The London Company of Virginia is a fee-only, privately-held investment management firm based in Richmond, Virginia. The firm's advisors manage billions of dollars in client assets, depsite having a moderately sized advisory team.
The firm mainly works with institutional clients, such as investment companies and retirement plans. However, through these relationships, the London Company has a number of institutional clients with and without a high net worth.
The London Company Background
Established in 1994, The London Company is an independently owned registered investment advisor (RIA) founded by chartered financial analyst (CFA) Stephen M. Goddard. Goddard is also the firm’s director, CEO and chief investment officer (CIO). The firm’s chief focus is on managing domestic equities with a long-term orientation, according to its firm brochure.
The firm’s team includes 10 CFAs and one certified public accountant (CPA).
The London Company Client Types and Minimum Account Sizes
The firm’s client base consists of individuals and high-net-worth individuals, pensions, foundations, Taft-Hartley plans, profit sharing plans, banks or thrift institutions, investment companies, trusts, estates and charitable organizations.
The London Company imposes a minimum account size requirement of $10,000,000.
Services Offered by The London Company
The firm provides asset management services through wrap fee programs and sub-advisory programs. Advisors also offer non-discretionary services through model portfolios.
The London Company Investment Philosophy
The London Company says it believes in active management and that its process is driven by fundamental research, according to its website. The firm offers a range of investment strategies through mutual funds and separately managed accounts (SMAs). These include its sub-advisory funds, Small Cap, Small-mid Cap, Large Cap, Income Equity, Mid Cap, Concentrated and All Cap 25 strategies.
The firm says its investment process is driven by optimal diversification and a focus on cash return on capital. Its principles include the belief that the value of a company is decided by cash inflows and outflows discounted by the optimal cost of capital, according to its firm brochure. The London Company says it also seeks the following: consistent free cash flow generation, high return on capital, predictability and stability and conservative valuations.
Fees Under The London Company
For SMAs, clients pay asset-based fees which are payable quarterly in arrears, according to the quarter-end account value. Fees are based on a percentage of AUM, but differ according to strategy.
Here's a summarized breakdown of what percentage of assets you might pay in fees for SMA services at this firm:
|The London Company Fee Schedule|
|Strategy||Annual Fee Range|
|Concentrated||Up to 1.00%|
|Income Equity||0.60% - 0.75%|
|Large Cap||0.60% - 0.75%|
|Mid Cap||0.50% - 0.75%|
|Small Cap||Up to 1.00%|
|Small-Mid Cap||0.70% - 1.00%|
The London Company also advises wrap fee accounts sponsored by other firms, for which clients pay a single fee to the program sponsor. The firm offers performance-based fee arrangements, with rates of 15% on the amount by which the net profit exceeds 6%. If you’re planning on investing with The London Company, your expenses may also include custodial fees, deferred sales charges, odd-lot differentials, transfer taxes and wire transfer and electronic fund fees.
The London Company Awards and Recognition
In 2012, The London Company was named as one of the top 10 performing separate account managers by Pension and Investments, an international money management newspaper. On another listing in the same year, Pension and Investments recognized the firm as a top performing small cap blend manager. Lipper, a financial services company, also named the firm as a top manager in 2012.
The firm was also recognized in 2016 when Touchstone Investments named it as its Sub-Advisor Of The Year.
More recently, in October 2020, its Income Equity strategy was awarded Active US Large Cap Strategy of the Year at the Pension Bridge Institutional Asset Management Awards. Additionally, its Mid Cap strategy was among a select group of nominees for Active US Mid Cap Strategy of the Year.
What to Watch Out For
The London Company’s Form ADV doesn’t list any disclosures, according to its most recent SEC filing.
The firm is mainly compensated through asset-based fees, but it also earns performance-based compensation. Its side-by-side management of asset-based accounts and performance-based accounts creates a potential conflict of interest because performance-based accounts charge higher fees. The firm has a fiduciary obligation to prioritize each client’s best interest.
All information was accurate as of the writing of this article.
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