A recent article about my buddy Jeff Arricale. He said he mentioned me and Lisa Smith-Batchen for the article but we must have been edited out.
INVESTOR PROFILE-T Rowe financials manager goes the distance
[07-August-2009]
By Claire Milhench
LONDON, Aug 7 (Reuters) – Any fund manager steering a financials fund through the credit crisis might be forgiven for putting their feet up after leaving the office, but T Rowe Price’s
The 38-year-old has tackled both the Great Wall Marathon in China and the six-day 150-mile Marathon des Sables in the Sahara in the months since the wheels started falling off the banking system.
It has given him a break from market turbulence and a chance to raise awareness of interstitial lung disease, which has affected two of his four children.
Arricale says the hardest single day of running was in the Grand Canyon Rim-to-Rim last year. “It was about 120 degrees at the bottom of the Canyon — it was brutal,” he told Reuters.
Markets have been brutal too since Arricale became head of T Rowe’s global financials team and manager of the $292.07 million Financial Services fund in March 2007.
“The timing was horrific — the S&P Financials peaked and has been going down until this March,” he says. The fund is down 17 percent in the 12 months to end-June, according to Lipper data, but has outperformed funds in the Lipper Global equity banks and financials sub-sector by 12 percent.
Arricale says he has benefited from having a strong team of analysts and the support of T Rowe. “The fund’s relative performance was pretty good and the management allowed us to take a long-term view.”
The team “stubbed its toes” on some names such as Lehman but never held big positions in stocks that went under. “We also lost less than most of our peers by buying convertibles and as things bottomed in March we added significantly to positions.”
SPECULATIVE EXCESSES
Arricale, who has an accountancy degree from the University of San Diego and an MBA from the Wharton School, joined T Rowe in January 2001 as an analyst, after a summer internship following technology stocks.
“It was just after the bubble burst, but it was a good time to come into the business as I learned a lot about speculative excesses and valuation,” he says.
It was around that time too that Arricale took up marathon running, with a first race in Baltimore, where T. Rowe Price is based. When the financial crisis hit in 2007 he needed something more to blow off steam, he said.
He decided to run the Great Wall Marathon, among the toughest of the 26-milers as six of those miles are on the steps of the Wall.
He trained by running up the stairs in T Rowe’s Baltimore office for hours, which paid off when he got to China. “It was 90 degrees and humid, and you had the steps, so it felt like an ultra-marathon,” he said.
Lunch with former T Rowe colleague Aran Gordon led to his next challenge — the Marathon des Sables across the Sahara, where runners carry all their own kit apart from their water.
“That’s the toughest race I’ve done — the 50 mile stage took me 19 hours to do, and I ran through the night,” he said. “There’s also a day of sand dunes and one section where you’re climbing and hanging on to a rope.”
Arricale says a lot of participants suffer from blisters or nausea but he finished and raised over $100,000 for charity. His Great Wall run had already raised another $60,000 for the Johns Hopkins hospital where his children are treated.
WELL POSITIONED
He is wary on the prospects for his portfolio, but feels he is well positioned with top 10 holdings including JP Morgan Chase
By 2012, he believes bank earnings will have normalised, although he sees billions of dollars of losses in the meantime, particularly from commercial real estate. “But the banks have raised $150 billion of equity capital and with strong revenue generation they should be able to earn their way out of the next phase in the cycle,” he said.
As a result he expects a lot of the sector to trade at significantly higher prices in the next couple of years.
Arricale recently hung up his ultra-marathon running shoes to take up a new challenge, boxing, targeting a legitimate amateur fight next spring or summer.
“It’s a very different community than the circles I normally travel in,” he says. “It’s an inner-city gym with people who are struggling to live, to stay out of jail, not just be the best they can as boxers. It’s a humbling experience.” (Editing by David Holmes)
Company Codes: NASDAQ-NMS:TROW, NYSE:STT, NYSE:WFC
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