mix of both stocks and bonds. By balancing the portfolio, the firm reduces the risk associated with gyrations on Wall Street,like those seen last year. That approach made the company the 19th best-performing manager in Nelson’s U.S. Balanced/Multi Asset category. For 2000, the firm gave a 15.5% return to investors, a far cry from the average return of 1.6% given by 333 firms and funds in that category.
“We were in the right stocks last year,” Stable said.
Street Asset picked up stocks in food, drugs and energy, which outperformed broader market indices such as S & P; 500. He also said his firm was less weighted in technology.
Every quarter, Nelson collects data from more than 1,500 investment managers on some 4,500 portfolios. The World’s Best Money Managers categorizes and ranks this performance data in a series of 200 ranking reports.
While Street Asset took the trophy as the best- performing Orange County-based money manager for the fourth quarter and 2000, Metropolitan West was among the top-performing managers over the past five years.
The money manager came in at No. 13 in the U.S. Large-Cap Value Equity category out of 140 money managers and mutual funds ranked by Nelson. The firm gave an average annual return of around 21% for this five-year period, compared with an average of 16% return given by 140 managers put together.
Metropolitan West manages money for wealthy individuals and institutional clients. Borowski said that since the first quarter of 2000 there has been a big shift in preference for value stocks.
“The mid-1990s was the era of TMT (telecom, media and technology) stocks,” he said. “Last year was good for value managers like us.”
The money manager also ranked No. 34 in the U.S. Value Equity category, where it gave around 21% compounded returns in the five-year period. The firm ranked No. 32 among the best performing money managers in the U.S. Balanced/Multi-Asset category. n
