Although no one knows where the economy is headed, most agree where it has been recently and that there has been plenty of carnage. But Annandale Capital LLC, a Dallas-based investment-management firm founded by George Seay, seems to be thriving in hard times. Annandale has had a banner 2010, attracting new clients and approaching half a billion dollars under management.
These days Annandale’s chief executive Seay, 43, is bounding energetically around the globe on behalf of the firm’s clients and, in his spare time, playing a key role in helping reshape one of Texas’ major political parties. He’s motivated in both endeavors, he says, by the need “to uphold a tradition of … duty that runs very deep on both sides of my family.”
If Seay’s family name sounds familiar, it should. George Edward Seay III is a seventh-generation Texan whose ancestor John Cartwright came to Texas in the early 1800s. He’s also the fourth generation in a line of Dallas businessmen who were successful entrepreneurs, devoted to Dallas and Texas, generous philanthropists and civic leaders who were keenly interested in both politics and public policy.
One of Seay’s grandfathers was a prosecutor at the Nuremberg Trials and led his own labor-law firm, which eventually merged into Dallas’ modern-day Haynes and Boone firm. His other grandfather is Bill Clements, who served as the first Republican governor of Texas since Reconstruction, from 1979-1983, and again from 1987-1991. Seay’s great-uncle, the late Charles Seay, left his name and imprint on the UT Southwestern Medical Center, Texas Scottish Rite Hospital for Children, Children’s Medical Center, and buildings at the University of Texas at Austin.
An enthusiastic, optimistic man with a thatch of reddish-brown hair and a seemingly permanent smile, George Seay [pronounced “see”] watched his own career as a businessman and civic leader take more than a few twists and turns before he started Annandale Capital. He turned down opportunities to attend Princeton and Stanford universities, for example, because he thought he could play football for the University of Texas at Austin. “I failed my knee tests,” he recalls wryly, “so I had no choice but to start studying.”
After earning a B.A. degree at UT, he went on to law school at Southern Methodist University and joined a North Texas law firm. “Loved the people, hated the work,” he says of that period.
So Seay returned to UT in Austin for an MBA in finance and then, at his great-uncle’s urging, founded his own investment firm in Dallas. It soon branched out from advising about stocks and bonds to a broader range of investments: oil and gas, real estate, private equity, venture capital, commodities, timber, hedging instruments.
Today Annandale has a very specific business philosophy: research, plus protection of assets. “If you can invest in it, we research it,” says Seay, who is a chartered financial analyst. “We do qualitative and quantitative research. We want a decent return, but our goal is protection.”
The firm’s literature says that Annandale invests “clients’ capital across multiple asset classes and geographies,” which essentially means investing in anything, anywhere. Annandale acts like Mission Control, in a sense. Its clients entrust their wealth to Annandale, and the firm creates a customized portfolio, picking specialists in different areas.
As investing has grown immensely more complex—as people who lost money with Bernie Madoff, as well as with brand names like Bear Stearns and Merrill Lynch, have discovered—it’s difficult for even the wealthiest to devote the time needed to choose the best managers. Seay and his colleagues claim to scrutinize thousands of managers each year and to interview about 250, searching for something exceptional.
One of Annandale’s managers is John Fichthorn of Dialectic Capital, a New York-based equity fund. He says most clients invest with the firm because they are looking for an alternative investment approach . “It takes a while to understand what we do and how we do it—not because there is some kind of black box, but because we use multiple unorthodox tactics,” Fichthorn says.
He says that Annandale’s Seay stands out because, “only when you put them all together does it start to make sense, and George took the time to figure it all out. They not only dug into our strategy, but they spent the time to comprehensively verify our operational details to make sure we were doing what we claimed.”
Orlando Montagu of Odey Asset Management LLP, a London-based hedge fund and public stock manager and another Annandale manager, calls Seay “the perfect client—an old-fashioned homo universalis” who “likes to cover a wide variety of topics, which allows him to be creative and think laterally.”
Ben Nickoll, another Annandale manager who’s co-founder and managing partner of Ore Hill, a credit-focused, event-driven fund manager in New York, says he was attracted to Seay’s preference for highly specialized experts. “We have invested in and traded the securities of hundreds of companies that remain ‘junk’ credits,” Nickoll says. “I think [Seay] appreciates that we are very focused on our niche—U.S. distressed-high yield—and we don’t stray from that mandate.”
He even compares Seay to the legendary investor Warren Buffett. “George can size up a situation quickly and clearly,” Nickoll says.
Clients of investment firms, especially those who’ve switched from other firms, are typically reticent about being quoted by name in news or feature articles. But Seay’s clients are unusually forthcoming. Tom Luce, a former deputy secretary of education and prominent Dallas lawyer who’s known Seay for 10 years, says that, “in selecting a financial adviser, factors one and two are trust and integrity.” Seay, he says, is “totally focused on his customers, night and day. Factor number No. 3 is: he’s smart enough to hire smart people.”
Another fan of Seay’s, St. Louis-based philanthropist Barbara Bryant, supports nonprofits around the world, ranging from the Bowery Mission in New York City to the University of Virginia to the Alpha Project, a Christian Apologetics ministry in London. Bryant says she moved her accounts from the giant Neuberger Berman firm in New York City to Annandale, “because I wanted to increase the diversity in my investments across individual securities and asset classes, but [also because I] wanted one ‘go-to’ adviser. Integrity and trust should be a given in a financial adviser, but they are not.”
