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MONEY MANAGER MONITOR
FOR THE WEEK ENDED MAY 4, 2001 ----------------------------------------------------------- THIS WEEK: ***NOTABLE CONTACT MOVEMENTS ***MERGERS & ACQUISITIONS ***NEWS ***OCTANE CAPITAL RUNS OUT OF GAS ***J.P. MORGAN CHASE & CO. MERGE TO CREATE INVESTMENT POWERHOUSE ***SECTOR COVERAGE: MONTAG & CALDWELL ----------------------------------------------------------- NOTABLE CONTACT MOVEMENTS U.S.: *RICHARD BEGUN, formerly a portfolio manager with Orbitex Management, Inc., left the firm in April 2001. Prior to his departure from Orbitex Management, Inc., he managed the Orbitex Focus 30 Fund, Orbitex Growth Fund, and the Orbitex Energy & Basic Materials Fund. *RUPAL BHANSALI recently joined MacKay Shields as head of its international equity team. Previously, Bhansali was employed by Oppenheimer Capital where he was co-head of international equity. *JOHN DAVENPORT, formerly managing director, chief investment officer/large-cap and member of the capital growth team at Evergreen Investment Management Company, left the firm on May 1, 2001. Prior to his departure from Evergreen, Davenport managed the Evergreen Capital Growth Fund and Evergreen VA Capital Growth Fund, which are now managed by the Pilgrim Baxter & Associates' portfolio manager team lead by RAYMOND MCCAFFREY and JEROME HEPPELMANN. *ROGER EDGLEY, formerly a portfolio manager and director of international research with Chicago, IL-based Liberty Wanger Asset Management, recently left the firm. Prior to his departure, Edgley co-managed the Liberty Acorn Foreign Forty Fund. *MARTIN JACOBS, formerly a senior investment analyst following machinery, mining, aerospace/defense, leisure, high tech- hardware and energy at Brinson Partners, Inc., joined the Los Angeles office of Capital Research & Management in April 2001 as a senior analyst following the same industries. *MATTHEW E. LAMPHIER recently joined the Chicago office of Northern Trust Global Investments as a senior equity analyst. Previously, Lamphier was an investment analyst with Security Capital Global Capital Management Group Incorporated where he was responsible for the coverage of lodging and healthcare industries. *IAN LAPEY recently joined New York-based EQSF Advisers, Inc. as a senior research analyst. Previously, Lapey was a sell-side security analyst with Credit Suisse First Boston, Inc. *PETER F. LEVIN, formerly a portfolio manager at Cincinnati, OH-based Bartlett & Company, left the firm on April 2, 2001. *ALEX METVINER, formerly a co-founder of Kismet Capital Management, recently re-joined New York-based Rudman Capital Management as a portfolio manager. He originally joined Rudman in 1994. *MICHAEL NANCE, formerly a portfolio manager and senior vice president with Kobrick Capital Management, L.P., left the firm on May 1, 2001. During his tenure at Kobrick, Nance managed the Nvest Kobrick Growth Fund and the Nvest Star Advisors Fund. *NOAH C. RUDOLPH recently joined Shrewsbury, NJ-based Osprey Partners Investment Management, LLC as a vice president and analyst working in the quantitative research area. Rudolph recently graduated from University of Virginia's Darden School of Business. *PATRICIA SATTERTHWAITE, a portfolio manager specializing in Latin American equities with Fidelity Management & Research, will take a leave of absence from the firm beginning September 1st to spend more time with her family. During her tenure at Fidelity, Satterthwaite managed numerous Latin America and emerging markets funds including the Fidelity Latin America Fund, Fidelity Advisor Latin America Fund, and Fidelity Latin America Growth Fund. *DORIS SKEES, formerly a senior vice president and portfolio manager for private clients at the Louisville, KY office of National City Corporation, left the firm in March 2001. GREGORY NORDLOH assumed her responsibilities at the bank. Nordloh, formerly with Stock Yards Bank & Trust Company, joined National City Corporation in April 2001. *BIJAL SHAH, formerly a security analyst following U.S. telecom companies with DuPont Capital Management, recently left the firm. *JOSEPH W. SKORNICKA, formerly a portfolio manager and security analyst at Munder Capital Management, joined the Denver office of INVESCO Funds Group, Inc. in March 2001 as an assistant