He doesn't say he's adding staff. But Sanders Capital, the year-old institutional asset management firm headed by celebrated value stock investor Lewis Sanders, sounds like an appealing destination for anyone serious about fundamental equity research.
A recent in-depth interview in Pensions & Investments details both his plans for the firm and what makes the former AllianceBernstein chief executive tick professionally. It's important reading for anyone who hopes to join Sanders Capital, which currently has about $4 billion under management.
AllianceBernstein's parent AXA Financial abruptly dumped Sanders in December 2008, amid poor short-term performance that led some clients to withdraw assets. A handful of former colleagues from the firm where he'd worked 40 years joined him in the new venture.
Its purpose, Sanders says, is "not to build some major investment management firm... (but) to build a really great research team, to pursue what appear to be important research topics that can be profitable." He expects to grow to an eventual maximum of "30 or 40 clients," then stop accepting new ones.
Sanders Capital currently employs about 15 people, including 10 research and portfolio management professionals. Its offices occupy one floor of a New York City building. Although Sanders doesn't indicate what the headcount might be in the future, he says, "There'll be no need for additional space."
Sanders Expects Some Staff Turnover
A bit more color about Sanders' team:
The bulk of the research staff here, aside from the senior core, are young people whom we will train and develop, who may later pursue their ambitions elsewhere, but while they're here, will make an important contribution to our research process, and become a lot better for it, as research analysts. Another way to think about it is that the staff is leveraging the intellectual capital of the senior group here: me in particular, and John Mahedy (co-CIO and research director).
Other tidbits worth noting:
- The 63-year old Sanders hopes to have at least 10 years as a significant contributor to the research process.
- Doing research truly rings Sanders' bell: "Research is, to me, what this business is about." Value investing, he explains, is based on obtaining compensation for taking on "the anxiety of the seller." And the research problem always involves figuring out whether the driving forces beneath that anxiety "will damage the enterprise that's been afflicted - the company, the industry, the sector - in a lasting way or not."
- Sanders is fairly bullish about current economic and market fundamentals, but worries that demand for materials-based commodities is too dependent on what he sees as an overheated property construction boom in China.