Baird is gaining its first international asset management capabilities by buying a boutique that also subadvises a mutual fund.

Reik Read Baird Investment Management Director, Managing Director

Reik Read, managing director of Baird Investment Management (the $3-billion equity side of Baird's asset management business), confirms that Milwaukee, Wisconsin-based Baird [profile] is buying Boulder, Colorado-based Chautauqua Capital Management. Chautauqua is a $700-million AUM institutional asset management boutique that specializes in international equities and is one of the four subadvisors on UBS' [profile] four-star, $1.0-billion PACE International Equity Fund.

Brian Beitner Chautuaqua Capital Management Managing Partner, Chief Executive Officer

A spokesman for UBS was not immediately able to comment on the deal. Chautauqua founder and chief investment officer Brian Beitner tells MFWire that he hopes to continue subadvising the PACE fund.

"We manage concentrated, conviction-weighted, non-U.S. and worldwide portfolios designed to provide superior risk-adjusted returns through an emphasis on stock selection," Beitner tells MFWire.

Though the precise pricing and terms of the deal were not disclosed, Read confirms that the Chautauqua team will be part of Baird's employee-ownership system, under which two-thirds of Baird's employees own stakes in the firm.

"The Chautauqua team has given us a long-term commitment," Read tells MFWire. "They're essentially going to be exchanging stock ownership [in Chautauqua] to become Baird shareholders. We think that's really great."

Six people from Chautauqua, including four people on its investment team, will be joining Baird as part of the deal, which is slated to close early next year. Read confirms that Beitner will continue to lead the boutique.

"Chautauqua will become part of Baird Investment Management. Brian's role really will not change," Read says. "They will maintain complete autonomy. We think they're excellent investors. We don't want to interfere with that."

Baird has made minority investments in outside boutiques before, lifted out equity teams, and even acquired on the fixed income side of its asset management business (Baird Advisors, which has about $36 billion in AUM).

"This is the first one on the equity side," Read says.

"We have been looking in the international space for quite some time ... We have an increasingly global footprint in all of our business units," Read adds. "We've looked at a number of teams over the last several years."

Paul Purcell, chairman and CEO of all of Baird, confirms that "adding global and international capabilities" in asset management has been "a strategic priority" for the firm.

The courtship with Chautauqua began about two years ago, Read says, when "a couple of people internally" recommended that the Baird folks meet the Chautauqua folks. From there, Read says, they discovered that they "really mesh well" as two organizations that "think about performance and think about clients."

"We just found a very good cultural fit over the two years that we have been talking with them," Read says. "They have an excellent team that's put together an excellent track record ... Brian, he's an exceptional investor."

"Over the course of conversations with them, we became more and more impressed with their culture, integrity, professionalism, thoroughness," Beitner says of the Baird team. "They're down-to-earth and approachable but very professional and effective."

"Chautauqua Capital has a great track record and a world class team," Purcell states. "They have a strong, client-first culture like ours and an investment philosophy and approach that is similar to our current equity asset management offerings where we seek to balance performance and risk control to provide long-term value across market cycles."

An alumnus of USC, Beitner launched Chautauqua in 2009. Prior to that he spent a decade at TCW, and before that he worked at Scudder (now part of Deutsche), Bear Stearns (now part of J.P. Morgan), and Security Pacific Bank. 

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