Before we go any further, let’s get the credentials out of the way. I graduated from the Deerfield Academy in 1961 and the Swarthmore College in 1965. MBA in finance in 1972 from Washington University in St. Louis and passed the uniform CPA examination in 1978. I list all these names because some people may think that they are impressive brand names but they mean nothing without good investment results and investment results are never good without common sense strategies as the foundation. So read on to see whether what we do makes sense to you.
The following autobiography reflects the psyche of a highly ambitious and probably not very modest, only child condition to compete at high levels. This autobiography may be too long for a quick read, it is advised to brew a strong pot of coffee and to consume three cups of it before reading the entire text.
I was born in New York City on February 17, 1944. I was an only child. I do not know whether my parents planned to have only one child, but I am guessing that, after listening to my mother’s complaints about my stubborn, recalcitrant nature and after some years of negotiating with me, applying all the psychological behavioral techniques sanctioned by child learning experts and child development experts, my parents must have thrown up their hands in despair, and reconciled themselves to their fate of incessant struggle--with some moments of intense delight and pleasure--and correctly concluded that some battles were not worth fighting. Some battles could only yield--even if won--only the scantiest of rewards—and would, if wisdom not ego were to be exercised---be left unfought.
I like to think that there is a positive effect of being stubborn. I believe that effect is determination, sometimes ungracefully called stick-to-itiveness, an assiduous personality characteristic, or just plain hard work. The determination to do a thorough job, to cross all the T’s and dot all the I’s is a characteristic we need in the money management business. When a money manager is looking at a company’s financial quarterly results and the company claims that a litigation charge is an extraordinary item, not in the usual course of business, ought not to penalize results and the investment community’s view of the usual or recurring earnings power of the company, a stubborn or determined money manager ought not to be afraid to ask whether litigation of the same character occurs frequently, in fact so frequently as to be considered recurring or part of normal business activity. The money manager must be relentless in determination to correctly classify any expense; the money manager must also be attuned to the subtleties of the English language. If a company takes a large charge against earnings because of a failed product, and terms such failure immaterial is this correct, is this honest if such failures have occurred so many times as to be almost predictable? Today I am living in Oklahoma. I am proud of the firm that I, along with my colleagues, have created. However, I believe we can do much more in serving our clients and enhancing the intellectually and emotionally rewarding atmosphere at the firm.
But I am getting ahead of myself, or at least getting ahead of the story. My parents were of modest economic background. Modest is probably a genteel euphemism, at least for my mother’s situation. Born in 1916, in Brooklyn, New York, she was one of four siblings, three girls and one boy. Her father died when she was five, and I believe that it was a painful experience that was with her all her life. To make ends meet, my grandmother operated the neighborhood candy store that provided a barebones living for the family. To use a term that business schools have popularized, the candy store enterprise did not enjoy any economies of scale. It remained a small neighborhood store below Costco, the family’s living quarters. My father’s economic heritage was more sanguine, but not by much. Also born in New York City, but in the Bronx, my father, like my mother, did not have the fortune of attending college.
In the early years of my parents’ marriage, my mother, suppressing her feminist leanings, mostly stayed at home, washing the dishes, doing the laundry, and performing the many thankless tasks that a stay at home mom would perform in the nineteen forties and the nineteen fifties. She did these things, however, without the conveniences that a stay at home mom or a stay at home dad would enjoy today. There was no dishwasher, and the laundry machines were inconveniently located -- the washer and the drier were in the building’s basement, with coins required to operate them—and, from my experience dealing with the brutal summers of Oklahoma -- there was no central air conditioning. Window units impotent by today’s standards, and noisy by any standard -- were the best that money could buy. On a higher level, there were no health clubs conveniently located to my parents’ apartment and supermarkets, whose assortment of goods was miniscule to today’s offerings by Costco, Target, Dollar Tree, Dollar General, Walmart, and Whole Foods. In one sense the paucity of offerings was academic as people shopped without a car, as it was prohibitive to garage a car in Manhattan and supermarkets had no parking lots. A common sight, therefore, on Manhattan’s streets, was a woman pulling a cart full of groceries and soft items. When I was old enough to be left at home, my mother did enter the workforce; I am not for sure how she managed to perform a demanding secretarial job for forty hours a week as well as take care of the apartment we lived in. She was determined. She was the firm’s first secretary, working hard while I tried to cope with the demands of a new business. She was organized, well organized but --- this was 1987--- it soon became apparent to her that without computer skills she could not be as effective as she wished. A few months into my new business, she resigned. I was able to hire a young woman with whom I worked at a local bank trust department. She was versatile with computers and, like my mother, hard working.
