Download 14755 Partheon Capital Management 1-1 (500)

G R E AT E R L O U I S V I L L E ’ S D E F I N I T I V E S O U R C E O F L O C A L B U S I N E S S N E W S
Vol. 19
l
No. 15
4
fast FIFTY
November 15, 2002
Parthenon Capital Management
Personal service, research are key to growth of investment services business
BY SUSAN REED LAMBERT
BUSINESS FIRST CORRESPONDENT
Like its famed Creek namesake, the strength
behind Parthenon Capital Management LLC lies
in its foundation. Built from the ground up by
four principals, the investment firm is all
employee-owned.
Each of the seven employees, including three
who are vice presidents and administrative
officers, owns equity in the business.
“Parthenon was formed with an eye toward
putting together the right team of people who
would fulfill our needs while creating an environment in which we would be pleased to come
to work each day,” said company president
Todd Lowe, 43, who started the company in
March 1999.
Parthenon provides investment advisory
services to several types of clientele, including
high net worth families, trusts, foundations,
endowments and retirement plans.
The staff of Parthenon had previously
worked at J.J.B. Hilliard, W.L. Lyons Inc., for
periods ranging from five to 19 years. Six of
the seven worked together there during a large
part of the 1990s.
When it became apparent the company would
be sold to PNC Bank Corp., each member of the
team decided to explore other career options,
Lowe said.
Lowe formed Parthenon with the other founding principals, J. McFerran “Mac” Barr II, Thomas A. Corea and Tony H. Coffey. Barr serves as
company chairman. Corea is CEO, and Coffey is
executive vice president.
Together, the quartet has multi-faceted investment experience, including fixed income,
institutional equity, law and accounting, trust
and estate planning, as well as marketing and
advertising.
Vice presidents Dianna Saylor, Beverly Clark
and Panayiota “Pixy” Jones round out the
Parthenon team. Each of the vice presidents
RON BATH BUSINESS FIRST
l
Four principals in Parthenon Capital Management — Todd Lowe, left, Thomas Corea, J. McFerran
Barr II and Tony Coffey — once worked at J.J.B Hilliard, W.L. Lyons Inc.
has at least 15 years experience in portfolio
and trust administration.
Providing an alternative
Lowe said he saw a need for Parthenon’s
services in the Louisville area since there were
few investment options outside of the local banks
and brokerage firms.
“The opportunity seemed ideal to build an
advisory business that would provide a high
degree of personalized service while performing
original research in order to offer competitive
investment results,” Lowe said.
“Further, with the sale of our previous firm to
a large non-Louisville bank, we felt it was critical
to create an environment where we could control
the investment process and the quality of service
our clients expected. The only way to do that was
to create our own environment at Parthenon.”
Presently, Parthenon serves about 130 clients,
with a minimum account size of $1 million and
minimum annual fee of $10,000. Fees are based
on account size. “We currently have clients who
pay us well into six figures,” Lowe said.
Lowe said average accounts are from $4
million to $5 million. Company officials declined
to give specific figures, but did say Parthenon
earns several million dollars each year in fees,
the company’s sole revenue source.
From its inception in March 1999, Parthenon
began attracting clients and had a base of
business by the fourth quarter of that year.
Consequently, the company was profitable
within two quarters, some two years ahead of
its projections.
Lowe said the partners had considered outside investors to get the business started. But
instead they initially funded the firm with capital
from the operating members supplemented by a
line of credit, which they used for about six
PARTHENON: Company follows a disciplined formula for purchasing securities
months. Since then, the firm has had the needed
“As we continue to develop our performance
cash flow to operate.
record, we anticipate that we will attract more
Personal service and original research are key institutional clients, who typically need at least a
to Parthenon’s growth, Lowe said. And the three-year record to consider an investment mancompany’s clients agree.
ager,” Lowe said.
Richard Lennon, senior business adviser to
management of the Port Authority of Seattle, Relying on original research
Wash., holds four personal accounts with
Parthenon’s investment philosophy includes a
Parthenon, including IRAs. Lennon said he heavy focus on research into “high-quality
selected the firm because of his trust and companies with superior financial characteristics
confidence in Lowe, who
and enduring economic advanserved on the board of
tages,” Lowe said. The comPARTHENON LOGO
directors for Actors Theatre of
pany is not afraid to veer away
Louisville where his wife,
from the investment firm pack
HERE
Jennifer Lennon, had worked
and go its own way to success,
as director of development.
