Embracing Global Opportunities with Jeffrey Becker of Jennison Associates

Summary

Masters in Business: Embracing Global Opportunities with Jeffrey Becker of Jennison Associates

Podcast Information:

• Title: Masters in Business
• Host: Bloomberg Radio's Barry Ritholtz
• Episode: Embracing Global Opportunities with Jeffrey Becker of Jennison Associates
• Release Date: April 24, 2025

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Introduction

In the April 24, 2025 episode of Masters in Business, Bloomberg Radio host Barry Ritholtz engages in a comprehensive conversation with Jeffrey Becker, Chairman and CEO of Jennison Associates. With Jennison managing over $200 billion in assets, Becker brings a wealth of experience from his diverse career spanning firms like Arthur Andersen, Aetna, Altus, ING, and Voya. This discussion delves into Becker's unique perspectives on investment management, global opportunities, and the strategic direction of Jennison Associates within the PJUM family.

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Career Journey and Leadership Development

Becker begins by outlining his academic background, earning a Bachelor's in Economics from Colgate and an MBA in Finance from NYU Stern. Contrary to what one might expect, Becker shares, “[...] I had no idea what I wanted to do in college or coming out of college. I was a liberal arts major” (03:01). His early career at Arthur Andersen provided a solid foundation in valuation services, which later transitioned into significant roles at Aetna, where he navigated the challenges of commercial real estate during the post-Recession era of the late '80s and early '90s.

A pivotal moment in Becker's career occurred during the 2008 financial crisis when ING acquired Aetna's financial businesses. This led to his appointment as CEO of ING Investment Management, later rebranded as Voya. Becker recounts a dramatic phone call on a Sunday while coaching his son's hockey team, which led to his unexpected promotion (07:45). This transition showcased his adaptability and leadership under pressure, ultimately setting the stage for his current role at Jennison Associates.

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Transition to Jennison Associates and PJUM Integration

After two decades with ING/Voya, Becker sought a new challenge, aiming to return to a more independent asset management environment. He was drawn to Jennison Associates due to its esteemed reputation, strong client roster, and the appealing multi-boutique model under the PJUM umbrella. Becker highlights the advantages of this structure: “for this stage of the asset management industry a multi boutique model is a good model. You get the asset class specialization, you get the entrepreneurialism in the boutique, but you get the benefit of being part of a larger manager that has access to wealth management platforms, capital, global distribution” (19:18).

At Jennison, Becker appreciates the firm's long-standing tradition as one of the first independent institutional asset managers, founded in 1969. He pays tribute to Sigalis, an iconic investor at Jennison, whose philosophy—“do what's right for clients and that'll always be right for the business”—has profoundly influenced Becker’s approach (21:42).

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Investment Philosophy: Growth and Value Investing

Jennison Associates prides itself on its growth-oriented investment strategies, focusing on high-conviction, research-driven active management. Becker explains that growth investing at Jennison is centered around identifying “innovative and disruptive businesses driving structural shifts in industries” with significant barriers to entry and secular demand trends (24:16). This approach has positioned Jennison as a premier alpha generator for institutional clients.

On the value side, Jennison employs an intrinsic value approach, targeting companies with temporarily depressed earnings rather than deep value or fallen angels. Becker notes, “value investing [...] is still good companies and good growth in value. I don't think investors really think about growth versus value investing like they used to” (42:46). This balanced focus allows Jennison to navigate different market conditions effectively.

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Concentrated Portfolios and Deep Conviction

A key aspect of Jennison’s strategy is maintaining concentrated portfolios, typically holding between 10 to 50 stocks depending on the portfolio size. Becker elaborates, “for our core franchise of growth portfolios, we have 10 stock portfolios, we have 20 stock portfolios” (26:11). This concentration is driven by deep conviction, stemming from extensive fundamental research conducted by their dedicated teams. With a robust team of 70 investment professionals, Jennison ensures that each portfolio is built on meticulous analysis and a clear understanding of each investment’s potential.

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Global Opportunities and International Investing

While the majority of Jennison’s assets are US-focused, Becker emphasizes the importance of international and global portfolios, managing around $25 billion dedicated to these areas within a total equity asset base of $150 billion (29:07). He observes, “the international markets might have some legs” given recent policy shifts and economic recoveries in regions like Asia and Europe. Becker asserts that Jennison approaches international investing with the same rigorous, bottom-up company analysis as their domestic strategies, seeking alpha without regional bias.

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Risk Management and Unintended Risks

Managing risk in concentrated, high-conviction portfolios is paramount for Jennison. Becker discusses the concept of “unintended risk,” emphasizing that all risks should stem from deliberate stock selection rather than unintended sector, geographic, or factor exposures (32:44). Jennison employs comprehensive risk management reports to ensure that their portfolios remain aligned with their investment strategies, safeguarding against volatility while maintaining the potential for high returns.

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Navigating the Parent Company Structure: PJUM and Multi-Boutique Model

Jennison operates within the PJUM (Prudential Financial’s PGIM) family, benefiting from a multi-boutique structure that allows each affiliate to specialize without overlapping. Becker explains, “the multi manager model at PGIM is each of the affiliates, as we call them, versus boutiques are free to pursue their asset class and their specialty in their own way” (34:08). This independence fosters innovation and expertise, enabling Jennison to maintain its distinct investment approach while leveraging the broader platform’s resources.

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Market Environment: Managing Volatility and Inflation

Discussing the current economic landscape, Becker acknowledges the heightened volatility and persistent inflation challenges. He emphasizes Jennison’s focus on fundamentals, striving to “filter out the noise” and remain attentive to how macroeconomic shifts affect their portfolio companies (40:32). When fundamentals are impacted by economic changes, Jennison responds by adjusting sector and geographic exposures rather than resorting to cash or bonds, maintaining a fully invested stance to capitalize on identified opportunities.

