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Rating:Like a Gator, Two GSAM Alums Hunt for Quality Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, December 23, 2013

Like a Gator, Two GSAM Alums Hunt for Quality

Reported by Tommy Fernandez

A burgeoning fund firm with two GSAM alums as PMs is looking to make a name for itself looking for small and mid-cap quality companies. The firm, Gator Capital, was launched in 2008 by managing member, and former GSAM portfolio manager, Derek Pilecki.

It entered '40 Act Country, with the help of Endurance Fund Services, in May with the launch of the Gator Focus Fund.

In the Fall, Gator expanded its investing talent with the hiring of Liron "Lee" Kronzon, another GSAM alum, who has helped Pilecki launch a second fund, the Gator Opportunities Fund.

Kronzon has been in the investment management business for over 15-years. For the past ten years has been a senior member of GSAM in the fundamental equities group. He worked the whole gamut of the investment process, from idea generation to doing analysis and the implementation of the investments, the portfolio construction, the strategic analysis and so on. He contributed to the launch of several products, inclyding an all-cap fund, a mid-cap and a amid-cap equity fund. These were fundamental equity driven products.

He joined GSAM in 2001. Before that, he was a co-founder of Tower Hill Securities, a merchant banking firm focused on funding global emerging growth companies across various sectors. Prior to co-founding Tower Hill, he was a founding member of the strategic consultancy Mitchell Madison Group, and an associate in the Financial Institutions/Services Practice of management consultancy A. T. Kearney.

Before that he was a faculty lecturer at Princeton University’s Woodrow Wilson School, where he co-taught courses in applied quantitative and economic analysis with Professors Ben Bernanke and Alan Krueger.

Kronzon said that "Gator is really an opportunity to apply the best practices that we learned at Goldman Sachs."

"We [Kronzon and Pilecki] have similar experiences and approaches, similar kinds of principles. We really adhere to analytical rigor," he said.

The Gator PMs are both focused on investing in quality companies, Kronzon said. He described their investment philosophy in this way:

One of the key lessons we learned in investing is that successful investing often involves a heavy focus on quality, which I don't think the investing community really appreciates. There is a lot of talk about growth or value, not as much talk about quality. We become stakeholders, not just stock traders, we are buying and keeping them in the long-term. With the funds that Derrick and I manage, the goal is to highlight this quality focus, as another value add to your growth metrics.

Invest in high quality firms that have sustainable advantages like brand, market leadership, best in class business models. High quality businesses tend to outperform their peers over the long-term and do so with less risk. We can capitalize on this and provide superior risk adjusted returns that are less risky. Some of the best investors out there have a similar philosophy: Warren Buffet and Charlie Munger. Both now are really quality investors. They have that same focus, that long-term orientation.

However, they don't really go into the small and mid-cap space, that is where Derrick and I see a lot of opportunity. The same kinds of investment processes and approaches around high quality franchises can be more effectively applied in the mid-cap arena.

Andres Sandate, president and chief executive of Endurance Fund Services, said he is working on building brand awareness for the funds, getting in front of the press, meeting with platform executives and conducting educational efforts.

"There are advisors in the intermediary channel who are early adopters and are looking for new products. When you think about articulating their message to independent advisors and broker dealers, the idea behind these strategies that they are very, very flexible funds. They are able to go across market caps, across geographies," he said. 

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