I do not know how my father became interested in journalism. All I do know is that my father was a lucid writer and that I admired that skill. My father wrote for several New York daily newspapers, the last being the World-Telegram & Sun where, in his last position, he wrote a column, with his picture above the headline, on the advertising business. (Later, after my parents’ divorce, my father remarried. My stepmother, who was born in Portland, Oregon, attended Reed College there. After graduation she moved to Manhattan and earned a graduate degree from the Columbia School of Journalism).
In 1952, at the age of eight, and emulating my father’s absorption with writing and publishing and his love for newspapers, I decided that I would start my own newspaper. My parents and I were then living in a real estate development funded by the Metropolitan Life Insurance Company. I was the publisher, the editor, the writer, and the columnist for this newspaper, which went by the name of the Peter Cooper Weekly. (Peter Cooper Village was a collection of apartment buildings bounded by twentieth street and twenty third street and first avenue and the avenue that separated these buildings from the East River Drive or what was also commonly called the FDR drive. This was an urban setting. There were pockets of grass and some trees but if one compared Peter Cooper Village today with Utica Square in Tulsa, this is what you would say: there are far more trees per capita in Utica Square than in Peter Cooper Village. I knew that I had a small market; today we use the euphemism niche for such a market. Recognizing that I had a truly niche market in my hometown, a market with a maximum readership of approximately two thousand people, a market so small as not to interest any New York-based publication, newspaper or otherwise, I felt confident that my enterprise would flourish, especially if I priced the paper realistically.
There was no need for test marketing or any other expensive study to determine who would buy a paper that focused on what went on in the apartment complex. It didn’t take a genius to determine my target market.
After one year, encouraged by a rapidly growing readership, I raised the price of the paper to two cents. Obeying the economics law that says when a product has “inelastic demand” (a demand that anything selling at one cent would probably enjoy), the venture’s net profit and return on equity (an uptown printing firm for production and a singular capital expenditure for the purchase of a typewriter), I experienced a dramatic increase in profits. They rose so greatly that I contemplated retirement, but before doing so, I got lucky.
I had sold a copy of the newspaper to the producer of a nationally viewed television show, Judge for Yourself: Fred Allen Show, who arranged for me to appear on an episode a few weeks later. During this show, three contestants predicted which of the three songs the audience would like most, then the audience voted on its favorite. The contestants who guessed correctly would share a prize of $1000. That night, all the contestants guessed correctly, so I came home with $333.32, which given the progression of the Consumer Price Index from 1954 to 2020 would be worth about $3,174.73 today.
I grew up in a family whose fortunes were linked with the newspaper business. My father wrote for the Daily News (founded 1919 as the Illustrated Daily News—it was the first US daily newspaper printed in tabloid format), the New York Journal-American, and finally the New York World-Telegram and Sun, the last two of which struggled after the advent of evening television news and breathed their last in 1966 after a short-lived merger. My stepmother was immersed in the newspaper business as well, writing a daily column for the New York Times.