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Growth vs. Value Investing in a Shifting Market

Becker addresses the ongoing debate of growth versus value investing, noting that while growth strategies have outperformed traditionally for over a decade, Jennison continues to excel in both domains. He points out that market conditions now may favor opportunistic intrinsic value approaches, especially as volatility provides entry points for undervalued companies (42:46). This dual capability allows Jennison to adapt and thrive across different market cycles.

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Integration within PJUM and Branding Challenges

Operating under the PJUM umbrella introduces complexities in branding and product structuring. Becker discusses how Jennison navigates these challenges by maintaining distinct brand identities for its various strategies while collaborating seamlessly with other PJUM affiliates. For instance, when offering growth funds through broader platforms, Jennison’s offerings are branded accordingly, such as the “PGIM Jennison Growth Fund” (37:02).

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Mentorship, Leadership, and Personal Development

Becker attributes much of his leadership style to mentors and his mother's influence, highlighting the importance of values and work ethic. He mentions several key figures who shaped his career, including John Kim, Scott Fox, Bob Crispin, Rob Leary, and Alon Kara-Oglund (54:43). His admiration for Sigalis, a long-standing Jennison leader, underscores the firm's culture of excellence and client-centric values.

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Advice for Aspiring Professionals

For recent graduates seeking careers in finance and investment, Becker offers pragmatic advice: “[...] build a resume of skills, not a resume of jobs. Try to develop as many skills as you can along the way and ask questions early and often” (57:26). He emphasizes taking ownership of one’s career, seeking mentorship, and proactively gaining diverse experiences to navigate the multifaceted world of finance effectively.

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Personal Interests and Continuous Learning

Beyond his professional life, Becker enjoys immersing himself in historical documentaries, particularly those by Ken Burns, reflecting his passion for history and continuous learning. Currently, he is delving into documentaries on figures like Benjamin Franklin and exploring series such as Yellowstone (53:44). This pursuit of knowledge mirrors his approach to investment—meticulous, informed, and ever-evolving.

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Concluding Insights

Jeffrey Becker's tenure at Jennison Associates exemplifies a blend of deep expertise, strategic foresight, and unwavering commitment to client success. His stewardship reinforces Jennison's position as a leader in growth and value investing, adeptly navigating global opportunities and market volatilities. For listeners seeking to understand the intricacies of high-conviction investment management within a global framework, Becker's insights offer invaluable guidance.

Notable Quotes:

• “[...] I had no idea what I wanted to do in college or coming out of college. I was a liberal arts major” (03:01).
• “Do what's right for clients and that'll always be right for the business” (21:42).
• “We're building portfolios, bottoms up, company by company, and looking for what we view are the best companies for our strategy” (29:07).
• “Our portfolios do tend to be more volatile than the benchmark” (31:23).
• “Being invested is key. When people try to time the markets and exit, they've always regretted that” (52:58).

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About the Hosts and Production Team

Barry Ritholtz concludes the episode by promoting his book How Not to Invest: The Ideas, Numbers, and Behaviors that Destroy Wealth and How to Avoid Them and acknowledging his production team, including audio engineer Steve Gonzales, producer Anna Luke, researcher Sean Russo, and Sage Bauman, head of podcasts at Bloomberg.

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Listen to More Episodes

If you found this conversation insightful, explore over 550 episodes of Masters in Business available on platforms like iTunes, Spotify, YouTube, and Bloomberg. Each episode features in-depth discussions with industry leaders shaping the future of markets, investing, and business.

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This summary is based on the transcript provided and aims to capture the essence of the conversation between Barry Ritholtz and Jeffrey Becker.

Transcript

[Barry Ritholtz]

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[Jeff Becker]

This.

[Barry Ritholtz]

Is Masters in Business with Barry Richoltz on Bloomberg Radio.

[Jeff Becker]

This week on the podcast, Jeff Becker Chairman and CEO of Jenison Associates. They're part of the PJUM family of asset management's Jenison manages over $200 billion in assets. Jeff has really a fascinating background from Arthur Andersen to Aetna to Altus to ing. Eventually he becomes CEO of Voya when the parent company spun out the US holdings into a separate entity. Really a fairly unique career path and is sort of uniquely situated to look at the world of investing. Jennison launched way back in 1969 as a growth equity shop. Their focus is on generating alpha with high conviction concentrated portfolios. They put up a damn good track record over the years. I thought this conversation was really interesting. There aren't many people who have this sort of perspective and perch to see the world of investing from both an institutional and insurance based perspective and a long term retail investment perspective. I thought this conversation was really interesting and I think you will also, with no further ado, my conversation with Jenison Associates Jeff Becker so let's start with your background. You get a Bachelor's in Economics from Colgate and then an MBA in Finance from NYU Stern. Sounds like you had been thinking about finance as a career right from the start.

Quite the contrary Barry. I had no idea what I wanted to do in college or coming out of college. I was a liberal arts major. My parents felt strongly about getting me a liberal arts degree and having me learn how to read and write effectively and so that was the goal. I was an economics and English Major econ was the closest thing you could get to business in some of those schools. And so that's what I majored in. I had no real guidance in terms of finance. Neither of my parents were in the financial industry. And so I did what most students did in those days, as you saw on the board who was coming up to interview and potentially hire undergrads. And I saw that what were in those days, the big eight accounting firms were coming up to hire, and they had this program where they would hire liberal arts graduates, have them work, and as part of the arrangement would pay for you to go to grad school. So it was a combined program through Arthur Anderson to go to nyu. And they were originally paying for a master's in accounting, but ultimately everyone parlayed that into an MBA in finance.

Huh. Really interesting. And did you end up at Arthur Andersen for any length of time?