portfolio manager. Robert McAree and Jonathan Woodley assumed his industry coverage responsibilities at Munder Capital Management. *JODY TRIANDIFLOU, formerly a vice president and security analyst with Chicago-based Burridge Group, Inc., left the firm on April 23, 2001. *RONALD P. TROUT, CFA, previously a senior vice president and co-founder of Dallas, TX-based Hourglass Capital Management, left the firm in March 2001. No replacement has been announced. *The majority of investment professionals with Edgemont Asset Management including: HANS UTSCH, RANDI KITT, MARY ANN GRAY, MARK BAUKNIGHT, LAURENCE AURIANA, ELIZABETH CULMONE, PETER LERNER, and VIVIAN WOHL, joined Federated Investors as a result of its acquisition of Edgemont in April. *CATHERINE D. WOOD, formerly a portfolio manager and co-founder of New York-based Tupelo Capital Management, L.L.C., left the firm in March 2001. Lulu Wang assumed her responsibilities at the firm. CANADA: *RICK SERAFINI, formerly a managing director and portfolio manager with AIM Funds Management (Canada), recently left the firm to launch Elmwood Capital, a Toronto-based hedge fund. Prior to his departure from AIM, Serafini managed the Trimark Discover Fund. SELL-SIDE: *ALEX BALUTA, formerly a principal and senior eNetworking software and enablers analyst in the San Francisco office of Robertson Stephens & Co., left the firm at the end of April 2001. *JENNIFER CHAO and NARIO CORSO recently joined Boston, MA-based Leerink Swann & Company's equity research department. Chao, formerly an associate analyst covering biotechnology at Deutsche Banc Alex. Brown, joined Leerink Swann & Company in late April 2001 as a vice president and senior biotechnology analyst. Corso joined Leerink Swann & Company in late April 2001 as a vice president and senior equity analyst covering large-cap pharmaceuticals. Previously, he was an equity analyst covering large-cap pharmaceuticals at ABN Amro, Inc. *BERNARD GAUTHIER, formerly a security analyst at the Montreal office of TD Newcrest, left the firm in April 2001. *EMANUEL GOLDMAN, formerly a managing director and head of beverages and tobacco research in the San Francisco office of ING Barings, recently left the firm. *ERIC LARSON was recently named as co-head of the equity research department at U.S. Bancorp Piper Jaffray. Larson, who was named as an Institutional Investor All-America research analyst for 10 consecutive years in the packaged food sector and was a two-time Wall Street Journal All-Star ranked analyst, will report to Bob Peterson. Prior to joining U.S. Bancorp Piper Jaffray, Larson spent four years as a senior vice president of investor relations at General Mills in Minneapolis and was most recently a financial consultant for Nistevo.com. *MICHAEL PAISAN joined Williams Capital Group in April 2001 as a principal and senior equity analyst focused on the insurance sector. Prior to joining Williams Capital Group, Paisan was a senior equity analyst covering insurance at Keefe, Bruyette & Woods Inc. *JEFF L. SADLER, formerly a senior vice president and security analyst at the Boston office of FAC/Equities, left the firm in March 2001. ----------------------------------------------------------- MERGERS & ACQUISITIONS *April 30, 2001- ABN AMRO completed the acquisition of the U.S. businesses on ING Barings. The deal was originally announced in January 2001. *April 27, 2001- AMVESCAP announced that it will acquire Boston, MA-based Pell Rudman & Co., which managed approximately $4.0 billion in equity assets. The deal is expected to close in the third quarter of 2001. This is AMVESCAP's second U.S. acquisition since the beginning of 2001; in April 2001, the firm completed the acquisition of Louisville, KY-based National Asset Management, which managed approximately $9.3 billion in equity assets according to the 13F filed for the quarter ended December 31, 2000. --------------------------------------------------------- NEWS FUND CHANGES: *Fidelity Management & Research announced that PATRICIA SATTERTHWAITE would take a leave of absence from the firm beginning September 1st to spend more time with her family. During her tenure at Fidelty, Satterthwaite managed numerous Latin America and emerging markets funds, including the Fidelity Emerging Markets Fund, Fidelity Latin America Fund, Fidelity