My father was writing in the golden age of journalism. In 1954, New York City alone had seven major newspapers, each publishing several editions every day. Today’s major newspaper: The New York Times and the Wall Street Journal. Few people had televisions and television news, especially the evening editions, were no threat to the supremacy of newspapers. My father’s salary was not impressive but because of his column’s influence he could wield much power and enjoy many tax free privileges such as dining on the house in New York’s best restaurants where the waiters were professionals who knew food and drink and could tell you which wine to drink with what entrée. They knew how to interrupt a conversation without appearing to do so and would come by the table and say “…guys, is everything tasting ok?” These professionals knew how to take an order, to present the dish, and otherwise to infuse the experience with class, even though one patron, a rough teenager might not yet know what class and style were all about. Powerful chief executive officers, and the public relations departments they ruled, sought mention in my dad’s column. One day the public relations head of Merrill Lynch called asking whether my dad would interview Charlie Merrill, the founder and principal partner of Merrill Lynch, Pierce, Fenner and Beane, the country’s dominant stockbroker. At his office, Merrill and my dad must have enjoyed their time together during the interview and must have developed some rapport. It so happened that my parents had been seeking a more competitive environment for me than offered in the New York City public schools. However, they were not sure how to do this. When it came to knowing their way around higher education, my parents, neither of whom had been fortunate to a fancy office on Park Avenue east side office where a well-dressed, well-spoken, refined woman held herself out as an expert in private secondary school education. After patiently listening to my parents brag about my educational achievements at Junior High School 104, she suggested that they look at four schools: Exeter, Andover, Deerfield And Lawrenceville. Charlie, my father said, I have not had the fortune of going to college, and neither has my wife, so we know nothing about these schools. But I am sure you do. Well, Charlie said, I have some knowledge about Deerfield. How is that? Well, my roommate at Amherst is the headmaster of Deerfield and I am head of the Board of Trustees and I said, not too modestly, that I probably give more money to the school than anyone else. So, I can make a call for your son, but before I do, I want you to know I have great respect for the Deerfield headmaster, Frank Boyden, and so I want you to promise that if after I make a phone call to him on your son’s behalf, which is not guaranteed to do anything, your son, if accepted and attends, will work hard and respect my friendship with Mr. Boyden. “Do not worry, Charlie, my son will work hard if he gets accepted at Deerfield,” my father replied.
I write about Deerfield Academy because my four years put an indelible stamp on me that affects much of what we do in our firm. Almost everything we did at the school reinforced the spirit and the drive of competition and the need, or the desire, to excel in everything we did. From the first class through athletics there was the pressure to achieve. Even in extracurricular activities, there was a pressure to be the best. I am not sure that was always healthful. But it was a powerful dimension of reality at the school. You might think that after competing in the classroom and in athletics one could relax. But that was impossible. You competed to be on the school newspaper to write the most interesting article. I was competitive but I was also quiet and not aggressive according to the conventional definition. If I had to compete after school in athletics it would be over the chess board. I became President of the chess club. I had learned to play chess when I was eight years old and on vacation during the school year when I was home I would take the subway to the Manhattan Chess Club, play some chess, and watch people like the temperamental Bobbie Fisher, the three times world champion, play chess, and I would buy books on chess and study all the moves of the grand-masters. I am told that chess requires great planning and organizational skills requiring a player to anticipate moves of the opponent after one’s own move, and to anticipate your moves and so on and to keep all these possibilities locked in your mind, a difficult task as the possibilities skyrocketed in number after your first move was made.
The good thing about Deerfield was earning the value of discipline, execution, and the importance of routines, and pride of achievement and workmanship. The bad thing was that Deerfield was infused with an authoritarian culture, which was no surprise as Frank Boyden, the headmaster, held his post from 1902 through 1968, a tenure that had near rival in the longevity of prep school leadership, he was a hard worker and emphasized discipline and getting the assignment done; challenge to his authority or to the authority of teachers if not actually prohibited, was certainly not encouraged. Today we respect achievement and we respect the strength that authority brings, if backed by knowledge and compassion. But the last thing we want here is a blind adherence to rule and to authority. We want to challenge everything. We want to put the word WHY on a pedestal. If someone says that a certain way of writing is best, we will challenge this assertion. Any tension that such constructive challenge creates is outweighed by insight, growth and self-expression and group teamwork that such a challenge creates. If I have been studying a company over the weekend, and I am excited by it, I bring the idea to Kristen Jabbour and she, with logic and facts, rebuts my thesis I am greatful. That challenge is indispensable to the success of any firm, such as a money management firm, that relies on the freedom of expression to offer and refine an idea.
I asked Jessica Day if I could write something for Deerfield Magazine. As soon as she said yes, I was reminded of this universally recognized warning: Be careful what you wish for. Now I was competing with an internationally celebrated group of writers who had graduated from Deerfield.
