Based on the 29th floor of the Bank of America tower in downtown Tulsa, the principals of the Gregory W Group have quietly built their business into what they say is the largest investment consulting firm in the state.
Almost exclusively an institutional consultant, they have applied their “low profile” approach and Oklahoma upbringing, education and experience to involving the firm in the management and oversight of more than $15 billion in total assets for a couple of dozen clients, according to the numbers listed on the firm’s Web site
Of course, that “is a fluid number, depending on the market,” said Gregory T. Weaver, president and senior consultant. “We deal with 90 to 100 different mutual funds. And for our separately managed clients, there are 40 to 50 different pools of assets that we oversee.”
“That’s a lot of money,” he said. “It’s the largest in Oklahoma by far.”
Gregory W Group’s clients include the Oklahoma Teachers’ Retirement System, which, at about $8.5 billion, is “the largest pension fund in Oklahoma,” Weaver said.
Among other clients are the Oklahoma EDGE Fund, law firm Hall Estill, Alliance Coal LLC and Cabela’s, a sporting goods supplier.
“Dollars are important, but asset size doesn’t drive what we do,” Weaver said. “It is more the philosophy, strategy and construction of the portfolios. If we are hiring your firm to manage $1 million, versus $500 million, it’s the same research process.”
Matter of Management
Gregory W Group “works closely with our clients in the strategic management of their portfolios,” according to the firm’s Web site.
“We offer vision, experienced insight and creative investment solutions for all types of portfolios,” the Web site reads.
That’s the simplified explanation.
“When someone asks us what we do, we have a hard time explaining it sometimes,” Weaver said. “The best way, for a large pool of assets, we serve as their investment expert. We are really on their staff; we just don’t office with them. We are mostly on full retainer and do anything they need at all times.”
That expertise covers a range of consulting needs, including operation, structure and investment objective for different types of clients.
“Some of them are pension funds, some are foundations, some are like 401k plans,” Anderson said. “What we do for each of them is different. We work to manage the investment and, a lot of the time, the operational issues involved with making them successful investments.”
One of the primary objectives of that relationship is matching the client with the right investment manager.
“We don’t buy and sell shares or bonds for our clients,” Anderson said. “We help them find the folks who can do that for them. We are not the people who are building a portfolio security by security. We are putting together the more broad strokes for how it is managed.”
The principals are registered investment advisers, but they don’t have any discretion over assets, Weaver said.
“We can’t move a dollar from point A to point B,” he said. “We don’t execute any trade, but we are very involved in the daily observation of management of every dollar. We recommend to boards and committees, ‘This is the allocation, and this is the firm that you should retain.’
“Or, for a 401k, there are mutual funds, and, ‘This is the one you should have in your line up, and this is why.’ We will recommend they fire them, retain them or diversify from them, but we don’t vote. We are held in a fiduciary capacity for our recommendations and thinking.”
The Gregory W Group operates as an independent investment consulting firm with all revenue coming from clients to eliminate conflicts of interest, Weaver said.
“Every dollar this firm has ever received has been directly from the client and never from the fund or fund manager,” he said. “We are your experts for investments. Here is what you pay us, and we will earn it back for you many times over.”
Weaver founded Gregory W Group in 1989, after he began consulting in 1987 with a New York-based firm, where he was managing director.
A Blackwell native, he earned his BA from the University of Central Oklahoma and attended Southern Methodist University Graduate School of Banking in Dallas.
Anderson joined the firm in 1990 as a research analyst. A McAlester native, he earned his bachelor’s in finance from the University of Tulsa.
The firm continues to draw on local talent, hiring TU students as interns every semester.
“We have 3 or 4 rotate through here every semester,” Weaver said.
With an office in Dallas, Gregory W Group has focused on state and regional business.
“It is centered in Oklahoma. Since we are an Oklahoma firm, raised here and educated here, it’s a dominant part of our business,” Weaver said.
Better on the Outside
Weaver and Anderson view their location outside of the money market centers as an asset.
“I’ve always thought we are at an advantage, being based outside of New York or Chicago, because we have the perspective that when we see something gaining momentum on Wall Street or elsewhere and it just doesn’t look right, we don’t get wrapped up in what is popular,” Anderson said.
It is that kind of perspective that has kept the firm’s hedge fund exposure at zero, Weaver said.
He said the firm has been criticized by its peers for not getting involved in investment opportunities like the Bernard Madoff Ponzi scheme.
“You guys don’t understand it or what?” he said they were asked. “Yeah, we understand that we don’t understand what you are doing, so we are not going to do it.”
Even that kind of caution was not enough to offset the effects of the recession.
“We have all suffered through the downturn — the worst I have seen in my 30-year career,” Weaver said. “It has caused us to really reflect on our structure, and there is more risk awareness and more risk conversion and protection mentality than I have ever seen.”
He said most of their portfolios “fared OK.”
“They lost a lot of money, but many earned a lot back,” he said. “Most didn’t lose as much as the market lost, due to the fixed-income bond structure, and a lot of the active managers didn’t do as bad as the market. The last two have been the best successive quarters ever.”
Looking back a year at client returns, Anderson said, “We are up in most cases better than 20 percent.”
Weaver said the plummet in the markets has changed the outlook for investors.
“We all have to look at it differently and be more protective and opportunistic,” he said. “An example would be the concept we came up with last fall, when we saw high-yield bonds beginning to spread. Every client we recommended that to came out of equities and into high-yield bonds.
“Their returns have been remarkable, but that’s an opportunistic strategy, which we have never done because we don’t chase trends or fads.”