Select Equity Group is a financial advisor firm that manages billions in assets on an entirely discretionary basis. Most of these assets are in private funds, though clients can also have separately managed accounts that mostly use a long-only U.S. equity strategy. The firm's initial focus was U.S. small- to mid-cap companies, which then grew to large-cap companies, international companies and private equity investments. In 2015, the firm launched a private investment arm, called Astor Place Holdings.
Based in New York, Select Equity Group works with many different types of clients, including individuals, charitable organizations, businesses, other investment advisors and more.
Select Equity Group Background
Select Equity Group was founded in 1990 by current chairman and CEO George Loening. The firm has operated as a limited partnership since 2013 after a merger with its affiliate, Select Offshore Advisors, LLC, an investment advisory firm. Select Equity is employee-owned, but Loening is the principal owner.
The firm employs a large staff of advisors, several of whom have earned the chartered financial analyst (CFA) designation.
Select Equity Group Client Types and Minimum Account Sizes
While the vast majority of Select Equity Group's client base is made up of individuals both with and without a high net worth, it also maintains relationships with many other institutional and advisory clients. These include estates, trusts, banks, pooled investment vehicles, investment companies and advisors, pensions and other retirement plans, charitable organizations, government entities, insurance companies, pooled investment vehicles and corporations.
For a separately managed account, you need an initial investment of $250,000 million. To invest in a Select Equity Group private fund, you need to invest at least $100,000 and up to $5 million, depending on the fund.
Services Offered by Select Equity Group
Known for its extensive fieldwork and intensive research, Select Equity solely provides investment management. As noted earlier, it does this mainly through private funds, but does offer its long-only U.S. equity strategy through separately managed accounts. The firm’s 11 investment strategies are:
- U.S. Long-Only Strategy
- U.S. Core Strategy
- Concentrated Opportunistic Long-Only Strategy
- U.S. Long/Short Strategy
- International Long/Short Strategy
- International Long-Only Strategy
- Private Equity Strategy
- International Long-Only Large-Cap Strategy
- Global Long-Only Large-Cap Strategy
- U.S. Small-Cap Strategy
- Mobility-Focused Long/Short Strategy
Additionally, the firm acts as a sub-advisor for certain mutual funds.
Select Equity Group Investment Philosophy
Generally speaking, Select Equity Group doesn’t attempt to time the market or predict economic trends. Instead, the firm seeks to identify investments that it believes the market is currently undervaluing. The firm uses fundamental analysis as the backbone of this identification pursuit.
Fundamental analysis involves researching a company’s “fundamentals," which might include examining its financial documents and management history and considering the current macroeconomic environment. The firm stands out for using its own research rather than paying others on Wall Street. Its analysts, it says, look at "value chain analysis, studying suppliers, manufacturers, distributors and customers within a specialized area of the economy across market capitalizations."
Select Equity Group maintains nine different investment strategies, with perhaps the most prominent being the Small-Mid Capitalization/Long-Only strategy. All of these strategies primarily involve individual equity investments. However, the firm may invest portions of each client portfolio in some sort of cash element, such as money market reserves.
Fees Under Select Equity Group
Select Equity Group charges advisory fees according to a number of different schedules that can vary depending on the type of client, the size of their account and the investment strategy governing their account. For individual clients utilizing the U.S. Long-Only strategy, the firm will usually charge an annual fee of up to 2.00% of their AUM, divided quarterly. Accounts larger than $10 million may arrange to pay a performance-based fee. Private fund clients also pay up to a 2.00% management fee, plus performance compensation.
What to Watch Out For
Select Equity Group has one disclosure on its SEC-filed Form ADV. This is in reference to one of the firm's advisory affiliates.
Select Equity may receive performance-based compensation in relation to certain Private Fund and individual accounts. According to the firm's Form ADV, this may create an incentive for the firm to choose riskier or more speculative investments when managing accounts that have this arrangement, regardless of the risk tolerance of the client. However, the firm is still bound by its fiduciary duty to act in the best interests of clients at all times.
Opening an Account With Select Equity Group
If working with Select Equity Group interests you, there are a few ways to get the ball rolling. You can give the firm’s office a call at (212) 475-8335, or you can make an appointment to come into the New York office. It's located on the northeast corner of Lafayette Street and Great Jones Street, just a few blocks south of Astor Place.
All information is accurate as of the writing of this article.
Investing Tips
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