I had brazenly promoted myself to an elite cadre of Deerfield graduates recognized for their writing prowess: there was John McPhee ’49 whose attention to detail and mellifluous conversation-like prose had endeared him to millions of readers. His catholic grasp of a wide range of subjects included a beautifully crafted biography of Deerfield’s legendary headmaster Frank Boyden. There was a Budd Schulberg ’32 whose novel, What Makes Sammy Run? (1941, Random House), brought to prominence the toxic effects of the narcissistic personality, and whose screenplay for On The Waterfront (1954, Columbia Pictures) starring Marlon Brando told a searing story about the Mafia controlled New York City based longshoreman’s union, and whose The Harder They Fall (1947, Random House) was a brilliant and troubling expose of the corruption that pervaded professional boxing: the 1956 film version of which was the last movie Humphrey Bogart ever made.
As I thought about what is unique about Deerfield, I began to think about what is unique about every institution—school, corporation, and family—that has survived and prospered over many generations and landed on this: integration of great values and adaptation to change to meet the demands of a new society. Deerfield has been able to do this, and I wondered how it had accomplished this feat. Schools have developed high academic and ethical standards and married such standards with adaptation to the challenges of successive eras are unusually strong. Deerfield is one such school. But how could I trace the achievements of the school, starting with the first years under Frank Boyden and finishing with contemporaneous Deerfield? What would best describe such evolution? Was it a system, a phrase, or perhaps a word that explains the school’s success across the ages?
A few weeks later, reading an article in a scientific publication, I came across the word atavistic, which is usually considered to mean what is primitive or what is, especially in science, a biological throwback. But there is another meaning or use—less common—that atavistic suggests: It is the ability to retain what is great from one era and integrate this greatness with intelligent adaptation into a new period, another era. This is the genius of Deerfield: All the great values that Frank Boyden inculcated in his students have been retained and embellished by his successors—from David Melville Pynchon to Margarita O’Byrne Curtis, incorporating them into the new Deerfield.
Few institutions accomplish this, that is, create a truly positive atavistic experience where young men and women realized their emotional, intellectual, and athletic potential.
Charlie Merrill must have gone to bat for me. Within a week John Boyden, the school’s admission director and Frank Boyden’s son, called my father and said that if we were to take the Boston and Maine railroad next Sunday to Greenfield, Massachusetts, and then a taxi for three miles to the headmaster’s house within one hundred yards of Main Street in Deerfield Frank Boyden would meet us at one pm at his house.
I entered Deerfield as a freshman in 1957. I can never forget taking the train from Grand Central Terminal in Manhattan on a March Sunday in 1957 to have an interview with Frank Boyden after lunch in his house, which was situated on campus in 1902 and had taken a virtually bankrupt school to one enjoying international acclaim.
The personal touch, respect and courtesy, is something that Frank Boyden brought to Deerfield and instilled in his students and faculty. He didn’t spend more than five minutes with us, but for a man of such power and prestige to personally admit a twelve-year-old for admission was an experience that my parents and I always remembered.
In four years under the benevolent authority of Boyden, my fellow students and I learned that in every dimension of our lives, it was our responsibility to work and compete to our potential and to uphold the values of the school, such as respect for everyone; respect for the roles, the jobs, and the beliefs of everyone else. If you enjoyed economic or social privilege, or in the case of a student at Deerfield, the privilege of attending a great academic institution, it was a privilege that ought not to be held in a boastful or superior manner. If you were lucky or fortunate enough to have enjoyed such privileges, then they ought to be enjoyed quietly, with discretion. They were never used to demean any of those who had not been as fortunate.
Few institutions retain the best of their culture as they move into different eras, while simultaneously remaining dynamic and of central importance. Those that manage to do so by selecting their subjects of emphasis and concentration judiciously and not in response to fads or short-lived trends; they introduce new dimension to their organisms so that they remain attractive to, for example, students in a modern setting: Reading with insight and writing with clarity remain indispensable, but being facile with computers is now mandatory for control of one’s personal and business careers, and Deerfield has restructured the curriculum to reflect the demands of both the traditional and the contemporary.
Today, students sit around a table with the instructor and thus can constructively challenge each other as well as the teacher. There is another reason why Deerfield has adapted well to the 21st century: In 1988 the school returned to admitting girls, thereby giving both boys and girls a rich experience, and a dimension in interpersonal learning that was not available when I was in school. With the potential applicant pool larger, the standards for admission have risen. As a classmate and good friend of mine, John Suitor, who was head of the Aspen Country Day School, told me a few years ago, “Freddie, you were really smart, but you would not be accepted today.” The first part of this statement is subject to audit and verification. The second part is most likely accurate.
