Year-Old Samson Capital Advisors Focusing on Service, Growth

Amid a climate of increasing market and economic volatility, the founders of Manhattan-based Samson Capital Advisors LLC say their entrance into the fixed-income management industry nearly a year ago was a timely one.

There was a growing need among affluent investors for personally tailored asset management services that both emphasized capital preservation and wealth accumulation and also minimized the risk to their all-important assets for family planning, college savings, or retirement.

“The risk to individuals is greater now, so it is more important for investors to have their assets managed correctly,” said Benjamin S. Thompson, who left his position as managing director and head of “tax aware” fixed-income investments at J.P. Morgan Fleming in New York to help establish the new firm.

Thompson — who at Fleming was responsible for overseeing $36 billion in assets, and developing and coordinating strategy, research, portfolio structuring, and trade execution— said fee-based Samson is highly focused on protecting against and controlling investment risk through its exclusive activity in the high-quality, fixed-income market.

“Our goal is to inflate clients’ assets to the greatest degree possible,” he said.

As Samson plans to celebrate its first anniversary, its founding members are counting on the combined 290 years of experience shared by its 11 principals and other senior professionals to transform the fledgling start-up business — with a focus on municipal bonds — into a strong and stellar competitor in the fixed-income management industry.

Besides having about 80% of its clients’ assets invested in municipals, the firm offers a wide range of tax-efficient and taxable products, including Treasuries, corporates, and mortgage-backed securities.

Its conservative management style is focused on capital preservation and wealth accumulation, and it uses five different investment strategies that vary depending on the customers’ time horizon, degree of principal stability or volatility, and portfolio duration in order to create customized portfolios.

Samson also offers taxable municipal bonds to clients who are finding themselves now subject to the alternative minimum tax, noted Carolyn N. Dolan, a principal of the new company with 27 years of experience in the industry. According to the Congressional Budget Office, the number of individual investors subject to the AMT will rise to 30 million by 2010, up from 605,000 in 1997.

Dolan most recently worked at the former OffitBank, now Offit Investment Group, in New York, where she was a co-founder and served as senior managing director involved in the management and analysis of taxable and tax-exempt securities.

While Thompson’s colleague and fellow Samson founder Scott Einhorn declined to say specifically where the firm is finding value in the municipal market, he said its assets are “conservatively positioned” because the long end of the market is vulnerable to monetary, fiscal, economic, and political changes that can shift the direction of interest rates and alter the shape of the yield curve, depending on the type and severity of the news.

STARTING FROM SCRATCH

After only 10 months in existence, the privately held company, based in Midtown Manhattan, has generated more than $2.4 billion in assets under management and attracted 150 clients consisting of high-net-worth individuals, as well as small foundations, endowments, and corporations it classifies as intermediate-sized institutions.

The firm was the brainchild of Roy Zuckerberg, chairman and founding principal, who completed a 38-year career at Goldman Sachs Group Inc., where he most recently served as its vice chairman as well as a member of the executive committee and head of the equities division.

Zuckerberg wanted to create a firm that offered all the knowledge, expertise, and savvy of Wall Street, but with the personal approach of Main Street.

“We want our clients to be in touch with the people who are investing their money,” said Einhorn, who also hails from Offit Investment Group, where he was most recently director of sales, heading the national sales, marketing, and client development effort.

Allowing portfolio managers and clients to build a personal relationship with one another is one of the chief philosophies that Zuckerberg wanted to differentiate Samson from other fixed-income shops.

“The dream was to put the firm together in a way that combined all of our experiences in the marketplace, but also create a new firm that would be unencumbered by a big company bureaucracy,” Einhorn explained.

However, its personal, hands-on approach with clients should not be misconstrued as the firm being old-fashioned in any way, he was quick to point out in an interview last week.

Einhorn said that while Samson prides itself on doing business in a face-to-face manner — even in the current age of Internet-based sales, trading, and investing — it also offers clients cutting-edge technology and creative applications that add value to their overall investment portfolio.For instance, it currently uses a product provided by Bloomberg LP called POMS, which stands for Portfolio Order Management System, that offers firms like Samson a soup-to-nuts menu of everything from pre-trade compliance data to portfolio management strategies. Samson also uses a product created by CNS BondEdge that provides a high level of analytics and a variety of other customized applications to service the needs of high net-worth investors.

While getting the new company off the ground involved many hurdles — from hiring to crafting the internal technology infrastructure — Einhorn said since the group of 11 principals had so much experience spanning all aspects of the fixed-income industry, the challenges were met with little difficulty.

“We had enough experience to anticipate everything we faced,” Thompson said.

“We learned from past mistakes,” Dolan added. “Starting with a blank sheet of paper was exciting,” she said.

LOOKING AHEAD

One of the firm’s goals is expanding its geographic diversification outside of its largest market, New York, where nearly 40% of its customer base is located. Other states with a strong client base include Pennsylvania, California, and Florida.

“We’re looking to grow and get Samson exposed out there to the rest of the investment world,” Thompson said.

One way the firm plans to achieve this growth is by establishing strong relationships with so-called nationally based intermediates — lawyers, business consultants, and other professionals — who will recommend Samson to their own clients seeking personal investment management services.

The firm has already received a warm welcome by its peers in the industry as well as its new clients since its establishment, according to two of the principals.

“The market has been very receptive to a brand new firm focused on fixed income,” Dolan said.

“It is nice to see that the concept that we had when we formed Samson was as desirable to the marketplace as we had hoped,” Thompson added.

For the founders, success going forward will be demonstrated by quality service, not quantity, according to Einhorn.

“We are more interested in being able to offer the same level of client service and same investment approach and added value that clients expect,” he said. “We want to be one of the top firms out there and that is our goal.”

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