Advisor Latin America Fund, and Fidelity Latin America Growth Fund. John H. Carlson will pick up management of the Fidelity Emerging Markets Fund, effective May 30, 2001. Matthew Torrey has been named associate portfolio manager of the Latin American portions of Fidelity's emerging markets equity funds, working under Carlson, who will have overall responsibility for the asset allocation and performance of the funds. Margaret M. Reynolds will assume management of the Fidelity Latin America Fund and Fidelity Advisor Latin America Fund, effective June 30, 2001. Jonathan M. Kelly has been appointed sector leader, emerging markets, with responsibility for Boston-based emerging markets fixed income and equity research. *The Pioneer II Fund, with $4.6 billion in equity assets as of September 30, 2000, changed its name to the Pioneer Value Fund in April 2001. Richard Dahlberg of Pioneer Investment Management Inc. manages the fund. *On May 1, 2001, Dodge & Cox launched its fourth mutual fund, the Dodge & Cox International Stock Fund. The fund invests primarily in the equity securities of non-U.S. companies from at least three different foreign countries, including emerging markets. Investments are made in countries whose economic and political systems appear more stable and are believed to provide some protection to foreign shareholders. The fund invests primarily in medium-to-large well-established companies based on standards of the applicable market. In selecting investments, the fund favors companies that appear to be temporarily undervalued by the stock market but have a favorable outlook for long-term growth. The underlying financial condition, such as future earnings, cash flow and dividends are considered. Companies with financial strength and sound economic condition are chosen. The fund is managed by the International Investment Policy Committee which includes: John A. Gunn, Bryan Cameron, Jacob Gofman, Gregory R. Serrurier, Diana S. Strandberg, and Kouji Yamada. *The California Public Employees' Retirement System (CalPERS) committed $100 million in assets to San Diego, CA-based Denali Advisors, a firm formed in 2001 by ROBERT SNIGAROFF, former chief investment officer of the San Diego County Employees' Retirement Association. The assets will be managed in an U.S. equity portfolio. *Allied Investment Advisors Inc. launched four socially responsible mutual funds this past week. The new funds include: the Ark Intermediate Fixed Income Portfolio, the Ark Capital Growth Portfolio, the Ark Small-Cap Equity Portfolio, and the Ark Blue Chip Equity Portfolio. The funds will not invest in tobacco, alcohol, gambling, nuclear power, weapons, or contraceptives companies. FIRM CHANGES: *Key Corp., in a decision to unite its various investment management platforms under a single brand name, renamed Cleveland, OH-based Key Asset Management (KAM) and Cincinnati, OH-based Gradison-McDonald Asset Management. KAM now operates as Victory Capital Management and McDonald-Gradison now operates as Victory Gradison Capital Management. *At the end of March, Monitor Capital Advisors, a subsidiary of New York Life Investment Management Holdings, LLC, changed its name to New York Life Investment Management Quantitative Strategies. In addition, the firm also moved to the New York area, relocating to 51 Madison Avenue, Room 201, New York, NY 10010. *At the end of March, hedge fund Jacobs Levy Equity Management relocated to 100 Campus Drive, P.O. Box 650, Florham Park NJ, 07932-0650. *Atlanta, GA-based NewCrest Advisors, Inc. relocated to a new address located at 300 Atlanta Financial Center, 3343 Peachtree Road, Atlanta, GA 30326. ------------------------------------------------------- OCTANE CAPITAL RUNS OUT OF GAS In a recent letter to shareholders, Octane Capital Management announced that it will stop making new investments and will return half of its estimated $265 million in assets to investors. The remaining capital will stay invested. Since mid to late 2000, the fund has reportedly had trouble finding new suitable investments. Rather than invest in companies it did not find viable, the firm's managers have decided to return their excess assets. The firm was founded in March 2000 by a formidable team, seeking to capitalize on the raging bull market. The timing could