I did, I did. I ended up there for seven years. It was, it was a terrific experience. It was a great company. You know, in those days, these companies hired, you know, crops, undergrads, they trained them together. We learned everything, you know, across from accounting to auditing to tax and valuation. I ended up in what was called the valuation Services group, where we valued real estate and businesses either for transactions or for M and A activity. And it was a terrific company, a great learning experience. They sent you out to clients very early on in your career and you also got people management skills pretty early on.

So learning to value real estate, learning to value companies. Sounds like you're going into private equity and private credit down the road. Like that seems to be the path these days. What was that experience like and how did it affect how you look at investments today?

You would have thought that I didn't know what private equity or private credit really was at the time. I had started to shift more and more into. Into real estate. The background of tearing apart financial statements and balance sheets and discounted cash flow analysis was a great foundation really for anything in you do in finance ultimately. So it was a great experience in that regard. But I was starting more and more to specialize in real estate. And as a result, I got hired away by one of Anderson's clients, which was Aetna. And Aetna had a very large commercial real estate business. As you may recall, the insurance companies had huge commercial loan portfolios in those days that they were using to backstop long dated life insurance liabilities. It seemed like the perfect match of asset and liabilities until real estate valuations bottomed out and the life companies Ended up with a whole bunch of mortgage loans that were underwater. That led to a terrific experience for me being part of the workout of all of those loans in the early ninet. So we did foreclosures, we did restructurings, we did equity kickers, and we pulled up some of these loans into CMBS deals and sold them through Wall Street. It was really a terrific experience and really bred out of a crisis.

And I just want to emphasize we're not talking the beginning of the pandemic in 2020. We're not talking about the financial crisis in 08 09. You're talking about really the post SNL crisis, late 80s, early 90s, where a ton of commercial real estate suddenly took a big hit. Eventually you become chief credit officer covering real estate at Aetna. Tell us a little bit about that.

Yeah, I was, I was part of, you know, the management that ultimately had to determine, you know, the valuation and the credit approval of the different transactions that we were working on, whether that was originally putting out new mortgage loans and determining whether it was, you know, a good credit for the insurance company capital or when we got into the restructuring period, it was about, was this the right deal? Were these the right terms, you know, for us as we, as we tried to salvage the portfolio?

And then following Aetna, you end up at Altus investment manager, your CFO there. What was that like going from analyzing credit to being chief financial officer for an investment firm?

Well, one of the things we were doing by working out the troubled mortgage loan book at Aetna is we were also working ourselves out out of a job. So the job was to wind down the portfolio and we were actually given retention agreements that were two years in duration. And at the end we essentially were out of jobs. That was a little bit scary for an early career endeavor, but by the same token, it was the first time in my life I ever saw a six figure payment come at one time. And it was quite rewarding at an early stage in my career. So I knew I was going to be out of a job. Aetna was up in Hartford, Connecticut. So I was up there alone as a, as a, as a young man. And I went to the head of HR at Aetna and I said, this has been a terrific experience, but my, my gig is up and I'm probably going to head back to New York City. Is there anything that I should look at within Aetna? She happened to be a Colgate grad, took an interest in me as a Colgate grad and said yeah, we've got this great little third party institutional investment manager named Altus Investment Management. It runs pretty independently, has about 100 billion in ass sets. I'm going to send you over there to meet the young dynamic CEO there, a guy named John Kim. So I went over and met John. We had a terrific three hour conversation. And at the end of the conversation he said, you're hired. And I said, I'm hired, what am I going to do? And he said, I don't know, we'll figure it out, but I think you're going to be cfo. And I said, well, I know Arthur Anderson is on my resume, but I actually have never practiced accounting and so I'm not sure that's the right role for me. And he said, well, we've got a really strong finance team and a good strong controller. I want you to be a more strategic cfo. I want you to work on structured deals, M and A levers of profitability. And so that turned into a CFO role which again is a terrific experience for anything you do. Really understanding how businesses make money and the levers of profitability is a great experience, huh?

So how do you go from Altus to ING Investing Management? What was that transition like?

Well, in 2003, ING acquired Aetna's financial businesses and that was the life insurance, retirement and asset management businesses. And so Altus went along with that acquisition. ING had been on a buying spree around the world and in the US buying up insurers and other businesses and had ultimately ended up with about six asset managers, brands that are now all gone. Altis, the one I came to the party with, Pilgrim firm and sells, Lexington Partners, Reliastar Research, the original ING Investment Management. But ING did not want to see these run as boutiques. Ultimately in the long run ING had a very integrated model, a mono brand approach to the world and wanted to bring all these asset managers together. So I was selected to help lead the integration of these asset managers, which was, which was an interesting project. Each of these asset managers had a CEO. These boutiques were pretty fiercely independent and it was a bit of a bumpy ride as we, as we brought them together. But ultimately we did. We, you know, we started out in some cases with 4 small cap equity teams and, and in some instances we selected one and not the others. In others instances we might have combined teams and in other instances we started all over. So it was a multi year project to really bring all of what were the acquired asset managers into one integrated ING Investment Management and ultimately I was the CFO of that initially, and then later the coo, the CEO at the time came to me and said, you did a terrific job on the integration project. You can be CFO or coo. Which one do you choose? And I said, well, can I be both? And he said, no, I can't do that right now, so you have to pick one. And I chose cfo. And my rationale was the CFO is always at the head table because there's always a financial implication to everything you do. So that's where I started, but ultimately did become COO as well.

Eventually, ING changes its name to Voya, and everything is now branded Voya that were either these other pieces or ING and you rise to the role of CEO. How did that come about? And what was it like going from COO and CFO to CEO?

