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Friday, December 17, 2021|
A Value Investing Entrepeneur Dies at 80
A fundamental value asset management entrepreneur passed away last week, 31 years after co-founding his eponymous firm.
Samuel Robert Shapiro was born in Augusta, Georgia. He graduated from the University of Georgia and started his worklife in the family meat packing business.
Yet Shapiro soon switched careers and became a stockbroker. Eventually, he spent 13 years with Bear Stearns.
In 1990, Shapiro and Michael McCarthy, head PM at Heilweil, Hollander & Jacobs, teamed up to launch Shapiro Capital Management in Atlanta. Two of Shapiro's sons, Harry and Louis, later joined the firm, which specializes in fundamental value investing, offering separately managed accounts (SMAs) to institutional investors (mostly endowments and foundations) as well as high net worth investors.
Four years ago, a multiboutique asset manager called Resolute Investment Managers bought a majority stake in Shapiro Capital Management. Shapiro Capital Management now subadvises two funds, the American Beacon Shapiro Equity Opportunities Fund and the American Beacon Shapiro SMID Cap Equity Fund, for Resolute's American Beacon Advisors subsidiary. Shapiro Capital has grown to $4.807 billion in AUM, according to the firm's last form ADV filed back in July 1, and eight employees, and Shapiro's sons and McCarthy remain shareholders in the firm.
"As a cofounder of Shapiro Capital Management, Sam Shapiro was instrumental in establishing the firm's investment philosophy, and he was a valued member of the investment team," a Resolute spokesperson tells MFWire in an emailed statement, adding an expression of confidence in the Shapiro Capital Management team continuing to manage those two American Beacon funds.
"Sam embodied our prudent, value-contrarian philosophy, encouraging us to lean into the wind when justified by the facts. He was an investor's investor," Mike McCarthy and Harry and Louis Shapiro wrote in a letter to the firm's clients. "There is no escaping Sam was the architect of our firm's investment philosophy, and a bedrock in our formative years. His previous success investing in more complicated public restructurings was the inspiration for our focus on the market's inefficient pools."
Being a self-proclaimed "not a numbers person" Sam's interest was less with the GAAP accounting of balance sheets than what could be gleaned about managements' motivation in proxy statements. He studies degrees of ownership, compensation, and incentives. His search surfaced seemingly arbitrary bits of information such as a CEO's out-of-state home address, which is a reliable precursor to the excess return associated with a company's sale. His qualitative strengths were complementary to the analytical skill of the rest of the team, with Mike's degree in engineering, Louis' background in accounting, and Harry's expertise in abstract math of the credit markets.
Louis Shapiro, president and chief financial officer of the firm, describes them as "old-line value investors." He remembers his father as a "24/7, put the client first" person.
"I just had the pleasure of working alongside my dad and growing a business that we love," Louis Shapiro tells MFWire. "He was an under-the-radar, really savvy investor."
Sam Shapiro beat cancer 20 years ago, but five years ago he was diagnosed with a second cancer, Louis Shapiro confirms, and years ago, Sam Shapiro had a hepatic pump installed, speficially the Codman Hepatic Artery Infusion Pump. Yet the pump was later taken off the market, so Sam Shapiro fought to bring it back, and regulators approved it again earlier this year, Louis Shapiro says.
"Our family was instrumental in helping a group get it back on the market," Louis Shapiro adds.
Sam Shapiro was also a philanthropist who supported the College of Charleston, the Crohns and Colitis Foundation, Emory University Healthcare, Memorial Sloan Kettering, and the William Bremen Jewish Home.
"The American Beacon family is deeply saddened by the loss of Sam Shapiro," says the spokesperson for Resolute. "His caring spirit, sense of humor and generosity will be missed by all who had the privilege to know him personally and professionally."
"He taught us to not only do good fundamental work, but to always follow the money," McCarthy and Louis and Harry Shapiro wrote in their letter to clients. "We will continue to do so."
Sam Shapiro is survived by wife Gina, his three sons and daughters-in-law, his 10 grandchildren, his two great-grandchildren, and his brother. There was a graveside service (also accessible remotely via Zoom) last Sunday at Arlington Memorial Park in Atlanta. The family sat Shiva Monday, Tuesday, and Wednesday evenings, which was also accessible via Zoom. In lieu of flowers, the family is directing donations to the Dr. Nancy Kemeny Endowed Research Fund in New York and to Temple Sinai in Sandy Springs, Georgia.
Editor's Note: A prior version of this story gave the wrong timing for the Resolute-Shapiro deal. Resolute bought a majority stake in Shapiro Capital Management four years ago, in 2017.
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