not have been worse. The firm's founding in March 2000 came at the beginning of the Internet bubble's burst, and the market declines that came with it. While the firm was able to garner returns early on, its prospects became increasingly dim as the floor fell out of the IPO market. The firm started out looking to get into companies on the ground floor by operating a "cross-over" style fund. The fund invested in companies with a public offering on the horizon. Ideally, the firm would be able to identify solid companies and benefit handsomely after an IPO pop. The firm's established staff helped lend an air of prestige to the firm itself. Octane Capital was originally founded with the help of Emeric McDonald and Alex Monte-Santo (both formerly with Amerindo Investment Advisors, Inc.), David Golob (formerly with Tiger Management L.L.C.), Tim Murphy (formerly with Capital Research & Management), and George Lee and Laura Paradis (former bankers with Goldman Sachs). Unfortunately, the firm concentrated on companies with high revenues regardless of earnings. (In many cases, the kinds of companies that have taken a beating in the market recently.) The firm specifically invests in emerging growth companies within the technology sector. Using a fundamental approach, Octane seeks companies with high revenue growth, leadership qualities and innovative products. Unlike other sectors, emerging growth within the technology sector may include companies that have reached large market caps. The public equity portfolio typically consists of 20 to 40 core issues; some of which are private investments that have since gone public. In the year 2000, there was approximately $223 billion in U.S. common stock underwriting, up from $175 billion in 1999 according to Thomson Financial Securities Data. However, much of last year's gain was a result of a high volume of new issues introduced in the first quarter of 2000. More foreboding for firms such as Octane Capital- approximately 68% of IPOs were trading below their issue price as of the beginning of 2001. Many analysts believe that Octane Capital is one of the many firms that will soon be winding down their operations and consolidating with other firms. Venture capital and crossover funds flourished throughout 1999 and early 2000, offering tremendous returns as a result of a frantic and euphoric stock market. As the IPO market has suffered, so have the firms most closely tied to it. --------------------------------------------------------- J.P. MORGAN CHASE & CO. MERGE TO CREATE INVESTMENT POWERHOUSE Throughout the past few months, the buzz on the street was the recent merger between Chase Manhattan Corp. and J.P. Morgan & Co., completed on December 31, 2000. The merged firm operates under the name J.P. Morgan Chase & Co. with various deviations for the subsidiaries. A global competitor with operations in over 60 countries, stockholders equity valued at more than $39 billion, assets in excess of $705 billion and a market-cap of roughly $83 billion, the newly merged J.P. Morgan Chase & Co. is an investment management powerhouse. The firm activities encompass investment banking, strategic advisory, equity and debt capital raising, credit, global trading, market making activities, operating services, wealth management, institutional asset management and private equity. UNITED STATES J.P. Morgan and Chase have complimented each other with various investment styles ranging from growth to value. For example, Houston-based J.P. Morgan Fleming Asset Management- U.S. (formerly Chase Fleming Asset Management and Chase Texas Investment Management Group), is a core growth investor utilizing four equity strategies; equity income; America core; equity growth; and small-cap. Research is guided by proprietary valuations and decisions are made based on company visits, discussions with customers and competitors and industry analysts. The firm's analysts then make recommendations to the senior portfolio managers who ultimately make the final decision. On the other hand, New York-based J.P. Morgan Investment Management, Inc., which employs an active equity strategy, is designed to outperform the S&P 500 based on a bottom-up GARP philosophy. Internal fundamental research, systematic stock valuation and disciplined portfolio construction enable the