Yeah, it happened because of another crisis in 2008, the great financial crisis. ING had gotten overexposed in mortgages and had to take a loan from the Dutch state to shore up their tier ratios. And as part of that deal with the Dutch government, ING agreed to sell off the US properties. If you can remember back to the start of the financial crisis, it was viewed as largely a U.S. issue. And so I think there was a desire to shed the businesses, you know, where the. Where the subprime mortgage bubble had had burst ultimately. And so I was. I was working for the head of ING Investment Management. But when ING decided to take this loan, there was a change in leadership and my boss became head of ing America's all of the insurance, retirement and life businesses. And I became CEO of ING Investment Management, which later became Voya. The way I found out that I was becoming CEO of ingim was a bit of an interesting story. I was coaching my son at a U12 hockey tournament up in the Northeast, and my cell phone kept ringing while I was on the bench yelling at kids to skate harder and get into the. Get into the corners. And it kept ringing. And it was my boss. And it was a Sunday. And eventually, in between periods, I picked it up, and it was. My boss at the time was a gentleman named Rob Leary, a terrific mentor of mine, who said, I need you to get down to my house tonight. I said, rob, I'm up in the Boston area. He lived in Greenwich, Connecticut. He said, no, you have to be here. And I said, am I fired? And because if so, I'm not coming down, just tell me now, I'm going to finish the game. And he said, no, you're not fired, but you have to get down here. So I made my way down to Greenwich, Connecticut, and I proceeded to learn that ING had taken the loan from the Dutch state and that in the morning before we woke up, because Europe's ahead, it was going to go public, and my boss would become the CEO of the Americas and I would become the CEO of the investment management firm. And we, we planned what was going to happen the next morning. I was going to have to assure our investment teams, our clients, our pension consulting partners that everything was going to be okay and that we were, you know, we were still in business. But as you can imagine, it's incredibly hard to run an asset manager with a for sale sign on your back because ING had announced that it would dispose of the US businesses. So another Cris Bread opportunity for me. I had to actually tell my team of peers that I was now their boss because it was so chaotic that no one came in to actually deliver that message. I had to deliver it myself. But it was a great team and we rallied together and we built the business, grew it coming out of the financial crisis, and then that ultimately became the business that we spun out as Voya.

So two questions that I. First, I have to get the date of this. Like, was this right in the middle of the crisis? Was it towards the tail end? When did you get this Sunday hockey phone call?

Yeah, it was about the middle of 2009. So 2008, you know, as you remember, Barry, fourth quarter was chaotic. We were having global calls trying to preserve capital. Who knew what was failing next? And then as we got into 2009, companies were starting to sort out, you know, where they were. And that's. And it was about mid-2009 where ING decided to take, take the state aid.

But, but the second question is, he couldn't have told you that over the phone. Like, I know they want everybody in the room when you're planning, but no, no, this is good news. You're getting a promotion. Get down here. It's important. Had had a. That's a stressful drive from Boston to Grant.

It was. I think he was being extra cautious given it that it was material, non public information, and pretty significant information at that. And also we needed to be up and running in New York Monday morning. And so he needed to make sure I was down Sunday night.

Gotcha. That's really quite fascinating. How did you end up going from Voya to Jenison Associates? What drew you there?

Yeah, I wasn't necessarily looking for a new role. I was enjoying the role at Voya. Being CEO of the asset manager, I was on the executive committee. I was learning new skills, being part of quarterly earnings calls and helping grow that business as part of a new company and new brand. But at the same time I was probably deep down ready for a change. I had been with the company for 20 years, but really it had changed around me from Altus to Aetna to ING and then Devoya. And so I was ready for a change. I said to myself that if I left it would not be for another insurance or bank owned asset manager. And no disrespect to those businesses, I had terrific experiences and opportunities presented to me there. But I just felt that a new experience, maybe going back to something more independent or private would be the move for me. But I got the call from a recruiter and Jenison was an intriguing company to me. It's just well known, quality firm, strong results, impressive client roster and I'd heard it had a great culture. So I was intrigued and agreed to have some meetings and really got quite interested in the business. I thought the people were, were outstanding that I met. They, they validated the culture. The client list and roster truly was impressive. What, you know, what I had to get my head around is that it was owned by an insurance company, however part of PJIM's multi boutique model. And that was, that was very appealing to me. I think for this stage of the asset management industry a multi boutique model is a, is a good model. You get the asset class specialization, you get the entrepreneurialism in the boutique, but you get the benefit of being part of a larger manager that has access to wealth management platforms, capital, global distribution. So it seemed like a very good business model that allowed for sort of the best of both worlds. And I was therefore attracted to it and really have not regretted the move one bit.

Really interesting.

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[Jeff Becker]

Licensed by NYDFS Talk a little bit about Jenison. You mentioned they had been around a while 1969. They've been around for, let's call it 50 plus almost 60 years. What sort of traditions and cultures made that longevity so attractive to you?

Yeah, it was all around reputation and the history is that Jenison, founded in 1969, was really one of the first independent institutional asset managers. In those days all the institutional asset management was done out of the banks and there were seven founders who decided that maybe they could do it better and they left their banks and they set up a business in the Drake Hotel in New York City and they started to invest. They ultimately were growth investors, but growth investing was not even known at the time. The Russell 1000 growth didn't even exist. But the team started investing in what they believed to be the fastest growing companies, the disruptors of the time, and really became therefore one of the earliest true growth investors and the founder that survived almost the entirety of the business. And was there when I arrived was Sig Sigalis who was an iconic investor. Again, really one of the first dedicated growth investors. He was an incredible investor, but also an incredible man. He worked right up until he passed two years ago at 89, literally until the week before. He was never going to retire. He was someone who taught me a lot. He taught the firm a lot. But at the end of the day he was an intense competitor who wanted to win. But he was very values based. Everything was about the client and about values and he had a Great saying, which was do what's right for clients and that'll always be right for the business. And I think those are pretty sage words. And if you're serving your clients well, you're going to both retain and, and get, get new clients. And in fact, if you look at our, you know, our client roster, 2/3 of our clients have been with us for more than 10 years and 40% more than 20 years.

