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Rating:Faustian Bargain at Eaton Vance? Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, December 21, 2004

Faustian Bargain at Eaton Vance?

Reported by Sean Hanna, Editor in Chief

Good things are happening at Eaton Vance reports the Boston Herald, and other fund firms may want to take away some lessons from its example. The hometown paper for the asset manager reports that Eaton Vance insiders -- from the boardroom down to the staff room -- are buying Eaton Vance shares despite their being priced near an all time high. Seven hundred workers own $780 million of shares, or about 23 percent of the company. When options are accounted for, they own a cool billion dollars worth.

Between a sixth of those shares are in the account of Jim Hawkes, chairman and chief executive since 1996. Hawkes holds stock and options worth $170 million, $56 million more than last year. All of that stock has been a good investment. The stock has outperformed all other mutual fund advisor stocks in Lipper's specialized index and split multiple times as Eaton Vance's assets under management multiplied from $17 billion in 1996 to $94 billion today. Profits, of course, followed assets under management.

What is Eaton Vance doing right?
  • Acquisitions. It has done a good job at acquiring other business that diversify its business from its roots as a municipal bond manager.
  • Focus. It has concentrated its efforts on affluent investors seeking to minimize their tax bill. That focus includes being able to avoid fad marketing and branding campaigns.

The paper adds that Hawkes is even thinking about new investment products while in the shower (don't we all?).

For those with an eye on the future the paper also says that Tom Faust, Eaton Vance's chief investment officer, is heir apparent to Hawkes.

"That's probably how most people read the tea leaves," said Hawkes to the Herald. "We haven't put out a press release to that effect, but if you read the tea leaves in a rational and logical way, that's the conclusion that many people will come to."  

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