Today I live in Oklahoma, where we are known for swaggering, wildcatting oil millionaires (and three billionaires), college football at the University of Oklahoma and Oklahoma State University that is played on almost as high a level as the National Football League, and two internationally recognized programs in petroleum engineering. We have two vibrant investment communities in Oklahoma City and Tulsa, the latter of which I am a part. Unfortunately, we also have sweltering summers where the temperature often exceeds one hundred degrees Fahrenheit for consecutive weeks. In Oklahoma, air conditioning in not optional. It is a necessity.
Nevertheless, we cannot hide from the sun and heat forever, and by July we begin a desperate search for a cooler climate. My tastes in vacation are eclectic. Last year I wanted a place that was cool and quiet with a swimming pool. Why not Deerfield? I thought. It is quiet, it is beautiful, and it offered my kind of entertainment and recreation: My stimulation would be the Boyden Library; my recreation would be the Koch Pool and walking around the beautiful town and the tranquil campus.
I made reservations at the pleasant Deerfield Inn and found a flight on American Airlines that would take my friend and myself from Tulsa to Chicago where we would switch planes and fly to Bradley International in Hartford, CT. From there it would, according to Google Maps, be a fifty-minute drive along Interstate 91 and US Highway 5 into Deerfield. Finally, I made a right turn onto Deerfield’s Old Main Street. I felt as if I was in a different world. It was quiet. There were cars but no traffic, no neon signs, no billboards. You could not hear the unpleasant sounds of interstate traffic. The houses were beautiful and there was a harmony in their design and appearance without the plastic assembly line feel of many suburbs or the cacophony of many urban neighborhoods with monotonous, nondescript or ugly facades juxtaposed against another. As I slowly drove down the Street, I felt that I had been transported to an atavistic period, but not in the primitive sense of the word but in the sense of being thrown back to a world that was more orderly, less frenetic, more peaceful than today, all enhanced by a quiet, impressive sense of respect for education and learning, intertwined with a respect for civility. And as I drove up to the Main School Building, the respect for order, for learning, and for curiosity was as palpable as when I first walked into the same building in 1957.
I may have been the best student at Junior High School 104 in Manhattan but, in the first few weeks at Deerfield I realized that I was in a different, much more academically competitive environment. I quickly realized that if I worked hard, I could finish in the top half of my class and that would be something to be proud of. We took an IQ test early in the fall. My score was 134. That was pretty good but when I heard mention of scores in the 140s and even some in the 150s and 160s I realized that a lot of study was ahead of me.
What did Deerfield do for me? How did it mold me? Frank Boyden believed in discipline and hard work and no one worked harder than he did. Taking a school almost bankrupt in 1902 so far that in 1961, when I graduated, more than half of the graduating senior class matriculated to Harvard, Yale, Princeton, Dartmouth, Amherst, and Williams. (Three of us applied to Swarthmore, which then had the highest SAT scores in the country of its freshman entering class. Two went to Swarthmore and the third, Rodgin Cohe, went to Harvard and then to Harvard Law and subsequently became chairman of Sullivan and Cromwell, and became famous as the attorney who helped the Treasury and Federal Reserve execute programs that, in the financial crisis of 2008, helped the country, and the world escape financial disaster. He became known as the Trauma Surgeon. Boyden believed in keeping young men busy. He believed that if there were sufficient obligations every day and logical routines boys would be productive and stay out of trouble. Accordingly, he mandated that everyone had to compete in a sport in all three seasons. Every day you were required to go to breakfast, lunch and dinner. During the day, before athletics, you were required to attend two study halls as well as class. After dinner, there was a required meeting for all students and faculty. That was at seven p.m. It was a short meeting so that evening study hall required everyone to begin at seven thirty and end at nine thirty. You could stay up until ten if you were a freshman and ten thirty if sophomore, junior or a senior. This rigid, or benevolent authoritarian approach, extended into the classroom. Teachers were rarely questioned and back and forth, what I call constructive challenge, was notably absent. Years later, I gave credit to the routines for discipline but I believed that a more open approach to education with students encouraged to challenge the teacher and others would have been constructive. Today, in our firm, we work hard to create a culture of constructive challenge. In a company for investment, I hope that my colleagues will challenge me on the assumptions in my presentation and the logic of my conclusions.