Wow, that, that's pretty substantial. I'm kind of intrigued by the concept and I mean, I was a kid in 1969, I think I was 7 or 8 years old. But the idea that growth investing was like a novel concept. I get the idea that, hey, this was kind of the early days of a bear market that went on for another decade. But tell us, what does it mean to be growth oriented investors when there's no such thing as a typical growth index or a value index?

What growth investing has meant for Jenison, and it is the original legacy and an original book of business for the firm, we've extended from there. But growth investing for us has really been about high conviction, deep fundamental, research driven active management. And you know, we're a concentrated manager. We take large positions in concentrated portfolios and we're really striving to be that high alpha equity manager for pension plans and for wealth allocators. And often we're part of an asset allocation and we're the alpha in the corners, if you will. And I think that's the right place to play as a fundamental active equity manager. Because the hollow's been middled, because the middle has been hollowed out. And at the end of the day, no one's going to pay active management fees for 2 to 3. Tracking error equity, huh?

That makes a lot of sense. So I gotta ask two questions about concentration and deep conviction. First, what is a concentrated portfolio? I've seen a lot of people describe themselves as concentrated portfolios and they're 50, 60, 100 holdings. It doesn't really seem concentrated. What does concentrated mean to you?

Yeah, for us, 5060 would be the largest portfolios that we manage in our growth book of business. We do have down in our small cap and smid cap of book of business, we do have larger holdings down there just to get some more liquidity and diversification. But for our, our core franchise of growth portfolios, you know, we have 10 stock portfolios, we have 20 stock portfolios. When we say something's focused, it tends to be about 30. And for us, you know, flagship might be up to 50 but not typically more than that.

And so when you say deep conviction, what does deep conviction mean? Is that what leads to these 10 stock or 20 stock concentrated portfolios? Tell us a little bit of what does deep conviction mean?

Well, I think it starts with our investment research. You know, we're a firm of 400 people, 70 investment professionals, about half PMs and half analysts. They have very long tenures with, with the firm, about 30 years of experience in the industry, more than 15 on average with the firm. And they are doing very deep research by team. So every team, our large cap growth team, our global growth team, our small mid team, our value team and our fixed income team, all have dedicated research analysts. So there's no central research model, there's no house view, there's no, you know, mandated approach to seeking alpha. Every team has the, has the ability to seek alpha in its own way. And what we have are very long tenured, experienced career analysts. So our analysts in our firm are as important as our portfolio managers. It's not necessarily a track to portfolio management. In fact, we believe, you know, the real secret sauce to, to Jenison is the research that, that we do and what the teams do. And on the growth side, at the end of the day, what we're looking for is innovative and disruptive businesses driving structural shifts in industries. You know, business models with, with significant barriers to entry, secular demand trends driven by superior product offerings. And these days, you know, as you know, that might be EVs, autonomous driving, machine learning, obesity, drugs or luxury that's owned through the value chain. And all of those tend to be superior growers. They tend to have moats around them and are the leaders and the disruptors. And as you know, Barry, history has shown that market returns over time have been driven by a narrow set of disruptors and consistent winners. And Jenison has developed a reputation for identifying those companies.

So the past 15 years, those innovators, disruptors, companies with moats, have primarily been US Based, Right. And we see the rest of the world, Asia, Japan, Europe, primarily lagging the US Although there seems to be a lot of signs these days that that's starting to change. Certainly Q1 2025, Europe is dramatically outperforming the U.S. how do you think about the relationship between U.S. investing and international investing? I know only about 10 or 15% of your assets are invested overseas. What would it take to make that change?

Yeah, in terms of our portfolios that are invested overseas. And then I'll answer your question about how do I think about international versus US markets, we have about 25 billion of dedicated international and global portfolios. But within our other equity portfolios across the firm, we do hold a percentage of international assets, so that that number ultimately is about 40 billion of our 150 billion of equity. So it is a little larger than it, than it may, may appear. And at the end of the day, unless we have investment guidelines or restrictions from clients, we seek alpha with a bit of agnosticism to both the benchmark and the region. So we are building portfolios, bottoms up, company by company, and looking for what we view are the best companies for our strategy, whether that be intrinsic value and what we think are undervalued companies or the disruptors and, and the growers in terms of international holdings per se. As you mentioned, the first quarter after a long drought of underperformance compared to the U.S. international equities have had a nice run. You know, it's primarily driven by policy shifts locally in some of those regions as well as reactions to current U.S. policy shifts and the uncertainty around that. So in Asia, the government is clearly priming the pump. In Europe, increased defense spending has really ignited the markets over there. And so I think the international markets might have some legs. We do still favor the US in the medium term and longer term right now, but certainly international markets after being beaten down for years, have come back strong.

So let's talk a little bit about risk management. I know you guys employ the traditional sector diversification, geographic diversification, different strategies, but talk a little bit about your risk management and the downside protection you deploy to make sure that volatility like we've been seeing doesn't hit the bottom line too hard.

Yeah, and you know, as we discussed, Barry, we are concentrated managers, high conviction managers. So you know, we're paid to take risk. And as a result, our portfolios do tend to be more volatile than the benchmark, certainly and many other managers who are more diversified. So you know, we will have periods where we wildly outperform the benchmark and periods where we underperform the benchmark. We're looking typically at a holding period in our names of, you know, three to five years and much longer. And so, you know, we are long term investors. We want to align interests with our clients who are long term investors and try to filter out the quarter to quarter noise and the volatility that comes in between those periods. So again, if we can identify those companies early that are going to be the longer term winners, that's where we go from a risk perspective. What we want to protect against is unintended risk. So we're taking very deliberate and concentrated risk. But we have every kind of risk management report that you would expect in an asset manager to make sure we don't have unintended risks, to check our dispersion and to make sure that at the end of the day the risks we're taking are stock selection risk and not unintended risk around, you know, size, geography, sector.