Lowe said.
A former Louisville resident, Richard Lennon
Parthenon performs original research for each
was chief technology officer for Brown-Forman company. The process involves extensive
Corp. for about 12 years.
historical research using documents obtained from
Lennon said his wife was impressed with various sources, including company filings
Lowe’s insight into the financial matters at required by the U.S. Securities and Exchange
Actors, along with his steady influence on the Commission. “While we do have access to
board and management. He also said he sees his purchased research, we find that it is best used
relationship with Parthenon as a personal one for providing background data, and we do not
with Todd Lowe.
implement any buy or sell recommendations from
“I see him as a friend who I trust in taking care outside sources,” Lowe said.
of my money the way I would — if I had the time
Lowe is committed to fundamentals, said
and knowledge to do it,” Lennon said. “Todd and Dr. Frank Loudermilk, of Winchester, Ky., who
I speak regularly. We exchange views as to invests with Parthenon. “Despite the heat he
specific recommendations, and I never feel I am received from many, including me, as the Nasdaq
being steam-rolled nor overlooked in favor of spiraled upward, he resisted the dot-com mania,
larger clients.
saying it didn’t make sense.
“Our portfolio has done reasonably well in a
“They aren’t producing anything substantive,
tough period for investing,” Lennon said, adding and they aren’t making money. He predicted a
that Lowe continues to take a “very long-term few would make it but most would fall by the
view, and he’s been right.”
wayside,” said Loudermilk. He added that Lowe
talked him out of investing in dot-com stocks
Tailoring objectives for each client
and tech stocks when they were peaking.
Lowe said Parthenon’s clients recognize the
“I have enjoyed the explanations of why a
role that the protection of and growth in their particular company is bought or sold — and the
assets plays in their future. Each client — whether occasional hand-holding when the market has
a family or an institution — has specific invest- struggled,” Loudermilk said. “This availability has
ment objectives and relies on the firm to help been outstanding, and I am by no means one of
achieve those objectives through a high level of their larger clients.”
investment expertise, he said.
Specific needs depend on the type of client. Purchasing sound securities at low prices
For example, a high net worth family may need
Parthenon avoids funds and only will buy
advice regarding tax planning, estate planning and individual securities at certain prices.
other personal financial activities.
The prices must be significantly below
For other types of institutional clients, such as Parthenon’s estimate of a company’s intrinsic
endowments, foundations and retirement plans, value and also must include some margin of safety
Lowe said, the needs are very different, with a to account for unknown events, Lowe said.
much heavier emphasis on competitive investHe said he thinks this approach combined with
ment results and protection of assets for the ben- the firm’s original research process gives
eficiaries.
Parthenon a distinct competitive advantage.
Parthenon’s typical client is a high net-worth
“We follow our investment philosophy with
family, although about one-fourth of the firm’s consistent discipline, concentrate our holdings in
clients are institutional, which includes retirement our best ideas, conduct extensive internal
funds, endowments, family partnerships, and research, and we only buy if we can understand
charitable organizations, Lowe said.
the business model,” he said.
above
150
%
About the
company
Chairman: J. McFerran Barr II
CEO: Thomas A. Corea
President: Todd Lowe
Executive vice president:
Tony H. Coffey
Address: 9900 Corporate
Campus Drive, Suite 2100,
Louisville, Ky. 40223
Phone: 327-5660
Founded: 1990
Employees: 7
Description: Parthenon
Capital Management provides
investment advisory services
for high net worth families,
trusts, foundations, endowments
and retirement plans
Looking ahead, Lowe said, the team at
Parthenon is more optimistic about its business
than ever before.
“Having successfully navigated the worst bear
market in over 40 years, we have attracted new
clients in recent months who have been made
aware of our record,” he said.
While the company’s quick growth and
profitability have scored Parthenon a spot in the
area’s Fast Fifty, Lowe said the company will
show “restrained but significant” growth in the
coming years.
“It is important for our level of service to each
client to remain very consistent,” he said, “and
for that reason we will only grow in a manner
that does not diminish the importance of each
relationship.”
SUSAN REED LAMBERT is a free-lance writer for
Business First. E-mail comments on this article
to [email protected].
Reprinted with permission from the Business First. ©2003, all rights reserved.
Reprinted by Scoop ReprintSource 1-800-767-3263