Houston-based Smith Graham & Co. Investment Advisors L.P. (No. 6 on the BE Asset Managers list with $5 billion in assets under management) slightly grew assets under management by roughly $100 million. Noting 2011 as part of a turbulent cycle, CEO and Chairman Gerald B. Smith says three new fixed-income clients contributed to the modest gain. “The uncertainties and issues that were happening in Europe with [its] sovereign debt crisis had an impact on our markets here,†he says. “We’ll see better performance this year just because of the fundamentals in the marketplace.â€
The U.S. long-term municipal bond market saw its biggest drop in a decade. And issuance of those bonds fell to $287 billion in 2011 from a record $430.5 billion the previous year, according to Thomson Reuters. At New York-based M.R. Beal & Co. (No. 4 in taxable securities with $109.1 million in lead issues and No. 2 in tax-exempt securities with $2.9 billion in lead issues on the BE Investment Banks list), taxable securities lead issues fell 93% and co-lead fell 45%. Vice Chairman and Chief Operating Officer Stanley E. Grayson attributes the slide to an overall drop in the muni-bond market and some local governments not trading at the same volume as previous years. He noted that the volume is expected to rise after the 2012 presidential election. Grayson maintains the firm’s laser focus will position McBeal & Co. to expand its execution services and look at financial advisory services, particularly in the area of public—private partnerships.
For New York-based CastleOak Securities L.P. (No. 3 in taxable securities with $6.8 billion in lead issues on the BE Investment Banks list), business activity was strong. The firm underwrote 19 lead management investment-grade transactions totaling nearly $7 billion in 2011, up from 11 transactions worth $3.6 billion the prior year. It co-managed 106 equity transactions totaling about $125.7 billion last year, versus 87 transactions totaling $130 billion in 2010. The company successfully completed a $350 million transaction for San Diego Gas & Electric, $150 million for Southern California Edison, and two Toyota trades totaling $92 million. CastleOak also increased its staff from nearly 40 in 2010 to 50 in 2011, and it expects significant new hires this year. It also opened new offices in Indianapolis; Columbus, Ohio; and Cleveland.
CastleOak’s chief, David R. Jones, is representative of BE CEOs that will continue to find opportunities in any environment, especially the most tumultuous. True to the spirit of the old Motown tune: When you see these entrepreneurs coming, don’t get in their way.
–Additional reporting by Marcia Wade Talbert, Aisha Jefferson, Cliff Hocker, Bridget McCrea, and Jeffrey McKinney