Aug. 16–The owner of the first Hispanic investment-banking firm in San Antonio has branched into investment management services and stock exchange ownership.<\/p>\n
It’s part of plans to build a diversified financial services company that will have a trading floor downtown.<\/p>\n
Robert G. Rodriguez, the president and CEO of San Antonio-based Southwestern Capital Markets Inc., launched Vaquero Investment Management Co. Inc. two months ago.<\/p>\n
Southwestern Capital Markets, a small San Antonio-based firm that coordinates the sale of government bond issues, was the city’s first Hispanic investment banking firm when it opened in 1983.<\/p>\n
Rodriguez also strengthened Southwestern Capital Markets’ equity business by making it the second San Antonio company to buy a seat on the Chicago Stock Exchange, effective Aug. 21. Just seven Texas companies, including USAA, own seats on the 450-seat exchange. A seat sold for $28,000 on Wednesday.<\/p>\n
Rodriguez has expanded his financial services to prepare for the opening of a planned $1 million trading floor on Houston Street. The floor’s opening has been delayed for two months, though, as negotiations continue in his efforts to purchase the Book Building.<\/p>\n
Vaquero, named in honor of Rodriguez’s boyhood days spent roping horses, was the brainchild of Southwestern Capital Markets employee Stephen P. Arnold, a former manager of the $13 billion state Employee Retirement System pension fund. Rodriguez had hired Arnold to run Southwestern’s cash management division.<\/p>\n
Vaquero is Rodriguez’s second attempt at selling equity management services. The first, in 1995, didn’t last a year due partly to immature management and a bustling stock market.<\/p>\n
“If the market’s taking off, people don’t start looking at new managers,” Rodriguez said.<\/p>\n
With the markets in a slump recently, Rodriguez felt the time was right to try again. He hired Le Keough, a technology and telecommunications analyst and Central Catholic High School graduate who was laid off when Dallas-based Hoak Breedlove & Wesneski closed its equity analysts division in 2001.<\/p>\n
Rodriguez also hired former USAA Aggressive Growth Fund manager Eric M. Effron. Arnold shifted to the new company.<\/p>\n
Each of the three co-managers uses a different analytical approach before they reach a consensus on which growth stocks to buy. They plan to sell their services to corporate and government pension funds and foundations in South Texas.<\/p>\n
At present, the team manages Rodriguez’s and their own money. Between March 3 and Aug. 11, their small-cap growth portfolio beat the small-cap S&P 600 index by seven percentage points, while their large-cap growth portfolio beat the bigger S&P 500 by 8.9 percentage points.<\/p>\n
The next three years’ performance will be crucial.<\/p>\n
New money managers usually attract dollars by linking with an investment advisory firm or by getting into databases that track managers’ performances.<\/p>\n
Traditionally large fund investors won’t look at a money manager unless it has at least three years actively managing money. Pension fund trustees will consider waiving the three-year rule if the money manager can show lower volatility or a special ability to minimize losses.<\/p>\n
However, most pension fund managers don’t want their investments to be worth more than one-tenth of a firm’s assets or revenue, according to competitor Charles Robinson III of 51\/2-year-old Robinson & Wilkes Limited investment management firm, based in San Antonio. Even the smallest funds won’t look at a manager until it has between $40 million and $70 million under management.<\/p>\n
Money managers often must get through “gatekeepers” — consultants who are paid to recommend financial companies to trustees. Consultants sometimes demand higher-than-necessary trade fees that are called “soft dollars,” in exchange. Usually they couch them as payment for providing free office space, investment research, or computer equipment.<\/p>\n
It’s a dangerous arrangement, money managers say.<\/p>\n
“Accepting soft dollars can lead one to make a lot of decisions that aren’t in the best interest of clients,” said David Komet, managing partner for Komet Asset Management, which runs a hedge fund and declines “soft-dollar” propositions.<\/p>\n
Vaquero Investment Management Co., which is marketing itself as a place that refuses soft dollar arrangements, hopes to break in by showing consistent performance and latching onto new arrangements that allow young firms to subadvise under larger firms, Rodriguez said.<\/p>\n
Young firms typically must apply to be listed by a consultant or fund, fill out detailed questionnaires about company executives and investment management style, submit regular updates of performance, undergo off-site and onsite interviews, and then wait for a fund to go in search of their services.<\/p>\n
—–<\/p>\n
To see more of the San Antonio Express-News, or to subscribe to the newspaper, go to http:\/\/www.mysanantonio.com<\/p>\n
(c) 2003, San Antonio Express-News. Distributed by Knight Ridder\/Tribune Business News.<\/p>\n","protected":false},"excerpt":{"rendered":"
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