Bruce Zimmerman, CEO and chief investment officer of the University of Texas Investment Management Co., a $24.5 billion money-management company that manages money for the University of Texas System, says in-person meetings are important to ensure a money manager’s integrity and trust.
Zimmerman, who does not work with Annandale, adds that “capital markets are global, so having advisers or managers with global reach is important. The manager or adviser needs to take the time and effort to travel to the various localities where the money will be put to work.”
That investment-research process routinely keeps Seay on an airplane, flying to the predictable financial capitals of New York and London, but also to Zurich and Lugano in Switzerland, Tokyo, Singapore, Hong Kong, Dublin, Abu Dhabi, and Dubai. Reporting for this article, for example, we tracked Seay down en route from Spain to France. Still, he says his is really not an international firm—“just global”—and that 60 percent of Annandale’s investments are in the United States.
Almost everyone interviewed for this story commented on Seay’s “curiosity,” and noted that he’s constantly reading. Luce says that Seay “once gave me a book on the Comanches.” Montagu says Seay is likely to hand you “an 800-page novel in economics or American history, and you know he’ll be asking questions.” Adds Nickoll: “Every time I see him, we have a conversation about the latest book about our industry.” Besides reading, Seay also enjoys coaching his three children in volleyball, soccer, and football, and listening to some of the more than 10,000 songs on his iPod.
Seay’s fascination with American history may be partly responsible for his latest undertaking: “remaking” the Republican Party of Texas. He credits his grandfather Clements, who continues to live in Dallas, for the effort. “We’re very close and similar,” Seay says. “I inherited a lot from him about what you’re here for and what life is. You’re here to work hard, to take care of your family, and to give back to your community.”
Seay took on the position as chairman of the Associated Republicans of Texas, a statewide political group, with his co-chair, Hector De Leon. De Leon’s was a purposeful choice because Seay believes that, in order to thrive, the Republican Party needs to focus on a pro-business environment and to reach out to Hispanics. He and De Leon, a well-known Austin lawyer and recipient of this year’s University of Texas Distinguished Alumnus Award, have recruited what Harvey Kronberg of Quorum Report calls “a who’s who of Republican business leaders” for ART.
The group’s members include such high-profile Dallas businesspeople as Robert Rowling of Omni Hotels; Ray Washburne, who leads a partnership that recently acquired the upscale Highland Park Village shopping center; Dallas Stars owner Tom Hicks; and Harlan Crow, CEO of Crow Holdings. Other members of the organization include business heavyweights such as Dee Kelly and Kit Moncrief from Fort Worth and Red McCombs from San Antonio.
Texas “cannot go the way of California or New Jersey,” Seay says. “We must maintain a pro-business and economically vibrant atmosphere.”
What’s the main obstacle to this goal? Republicans, Seay answers surprisingly—or some of the Republican establishment, at least. Though he declines to name names, Seay says the party has created an image of being angry and favoring big corporations, rather than standing for opportunity and entrepreneurs. “When anyone is in power for a long time, they get comfortable and complacent,” he says. “Hispanics and young people are not favorable to the Republican Party right now.”
Not everyone’s a member of Seay’s fan club. Darlene Ewing, chair of the Dallas County Democratic Party, agrees with his assessment of the GOP’s current image in Texas. Ewing contends, however, that Seay is “the kind of Republican who wants to make sure that government works for the benefit of business, instead of [for] middle-class America. … George is open about the fact that ART’s focus is on winning seats to control redistricting.”
Seay shakes off such criticism, and has successfully recruited people like Arcilia Acosta to join ART’s board. Acosta, CEO and founder of a Carcon Industries, a Dallas-based construction and engineering company, says she has turned down dozens of invitations to join boards of nonprofit organizations and public companies. But not Seay’s.
Her company is the general contractor for DART’s Green Line light-rail system, currently the longest light-rail building project in the country. Acosta accepted Seay’s invitation because she, too, believes that entrepreneurial endeavors are especially important to ethnic minorities. “Small business and the new generation of entrepreneurs are being led by Latinos, and George understands how important it is to involve that generation,” she says.
In addition, “George is very genuine,” Acosta says. “His commitment, his follow-through—it’s real. He never asks you to do something he wouldn’t do.” This allows him to build on commonly held issues, she says. “Republicans have strong family values and navigate the difficult ones with the potential to divide—especially immigration,” Acosta says. “All of us are sensitive about [that] issue. It’s a federal issue and Republicans should treat it as such. It won’t be resolved with fences and walls. Laws need to protect our country and citizens, but we need not create animosity for people who are [already] here.”
Domingo Garcia—a Democrat, former Dallas state representative, former Dallas mayor pro tem, and current president of the local chapter of the League of United Latin American Citizens—agrees. “I wish [Seay’s group] luck, because Ronald Reagan and George Bush did reach out energetically to the Hispanic community,” Garcia says. “[But] ART has a difficult task, because the anti-immigrant-feeling, right wing of the Republican Party has alienated large numbers of the Hispanic community.”
One suspects it’s just one of many “difficult” tasks George Seay is likely to embrace in the years ahead—with curiosity, enthusiasm, high-minded purpose, and, of course, Texas family pride.