So I don't usually hear the phrase unintended risk. So I certainly understand the risk of performance relative to a benchmark. You're going to underperform, you're going to outperform. What are some other unintended risks? Is it strictly just sector concentration or geographic concentration or is there a little more nuance to it?

We want to make sure at the end of the day that the risk we're taking is stock specific. That's, that's who we are on the equity side. We are stock pickers. And so we want to make sure that what's coming through our portfolio from a risk perspective is all based on stock selection and not some of the more factor based influences that can take shape in portfolios. And as you mentioned, sector and geography and other exposure.

Really interesting. So, so given that PJUM is the parent company and they run a sort of multi boutique, multi strategy approach, how does your concentrated alpha approach to investing fit in? Do you have to think about, well, maybe this group or that group is doing something similar or do you do your thing and it's up to the parent company to select the allocation they want?

Yeah. The great thing about the multi manager model at PGIM is each of the affiliates, as we call them, versus boutiques are free to pursue their asset class and their specialty in their own way. Now to the extent that there are multi asset portfolios put together within PGIM that might select components of the different affiliates or boutiques, you know, that'll be determined by the multi asset team doing the asset allocation. You know, for Jenison, given, you know, the highly concentrated, you know, nature of our equity portfolios, we fit into some of those multi asset products but in other cases we don't. We're too high octane for that. But we are in a number of annuity and other asset allocation products throughout Prudential that avail themselves of of our various capabilities. And the other thing that Jenison can do is we have a small quantitative equity team, not to be confused with PGIM Quantitative Services, which is a sister company. Our team is there to customize our fundamental alpha from our equity portfolios. So if a client is looking for a targeted tracking error, a targeted volatility likes what we do, but maybe can't quite take the tracking error of volatility. We can manipulate the portfolio to fit within their requirements. They might be someone who wants a sustainable portfolio and has some exclusions or types of industries they don't want to include. So having this little quant group within Genison to customize our outcomes for our clients has been a terrific addition of value that has allowed us to get into some of these multi asset products. The other great thing about the PGM multi manager model that I'll comment on is that we have virtually no overlap among the different affiliates or boutiques. So Jenison is the fundamental active equity manager. PJIM Quantitative Services is the quant manager. PJIM Fixed Income has broad based fixed income capabilities. We have private real estate, private credit, et cetera. And we're not fighting with each other over shelf space in different products because we're all experts in what we do.

Now it's taken me about 10 years to stop saying prudential and start saying pjim. You did mention Prudential. When you think about the parent company, it traces back to Prudential Insurance which is still giant brands. How does the relationship between Genesis, how does the relationship between Genesen and PJUM and PJM Prudential just affect the nomenclature? It's a lot of stuff to keep keep straight.

It is, you have, you have the master brand of Prudential 150 years. You have the PGM brand a little over a decade old and then you have the brands Underneath Jenison at 55 years being the oldest of, of, of of the investment management brands. It's also why Jenison tends to be the most independent of the, of the affiliates or boutiques. It was an acquired business. About 75% of the assets were sourced by Jennison versus assets that have come through some of the Prudential or, or PGYM channels. But you know, we do, you know, we do have to be careful about the branding and sometimes it's at the product level. For example, PGIM runs a lot of the, you know, the consolidated platforms like the mutual fund platform and in Europe the UCIP platform that are, you know, used to structure the funds that are sold into the wealth management channels. And there, for example, if you want to buy Jenison in a growth fund through the PJim Mutual Fund Company, it's the PJim Jennison growth fund. So sometimes we have multiple brands at play.

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[Jeff Becker]

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[Jeff Becker]

Licensed by NYDFS so let's talk a little bit about the current environment. It certainly has been a chaotic first quarter with tariffs on and off. Again, you guys are deep fundamental investors. How do you think about news flow and all this noisy stuff? When you're looking at the fundamentals of.

Companies, it's hard to do, but it really comes down to focus. At the end of the day, we have to try to filter out the noise. Now we can't. We're not macro investors, but we have to be macro aware. We have to understand if policy Shifts or anything in the macro environment will ultimately affect the environment in which our companies operate. So we always bring it back to the fundamentals. We can't put blinders on and say this is a great company, but if the landscape in which they operate changes, it can affect the fundamentals of the company. So we work very hard to try to separate the noise from the fundamentals. But at the end of the day, sometimes that macro environment can affect the fundamentals.

So when it starts affecting the fundamentals, how do you manage it? I'm assuming since you're the alpha managers, you don't have an option of saying we're going to go to cash or we're going to go to bonds. Is it a matter of saying, hey, Europe seems to be doing better, we're going to rotate shift some of our exposure from the US to overseas. How do you deal with the macro once it starts affecting the fundamentals?

Yeah, it's exactly as you described. We're paid to invest in a certain strategy for a client. So we, we hold very little cash just for liquidity and trading. We're paid to be fully invested. And so as we see either a sector or a supply chain or a company's fundamentals coming under pressure, we'll either underweight or get out of the company completely and look for the next best opportunity.

Really kind of interesting. You had a piece recently at Jenison titled is Value Investing Dead? Tell us a little bit about that.

Well, growth indexes have certainly outperformed value for well over a decade. I think we're all aware of that. That's been good for Jenison. Two thirds of our equity assets are growth oriented assets and we've benefited during this period and also outperformed and raised money in new clients. So a lot of that has been a great tailwind for our business. But we also have a high performing value team that's put up some very good numbers. The way we manage in value is called an intrinsic value approach, which is very opportunistic. It's not deep value or a fallen angel type strategy. We look for companies with temporarily depressed earnings versus a permanent situation. We try to identify those and periods of short term volatility can actually favor our approach if we can decipher which companies have hit an inflection point and get into those early and hold them long term. Now the market has broadened out recently from the Mag 7 and some of the most concentrated positions that have led the market. And we're being rewarded, you know, for executing in the value space. There's still good companies and good growth in value. I don't think investors really think about growth versus value investing like they used to. I think they think about it as portions of the portfolio, stable growers, maybe with dividends versus innovators and disruptors that, that might lead the way in the future.

