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Luminaries Awards

Portfolio > Asset Managers

2019 Asset Manager Awards: Brown Advisory, Large Cap Growth Strategy

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Ken Stuzin Title: Portfolio Manager Years with present firm: 23 years Years in financial services: 33 years Investment/asset class focus: Large Cap U.S. Equity

Asset Management Firm: Brown Advisory Firm’s headquarters: Baltimore Year firm was founded: 1993 Number of employees and/or partners: 662 employees Assets under management/advisement as of Dec. 31, 2018: $66 billion

Brown Advisory Portfolio Manager Ken Stuzin, who has led the firm’s large cap growth strategy for almost 22 years, says he invests more in business models than in stocks. That approach is working well, as the strategy is one of two winners in the Large Cap Growth U.S. Equity category of the Envestnet/Investment Advisor Asset Manager Awards for 2019.

In 2018, the strategy returned 5.89% and outperformed the Russell 1000 Growth Index by 7.41%, putting Brown within the top decile of performance relative to AMA peers in large cap growth.

As Stuzin explains, Brown has a long-term view, with turnover sometimes taking five years. “We’ve owned some companies for 11-12 years,” he says, but look for great companies that will “traverse storms that hit, irrespective of the kind.”

In 2018, the portfolio didn’t have much turnover, was heavy in healthcare and technology, and was 700 basis points ahead of the benchmark. The strategy has a rule of concentrating its holdings to 30-35 stocks and focusing on best in breed. “Institutional pools of money don’t want to pay for beta,” Stuzin says. “If we owned 80 names, we would look like a benchmark.”

The portfolio team’s long-term investment record is strong and beats the benchmark about 60% of the time, he adds. Also, the team members watch fundamentals and keep an eye on current events, though these shifts do not determine how the fund is run. Stuzin points out that, for example, many people thought the Fed would never raise rates again back in 2014-2015, and the unexpected Brexit vote impacted stocks when it happened in 2016 but is still being negotiated today.

That’s not to say that the portfolio managers don’t have viewpoints. Their aim is to look at companies in terms of what the next few years hold for them, he says, such as competitive threats. “We use Darwinian Capitalism,” Stuzin said. “We’ll get out of a business we own to buy a better business.”

Envestnet analysts explain that “the edge of the strategy lies within the team,” which benefits from Stuzin’s experience and also from “the team’s culture and incentive arrangement, the latter of which includes a portion of equity ownership to every employee at the firm.” Stuzin agrees, adding, “The most important differentiator is that we are employee owned. We are a partnership.”

After six months on the job, an employee will get equity in the firm; a portfolio manager’s net worth is tied to the firm. Stuzin has seen how people will worry about their “fiefdoms” at large firms. At Brown, “We are vigorous advocates of what we’re all doing.”

When asked who are some of his role models, he says Peter Lynch for one, “because he was a stock geek.” The other is Warren Buffet who is “writ large” and someone, like Stuzin, who believes in time arbitrage and stock concentration. “He also plays the long game,” Stuzin says.

Videos of the award winners can be viewed here:

Profiles of the individual award winners are found here:


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