firm to build solid portfolios. J.P. Morgan places greater emphasis on normalized earnings and long-term growth rates and less emphasis on near-term earnings. The firm uses a proprietary DDM to derive at a DDR (dividend discount rate). The DDR serves a dual purpose, allowing investment professionals to rank each potential investment and determine performance for possible sell-outs. Similar to the Houston office, a majority of the research is conducted in-house, with decisions made on a team basis between analysts and portfolio managers. The combination of Chase and J.P. Morgan has enabled the firm to offer a wider array of investment philosophies. As a result of the merger, structural changes have begun to take place and will continue throughout the next few months. The Houston office of Chase Fleming Asset Management (formerly Chase Texas Investment Management Group) has exchanged the Chase brand name for J.P. Morgan and now operates as J.P. Morgan Fleming Asset Management. The former New York office of Chase Fleming, previously located on 320 Park Avenue, has merged with the team at J.P. Morgan Investment Management, located at 522 Fifth Avenue. Some of the equity analysts that have relocated are: ROBERT ZECH, who follows small-cap and private equity; CRAIG LEIGHTON, who follows micro-cap companies; GLENN GAWRONSKI, who covers small-cap stocks; CLARE HART, who covers media staples, transportation and media cyclicals; RICHARD ROYCE, who covers high tech - hardware and software and cellular/wireless telecom; DAVID EDWARDS, who covers small-cap and private equity, along with GARY SCHNIEROW, who follows small-cap and micro-cap stocks. The portfolio managers are as follows: T. GARY LIBERMAN, who follows high tech - hardware and software; CHRISTOPHER JONES, who follows health care and consumer cyclicals; ANTHONY GIFFORD, who covers consumer staples and communication services; TIMOTHY PARTON, who covers transportation, business staples, business cyclicals, non-bank financials, financials (diversified) and services (employment, payroll process, facilities/environmental); EYTAN SHAPIRO, who covers machinery, media staples and media cyclicals, MICHEAL FOSS, who covers food & beverages, and computer services; along with JONATHAN SIMON who covers real estate, non-bank financials, financial (diversified), insurance (life/health, property-casualty and multi-line). As a result of the merger between J.P. Morgan & Chase, the December 31, 2000 filing is a combination of approximately 32 institutions. J.P. Morgan Investment Management, Morgan Guaranty, Chase Fleming, and Chase Asset Management (now J.P. Morgan Private Bank) are among the entities now included in this filing. UNITED KINGDOM Numerous changes have occurred at the London offices J.P. Morgan Fleming Asset Management U.K. Ltd. as well. The firm also dropped the use of the Chase brand name, as both the J.P. Morgan and Fleming brand names carried the most cache in much of the U.K. Following the merger of Chase and Fleming, Chase Fleming moved to a new office at 10 Aldermanbury from its old Copthall Avenue location in September 2000. While the merger between J.P. Morgan and Chase was completed at the beginning of the year, the firms did not combine physically until late April 2001. Following the merger with J.P. Morgan, the former Chase Fleming made yet another move to Finsbury Dials, its current location. The combined firm, J.P. Morgan Fleming Asset Mgmt. U.K. Ltd., started operating out of its new offices on April 30, 2001. The former J.P. Morgan entity also changed its location, moving from King St. to join its sister staff at Finsbury Dials. However, the combined location has not led to a combined investment staff and investment approach. Despite their common location and common name (J.P. Morgan Fleming Asset Mgmt. U.K. Ltd.), the former Chase Fleming and J.P. Morgan entities continue to operate as separate entities. MARTIN PORTER has remained as the chief investment officer at the former Fleming entity, while PABLO FORERO remains chief investment officer of the former J.P. Morgan entity. The reasons for the separation lie in the firm's divergent client base. Each institution had too many large institutional clients that both sides feared an exodus of clients if a particular service or investment approach