That's really, that's really kind of interesting. It's funny because you were talking about your approach to intrinsic value and I would imagine that as the MAG7 and traditional growth equity falters, the volatility of this market would be great for an opportunistic intrinsic value investor. Tell us how the value guys are salivating these days over what the state of markets are. With volatility spiking up close to 30.

Yeah, I think volatility actually can be good on the growth side as well. So I think, I think when you're a fundamental stock picker, you, you want, number one is as little correlation as possible. If everything goes up, it's hard to differentiate yourself when markets broaden out. You know, when, when volatility is, is elevated, you know, it really, you really have to have skill to differentiate and to separate the noise, you know, from the fundamentals of the company. And so we think we can benefit in these periods both on the value and the growth side. Certainly, you know, on the growth side has pulled back most recently in the first quarter. You're starting to see that shift back already. It appears that mid March was perhaps the, you know, the, you know, the bottom and we seem to be, you know, starting to bounce off of that. I for one don't, don't see a recession on the horizon, at least not a, not a severe one. So I think we will continue to see, as, you know, we filter through the noise, we learn that tariffs may be a little more targeted and forgiven in some instances, that the supply chains don't get as disrupted as we thought and we could see a good period for growth equity again.

So you have large cap growth equity as a focus, you have global equity opportunity. What are some of the other areas where you guys focus in terms of looking for alpha?

Yeah, growth equity as we've talked about was the foundation of the firm and the largest book of assets, about half the assets of the firm. We have a global growth team that was built and extended off of that getting into global, international and emerging market equity also following a growth style and philosophy that team leverages a lot of the same research of our growth analysts. Then we have a small smid mid cap team. They are a little More growth managers but a little more valuation sensitive there. And we offer that in sort of growth and core portfolios. Our value team, we talked about our intrinsic value capabilities but you know, on the value side we also have certain sector funds, infrastructure, utilities, energy and other things including some strategies that are in demand in Europe like carbon solutions strategy. That's a sort of a brown to green strategy if you will. And then we have our $50 billion fixed income shop based up in Boston. They are really the antithesis of what we do in high conviction, focused concentrated equity. They are a high, high quality credit shop staying in, you know, the higher end of the space there down the fairway, core fixed income manager managing for the largest pension plans in, in the world and also in stable value and LDI mandates. So it's also a nice diversifier for the business. We have this very stable, you know, core credit manager and this high conviction, high alpha equity manager.

So given that there seems to be a consensus at your shop of higher for longer at least when it comes to rates, since you brought up fixed income and you brought up credit, does this allow your clients to say, hey, we could take a little off the table with equity and focus a little more on, on stable fixed income. How does that balance work?

Yeah, we've seen that over the last several years as rates ticked up and there was something to earn in fixed income again. We watch pension plans adjust their asset allocations. One of the double edged swords of being a high performing equity manager is when the equity markets run up and you outperform the benchmark you get allocated against, you're the one they take the money away from. You know, we've, we've had that happen and have been a victim of our success, if you will, in some of these areas. So we have seen that over the last couple of years as rates ticked up where we did see some of our clients, you know, maintain us but.

But shift some sort of rebalance from alpha generating concentrated equity into more stable, lower yielding fixed income.

Exactly, exactly. I mean we do, you know, I'm not one to call rates per se, but you know, I agree with the base case out there that we'll probably see two cuts. Hopefully they're, you know, they're for the right reasons and not bad news cuts if you will.

So that's interesting you say that because originally last year Wall street was looking for a lot more cuts than we got and the sort of pushback to the expectation was hey, the economy's really robust, consumers are spending, companies are hiring capex Spending is up, revenue and profits are up. What, why are you guys expecting cuts? How does that transition now where, you know, I'm in your camp, I don't really see an imminent recession. But at the same time it, it certainly appears that recession risks are ticking up. They're still relatively low, but they're appreciably higher than they were at the end of 2024. So if we're going to get two cuts, is that because the Fed wants to normalize rates to where they've been over the past 20, 25 years as, as inflation sort of settles down, or are we going to see cuts because the economy is beginning to slow?

Yeah, I agree with you completely. I hope it's the former and not the latter. We are starting to see some signs of, have some potential slowing of growth. I do think we could see growth slow down from what it's been, but.

And it's been red hot and a.

Good couple of years and it's been red hot. You know, there's still some good signs out there. Housing starts are up, services, PMI is up. You know, retail sales and manufacturing are down, consumer sentiments down. The income and labor markets importantly are still, are still decent. I think that'll be a major determinant of, of where we go. Inflation is stubborn, but it's, it's showing signs of coming down in key areas, tariffs notwithstanding. And you know, I think the tariff path will, will determine a lot of where we go here.

So it, it, it sounds like you guys stick to your knitting. You do fundamental research, you focus on intrinsic value, but you're certainly aware that, hey, what's going on in the rest of the world, it could have an impact and bleed over. If you're advising pension funds or foundations that have a perpetual lifespan or at least future liabilities that are decades off is the best advice. Hey, it's going to get bumpy for a while, but you have to look past this, look to the other side of whatever happens over the next one, two, four years. Or is it everybody man their battle stage?

Yeah, I think keeping a long term focus is good advice for the pension plans who obviously have teams of experts focused on their asset allocation, but also for the retail investor who obviously has the financial advisor as well. But as you know, Barry, staying invested is key. When people try to time the markets and exit, they've always regretted that.

Being.

