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Rating:After 43 Years, a Mutual Fund Entrepreneur Starts One More Adventure Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, April 9, 2018

After 43 Years, a Mutual Fund Entrepreneur Starts One More Adventure

Reported by Neil Anderson, Managing Editor

43 years after he founded Wasatch Advisors [profile], chairman Sam Stewart is about to head out on one more adventure.

Stewart, age 75, confirms that he and one of his sons, Josh Stewart, will be leaving the Salt Lake City-based mutual fund shop and joining Spencer Stewart (son of Sam and brother of Josh) at a nearby startup, Seven Canyons Advisors. Seven Canyons is also effectively adopting a pair of Wasatch mutual funds PMed by Sam and Josh, pending shareholder approval, and the duo will continue working at Wasatch until that deal goes through.

"I probably have one adventure left in me," Sam Stewart tells MFWire.

Sam Stewart's move will not involve an ownership change at Wasatch. The firm is 100-percent owned by 34 of its 85 employees, Wasatch president Eric Bergeson confirms; Sam Stewart, who stepped down as Wasatch CEO eight years ago, is already no longer an owner of the firm.

"Sam has actually had less than a 50 percent ownership stake probably for over 25 years," Bergeson tells MFWire. "In 2009 Sam sold his shares back to Wasatch following a standard ownership recycling structure we've had in place since 1996."

Spencer Stewart, Wesly Golby, and Eric Moessing co-founded Seven Canyons last September, about six months after Spencer left another Wasatch spinoff, Grandeur Peak. Seven Canyons debuted its first two hedge funds at the beginning of 2018.

Beyond adopting the Wasaatch Strategic Income Fund and the Wasatch World Innovators Fund (by merging them into newly created Seven Canyons mutual funds), Sam Stewart does not expect that they'll be launching lots more funds any time soon.

"One of the things that we don't want to do is proliferate products," Sam Stewart says. "I suspect that we'll be running with that lineup for quite a while."

"That's not to say that we're tying ourselves to the mast," Sam Stewart adds. "For the foreseeable future we don't see any particular need to expand the product lineup. Let's set a small table with really talented people and see where we can take this."

Like Wasatch, Seven Canyons is a privately held firm owned by its own employees. Watch for the Seven Canyons team to selectively hire more staff, though not PMs or analysts.

"I won't say that our staff is complete, but I will say that our staff is largely complete," Sam Stewart says. "Any hiring that we do will probably be back office or support ... We think that we have all of the investment talent that we need."

Spencer Stewart, managing partner and PM, describes Seven Canyons as "a performance-driven shop" that brings together his expertise in global and emerging market investing with Golby's focus on U.S. technology investing.

"We know how to screen these companies down," Spencer Stewart tells MFWire. "We're lean and mean. I think that's the right way to do it."

"The sweet spot is when you have five or six people that you trust with your life," Spencer Stewart adds. "You know everyone doesn't think the same, but you respect what they think and you ensure close collaboration."

Sam Stewart praises the Seven Canyons team as "a small group of guys that have been around the block a few times and know what they're doing."

"The interesting thing about a family is that the gloves are always off. Nobody's genuflecting," Sam Stewart says. "That atmosphere of familiar honesty is going to be interesting and challenging to manage."

"It'll be fun, but it won't always be pleasant," Sam Stewart adds. "I really look forward to it."

On the Wasatch side, the fund firm will have 17 remaining mutual funds after the adoptions go through. Bergeson describes the move to Seven Canyons as a "friendly, graceful way" for Sam Stewart to move from the company he founded in 1975.

"The firm is very much a collaborative, team-oriented environment. I would link that back to Sam," Bergeson says. "He had a vision early on to create a firm that was bigger than an individual. We are the beneficiaries of that."

Sam Stewart named Wasatch after the nearby mountain range, keeping his own name out of the branding.

"I named it Wasatch because I fully hoped and intended it would survive without me," Sam Stewart says. "We're long past that stage."

"There remains probably no person on the face of the earth that is still as vested in Wasatch succeeding, and I'll be the same way a year from now, or two or three," Sam Stewart adds.

Sam Stewart says he's looking forward to working closely with sons Josh and Spencer.

"I have no idea how many miles I have left. I have flirted with the idea of retirement," Sam Stewart says. "I'm not planning on hanging up my spurs anytime soon." 

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