were changed too much. Already, former Fleming and Chase brand names are being purged from the firm's mutual fund line-up. After first adding Chase to many of its funds, the name will no longer be used along with former Fleming brand Save & Prosper. The former J.P. Morgan does not run any U.K. retail funds at the moment, but may plan too, perhaps borrowing Fleming's distribution and style. The former J.P. Morgan entity uses an investment approach similar to its stateside relative, using the proprietary DDM model. The DDM is used to calculate each company's dividend discount rate; companies are subsequently ranked based on their DDR. The managers attempt to exploit inefficiencies in the market and purchase companies that are selling at a discount to their intrinsic value. In identifying such investments, portfolio managers utilize fundamental analysis coupled with an emphasis on relative valuations. Investments are concentrated in the securities of companies with the highest ranking within their respective sectors. The former Fleming entity uses a larger, macro-economic analysis in stock selection. The firm assesses economic themes and attempts to construct a portfolio of attractive growth stocks. All overseas investments are subject to BARRA risk analysis. The firm's model portfolios, decided on by a committee, are mandatory for all managers of discretionary balanced portfolios. Individual fund managers have no discretion over market timing or asset allocation adjustments. The former Flemings entity had endured some unfortunate investment returns as a result of its growth-oriented style. The merger with J.P. Morgan was widely hoped to help stem redemptions by large pension funds and institutions. ----------------------------------------------------------- SECTOR COVERAGE: MONTAG & CALDWELL Atlanta, GA-based Montag & Caldwell, with $26.4 billion in equity assets according to the 13F filed for the quarter ended December 31, 2000, recently became a new member of the ABN AMRO Asset Management family. Previously a subsidiary of Alleghany Asset Management, ABN AMRO acquired Alleghany and many of its affiliates in the first quarter of 2001. Other affiliates include: Chicago Trust Company, Blairlogie Asset Management, and TAMRO Capital Partners, to name a few. Although departures often occur after an acquisition by a larger firm, this was not the case for Montag & Caldwell. Current research responsibilities are as follows: *SANDRA BARKER: aerospace & defense, building & building materials, electrical equipment, food retailers, paper & forest products, retail trade, and textiles/apparel/shoes *RON CANAKARIS: computer hardware, electronic components, office equipment, and semiconductors *JANE DAVENPORT: automobiles, auto replacement parts, beverages & tobacco, chemicals, cosmetics, food wholesalers, household products, packaged food, pharmaceuticals & hospital supply, photograph, and restaurants/lodging *BRION FRIEDMAN: banks, financial services, and insurance *MARK HAYES: computer hardware, computer software, electronic components, semiconductors, and semi cap equipment *SCOTT THOMPSON: advertising, communications equipment, computer services, enterprise software, machinery, media & entertainment, metals & mining, oil & oil service, publishing & broadcasting, telecommunications services, toys & recreation, and transportation *BILL VOGEL: special situations and utilities ----------------------------------------------------------- Questions, comments or if you would like the MMM staff to investigate any news heard on the Street, please send inquiries to staff@news.moneymanagermonitor.com, or call (212) 510-9263. -------------------------------------------------- ?Money Manager Monitor. 2001. Although no assurance can be given for its accuracy, the information contained in this report was obtained from sources considered reliable. Except for making one printed copy of this document, published by The Money Manager Monitor, it may not be reproduced, republished, broadcast or otherwise distributed without prior written permission from The Money Manager Monitor. --- You are currently subscribed to carson_mmm as: jwillia@enron.com To unsubscribe send a blank email to leave-carson_mmm-151245F@news.carsongroup.com
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