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Tuesday, March 18, 2014

American Century's Founder Passes Away

Reported by Anastasia Donde

James "Jim" Stowers, Jr., the founder of American Century Investments, who was highly regarded as an investment industry innovator and philanthropist, died of natural causes yesterday. He was 90 years old.

Stowers founded American Century in 1958 in a one-bedroom apartment in Kansas City. The firm, which was then known as Twentieth Century Investments, started with only $100,000 in seed money from 24 investors and offered only two mutual funds. It has since grown to $142 billion in assets and has become a global asset management firm serving individual and institutional investors.

The firm now boasts serving millions of investors around the world and employs 1,300 people. Using the wealth earned from his investment management company, Stowers later established and endowed the Stowers Institute for Medical Research, a biomedical research facility geared toward finding cures for cancer and other gene-based diseases.

When reflecting on the success of his firm, Stowers once wrote, “From the start of our company, we had a dream. That dream was to try to offer people only the best products and services – second to none. It was my belief that if we helped make people successful, that they would in turn make us successful.”

“To call Jim Stowers a ‘visionary’ would be an understatement,” said Richard W. Brown, chairman of the board of American Century and the Stowers Institute. “For Jim, creating new knowledge was the most powerful contribution he could offer mankind. Throughout his whole life, whether as businessman or philanthropist, he thought about making things better for other people.”

“Jim Stowers was a pioneer in the worlds of investment management and personal philanthropy and the entire American Century Investments family mourns his loss,” said Jonathan S. Thomas, president and chief executive officer of the firm. “He was an unpretentious man of great vision, an investment innovator with a driving passion for helping investors achieve financial success.”

When both Stowers and his wife, Virginia, were diagnosed with cancer, Stowers decided to turn the bad news into something positive by creating the Institute in 1994.

“The Institute has been incredibly fortunate to benefit from the unique combination of Jim and Virginia Stowers’ vision, generosity, and determination,” said Dave Chao, president and CEO of the Stowers Institute. “We are all deeply saddened by Mr. Stowers’ death and will miss the enthusiasm and optimism he brought to the unique research organization.”

When discussing the idea behind the Institute in the past, Stowers said, “My wife and I wanted to give back something more valuable than money to the millions of people who made our success possible, and we think that through science is the best way we can do it.” In an unparalleled act of generosity, they created a $2 billion endowment for the Institute comprised of cash gifts and a more than 40-percent equity ownership stake in American Century.

Stowers is survived by his wife, Virginia, three adult children and their families. He is also survived by his brother Richard W. Stowers, Sr., Richard’s wife, Dorothy, and their children. He was preceded in death by a daughter, Pamela, in 2010.

Funeral arrangements are pending. In lieu of flowers, the family requests donations be made to the Institute.

Stower's Biography

The son and grandson of doctors, Stowers was born on Jan. 10, 1924 in Kansas City, Mo. Stowers spent most of his life in Missouri, also attending the University of Missouri. After graduating, he joined the Army Air Corps where he became a fighter pilot, later enlisting in the Air Force Reserves, where he served as a captain until 1957.

Given his family’s background, Stowers briefly considered a career in medicine, but later focused his attention on finance. Following a stint selling mutual funds for Kansas-based Waddell & Reed, he founded a term-life insurance firm – J.E. Stowers and Company – and, in 1958, Twentieth Century, which would later become American Century Investments.

Early in Stowers’ investment management career, Stowers said he believed that money follows earnings, meaning that, over time, investors would gravitate to the best companies and particularly those experiencing earnings growth. He later decided to refine this approach by only focusing on companies whose earnings and revenues were growing at an accelerating pace.

In the early 1970's, Stowers wrote his own proprietary computer program that would ferret out companies with the most desirable growth characteristics. Today, the “Stowers System” – as the Securities and Exchange Commission referred to it – remains a big part of the firm's investment process and guides a number of the firm’s growth-oriented investment strategies.

Throughout the 1970's and 1980's, this stock selection process helped Stowers generate strong performance for investors and garnered him celebrity status. In early 1981, Stowers appeared on the cover of MONEY Magazine, accompanied by a feature story about the success of his funds. Other national media attention led to additional interest in Stowers and his growing investment firm at that time.

By the early 1990's, Stowers and his company were becoming household names among investors. The firm’s Ultra Fund achieved a whopping 86-percent return in 1991. Another wave of national attention helped American Century double its assets under management in a single year. The 1990's also marked the beginning of the company’s move into other investment strategies, including fixed income, global and international equity, value equity, asset allocation and quantitative equity. The firm also began to look beyond the retail marketplace to financial intermediaries and institutions.

Stowers was named Ernst & Young’s 2005 Entrepreneur of the Year in the Financial Services Category. In his acceptance speech for the prestigious award, Stowers said, “With both American Century and the Institute, the goal was never about self enrichment. Rather, the larger goal has been to improve the lives of others, either by helping them achieve financial independence or by conducting medical research into the causes and potential cures for devastating gene-based diseases.”

In 2010, Jim and Virginia Stowers and other philanthropists signed the “Giving Pledge,” which called on signatories to give away more than 50-percent of their wealth to charity during their life or at death. In the case of Mr. and Mrs. Stowers, the majority of their wealth had already been transferred to the endowment for the Stowers Institute.

In 2011, on the one-year anniversary of the Giving Pledge, Forbes Magazine named Jim and Virginia to its list of the “Biggest Givers” – those who have donated at least $1 billion to charities or foundations. Ranked 9th on the list, Forbes praised the couple for their generosity. The magazine noted that, as a percentage of their total net worth, they had pledged the most.

At a special tribute in early 2014 to mark Jim Stowers’ 90th birthday, Investigator and Dean of the Graduate School of the Stowers Institute for Medical Research, R. Scott Hawley, Ph. D., reflected on what Jim and Virginia Stowers accomplished through both American Century and the Stowers Institute.

“There are so very few people who are courageous enough to have really gigantic dreams,” said Hawley. “And there are even fewer people who find a way to make those dreams come true. But the rarest are those who stay with it long enough to see how those dreams blossom and actually become so much more than anyone could imagine. And when I thought about that, I realized, they’ve done it twice!” 

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