Meet the Director of the Marathon Helping Tampa’s First Responders Retire Rich
Across America, dozens of municipal pension funds remain shockingly underfunded. But not the Tampa Police and Fire Department pension fund, thanks in no small part to Jay Bowen, whose no-frills approach to stock picking has protected and served them for over 45 years.
Harold J. Bowen III has participated in so many triathlons that he has lost count. At 59, he’s training for his twelfth Escape from Alcatraz race, which means that next June he’ll swim 1.5 miles through San Francisco Bay, cycle 18 miles to Golden Gate Park. and will run 13 miles to Marina Green. Bowen describes his obsession with endurance sports as a “productive addiction” because many years ago he realized that exercise would help him fight his attention deficit disorder.
“I’ll keep going as long as I walk,” insists Bowen, thin and tall with a slight southern accent.
As the sole asset manager of Tampa, the $ 2.7 billion Florida fire and police pension fund, Bowen has built his success on focus and endurance. His company, Bowen, Hanes & Company, is not only the only first responder asset manager, but the pension fund accounts for nearly 80% of the fund manager’s $ 3.5 billion in assets. Atlanta.
In an industry where diversification is fundamental, Bowen is an outlier. The balanced strategy of his fund, a mix of roughly 70% equities and 30% fixed income, has generated a return of 15% (net of fees) over the past three years and 13.5% over the past five years, compared to 13.7% and 12.4% for the benchmark. index, respectively. This places the store manager in the top 1% of comparable pension plans, according to data from the Wilshire Trust Universe Comparison Service. Over 47 years, the fund has posted stock returns of 14.8%, beating the 12.6% total return of the S&P 500. In the past year, the Tampa Police and Fire Department have been entitled to a comeback by 32%. More importantly, actuarial reports show their pension is 94% funded, compared to 71% among municipal pensions, according to Wilshire.
“It’s tragic to say that Tampa is the exception and not the rule,” Bowen says, with a hint of pride, at a salmon salad lunch in historic St. Augustine, Florida. “We don’t get involved in any type of mutual fund, private equity or hedge fund. We’re unconventional and it’s boring, but it’s also a high-quality, long-term approach.
“Jay” Bowen, as he is known, inherited his pension management business from his father, Harold J. Bowen Jr., who founded the company in 1972 but who had been courting the Tampa pension fund for years. 60. Bowen III’s approach is “if it ain’t broke, don’t fix it”. Like his late father, he uses a top-down “thematic” method to select individual, mostly large-cap sectors and blue chips, usually with dividends. Another key to his business success is the 25 basis point fee he charges in Tampa, about half the industry average.
Graduated in English from UNC Chapel Hill in 1984, Bowen joined his family business in 1986. In 1989 he wrote a thesis on international economics at the London School of Economics and then carried out research in Washington, DC. , at the Cato Institute. , a libertarian think tank.
“My time at the LSE and Cato made me realize how important monetary policy is to the markets,” he says. “There are other important political regimes to watch – regulatory, fiscal and trade policy – but monetary policy is everyone’s grandfather.”
In the 1980s, Bowen, Hanes used the economics of falling interest rates and falling inflation to buy winners like Campbell Soup and Coca-Cola. In the 1990s, as a new global economy emerged after the fall of the Berlin Wall, Bowen’s largest holdings were in companies that would benefit from globalization, such as General Electric and Colgate-Palmolive. In the early 2000s, he saw an opportunity in China’s rapid growth and voracious appetite for natural resources, making big bets on mining companies INCO, sold to Brazilian Vale in 2006, and BHP Billiton. After the financial crisis, Bowen assessed which sectors the Fed would favor for easy money and leaned on the S&P 500 giants Apple and Microsoft, but also on consumer staples such as PepsiCo and Procter & Gamble.
Bowen’s current choices focus on tech companies disguised as industrialists. In other words, new technologies like AI, Internet of Things (IOT) and 5G are changing the outlook for industries like Charlotte, Honeywell in North Carolina, once best known for making home thermostats. Last November, Aerospace market leader Honeywell invested in Trinity Mobility, an Indian company whose IOT applications will soon be put to use in so-called smart cities. Honeywell also paid $ 1.3 billion a year ago for life science software company Sparta Systems.
Other less obvious tech games he favors include Johnson Controls, Union Pacific, Teledyne and Corning, which as the world’s largest manufacturer of fiber optic cables are benefiting from the growth of 5G networks. Corning is also a leading supplier of advanced glass used in iPhone displays, flat panel televisions and laptops.
“A lot of these companies are selling at a market multiple or below, and they have strong balance sheets and attractive yields,” Bowen said, noting Honeywell’s 1.8% dividend yield.
His approach is not smooth. It has long owned Swedish telecoms giant LM Ericsson, whose stock has been stagnant for more than a decade and is down 9% since the start of the year. “Their latest issues are with their Chinese exposure, but I haven’t given up on Ericsson,” Bowen says. “It’s right at the heart of 5G equipment, and there aren’t too many players in this area.”
Although Covid-19 had little effect on Bowen’s investment approach, he adopted the work-from-home philosophy, having moved his home and main office to Ponte Vedra Beach, just outside of Jacksonville. His biggest account is now about a three hour drive away.
“Large public pension plans will usually have 20 or 30 managers,” says Bowen, who notes that he has underwritten a few other pension funds, including that of employees in coastal Glynn County, Georgia. “We are fortunate to be involved in a fund that sees us as their base manager without constraints, allowing us to pretty much do whatever we want.”