In the market during those key points of inflection, when markets tick up or missing that last large spike really can have a dramatically negative impact on your returns overall.

Yeah, we've seen a lot of studies that show the worst days and the best days tend to come clustered together, and it's very hard to miss one and. And catch the other.

Absolutely.

So I know I only have you for a limited amount of time. Let's jump to our favorite questions that we ask all of our guests, starting with what's keeping you entertained these days? What are you either watching or listening to? What your tell us about your favorite podcast, Netflix, whatever.

You know, I'm always well behind where. Where everyone else is. I didn't watch the first episode of the Sopranos until. Until the series was over.

Oh, really?

And I'm just starting Yellowstone, so that, that tells you how. How up to date.

You're ahead of me in Yellowstone. It's the next one up in my queue. Are you enjoying it?

I just started it. So, so far, so good. I've heard so many great things about it, so I'm looking forward to it. I'm a bit of a history buff, so I've been working my way through the Ken Burns documentaries. I've seen the Brooklyn Bridge, the Statue of Liberty, the Civil War, the Vietnam War, and the Great War, and the next one up for me is Benjamin Franklin. So I really enjoy Ken Burns and how he approaches, you know, the, the documentary.

Huh. Really interesting. You, you mentioned one of your mentors previously. Tell us about the folks who helped shape your career. Who, who are your mentors?

Yeah, I would say first, you know, it, it, it, it was my mother from a values and from a work ethic perspective. First generation college grad, went to got a master's at Georgetown, worked in politics, ran some nonprofits, and then ultimately worked in education. She's 90 years old and still alive and doing well. And, you know, she's been a great inspiration to me again from a values and work ethic perspective. I've also had the great opportunity to work for some great leaders and managers. I tried to learn from each one of them along the way, take the styles or the characteristics that I most admired of each of them and try to incorporate that into my leadership style. At Altus, it was John Kim and Scott Fox, Bob Crispin, Rob Leary at ing, and then Alon, Kara Oglund at Voya, to name a few. Sig Segalis, who I mentioned past about two years ago, I worked with him for only about six years. And while, you know, he wasn't necessarily a mentor in the sense of helping me do my job, which was terrific when, when, when I came on board, Sig said I I manage the money, you manage the firm. And he, he kept his word there and allowed me to do what, you know, we felt we needed to do to help grow the business and set the strategy. And it was a, it was a terrific partnership. And, and I have great admiration for him. So he was more an inspiration to me. Just the, you know, his will to win and the way he impacted everyone around him and the quality and the values of the firm that he built. Really inspirational.

Really interesting. Let's talk about books. What are you reading currently? What are some of your favorites?

Yeah, right now, I just started Leadership in Turbulent Times from, from Doris Kearns Goodwin. It seems a little apropos.

Sure.

Right now. And, and, you know, it's, it's a book about Lincoln, Teddy Roosevelt, FDR and, and lbj. And it kind of, you know, takes you through their, you know, their administrations and, and some of the, the challenges that they faced. You know, it's a big book. It sat on my coffee table for a few years, and I looked at it and I, you know, I've wanted to kind of tap in, but it was 4 inches high. And finally I did tap in, and I'm glad I did.

Our final two questions. What sort of advice would you give to a recent college grad interested in a career in either investment credit, finance, anything along the lines of your career experiences?

Yeah, I would say first thing, you know, you know, getting into finance, the path to finance starts so much earlier than it ever did. And in our day, you know, it was senior year, it was time to look for a job. Maybe you had an internship, you know, the year before. But now undergrads going into finance, they need to be lining up their internships sophomore summer, junior summer, senior summer. So, so it really starts a lot sooner. But once they're on the job, my, my advice to them is always build a resume of skills, not a resume of jobs. Try to develop as many skills as you can along the way and ask questions early and often. You're not expected to know anything when you're young and in the job, but as you move on in your career, you're expected to know more. And it becomes a little harder to ask questions and then ask for experiences outside of your current duties. So if you see something going on in the next department over, ask if you can be exposed to that while doing the job you were hired for. And try to get more exposure, but don't expect anything to be given to you. You own your career, seek out mentors and try to learn. But at the end of the day, you have to take ownership of your career and your advancement will really depend on the success of your current role. And if you focus on that and do it well, you'll be recognized.

Really good advice. And our final question, what do you know about the world of investing today? You Wish you knew 30, 40 years ago when you were first getting started?

Well, as I mentioned, I didn't know anything about it 40 years ago when I was getting started coming out of college. But in reflecting back, what I think would be helpful would have been how many different types of finance careers there actually are. Everyone thinks sort of Wall street, investment banking, ma but there's investment management, there's wealth management, there's insurance, there's commercial banking, there's, you know, there's institutional banking. So many, many careers in finance. And past that you can go down. I had a very narrow view of the investment world and, and my journey really happened because of the next role that I got and the next role that I got. I didn't have a plan per se, and I think I wish I knew more earlier on and I might have set a plan. The plan turned out okay and I've been happy with it. But who knows what the path would have taken had I known a little more about it.

Really interesting stuff, Jeff. Thank you for being so generous with your time. We have been speaking with Jeff Becker. He's chairman and CEO of Jenison Associates, helping to run the firm that manages well over $200 billion in assets. If you enjoyed this conversation, be sure to check out any of the 550 or so we've done over the past 11 years. You can find those at iTunes, Spotify, YouTube, Bloomberg. Wherever you find your favorite podcasts, be sure to check out my new book, how not to Invest the Ideas, Numbers, and Behaviors that Destroy wealth and how to Avoid Them out now at your favorite bookseller. I would be remiss if I did not thank the crack team that helps put these conversations together each week. My audio engineer is Steve Gonzales. Anna Luke is my producer. Sean Russo is my researcher. Sage Bauman is the head of podcasts at Bloomberg. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.

[Barry Ritholtz]

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