His winning investing strategy has earned mutual fund manager Chad Meade (FIN ’99) a few coveted industry awards and some good press. The Janus Triton Fund co-portfolio manager and executive vice president was lauded in Smart Money last summer as one of seven “young gun” mutual-fund stock-pickers who could be among “the next generation’s greatest investors.”
Meade and co-portfolio manager partner Brian Schaub have also been featured in The Wall Street Journal and Investment Advisor; their fund took the gold in the U.S. small-cap stock category in Standard & Poor’s first U.S. mutual fund excellence awards program in 2010 and the bronze in 2011.
Meade, who began co-managing the fund in June 2006, says the fund’s five-year track record ranks in the top one percent of its peer group. It gained 11.74 percent on average a year, compared with 6.67 percent for its primary benchmark, the Russell 2500 Growth Index, representing an annualized outperformance of 5.07 percent.
The accolades, attention, and financial rewards are nice, he says, but what matters most, he says, is fulfilling his duty as a fiduciary to his clients and fund shareholders. “I am extremely proud of our record. The most rewarding aspect is knowing I may have helped someone earn some extra money for a vacation, a home, a child’s education, or improved someone’s overall retirement potential. Our mutual fund vehicles represent a way for ordinary people to invest their savings, and my goal is to deliver the best investment performance to help increase and compound their investment over time.”
Humble but hungry
Meade (whose wife Misty is also a Pamplin alumnus — marketing ’00) joined Janus Capital Group in 2001 and has lived since then in Denver, Colo., where the company is headquartered. The Mile High City in the Rockies is a long way, in more ways than one, from the coalfields of Wise County, Va., where Meade had his “humble beginnings” (to quote his brother Chuck, another Pamplin alumnus — finance ’96).
Growing up in the small town of Coeburn, he was taught early on “to stay humble but hungry,” Meade says. “The overall ethos of the coalfields can be described as hard work, dedication, and humility, and for me it was no different. I had the blessing of two great parents, an older brother, and a large extended family that have always prided themselves on these values.”
He knew little about Wall Street or the asset management industry. “The overall per capita income is about $15,000, so most people are focused on making ends meet rather than investing for a future.”
From Main Street to Wall Street
Graduating from Virginia Tech, Meade found a job at Goldman Sachs as a sell-side financial analyst covering the transportation sector. Among his projects was the UPS initial public offering, which, at $5.5 billion raised, was the largest IPO in U.S. history at the time.
He enjoyed his work at Goldman Sachs, but his long-term aspirations included managing money, which he had experienced as a member of the SEED student group on campus. “I wanted to be able to ‘pull the trigger’ as a buy-side participant rather than making a recommendation to do this as a sell-side analyst. I find the immediate and tangible feedback of making a good investment much more fulfilling.”
When the job at Janus beckoned after two years at Goldman, he headed west, excited at the opportunity to examine a wide range of companies rather than focus on a single industry.
He and co-portfolio manager Schaub manage about $4 billion in the Triton and, since 2010, Venture funds. Their responsibilities include doing research and assembling a portfolio.
“We work closely with our investment team to identify small and mid-cap growth companies that have the ability to be good investments over a long period of time,” Meade says. “We build detailed financial models and conduct grassroots research to understand the competitive dynamics and position of each company and evaluate its financial health and income potential in the future. This fundamental analysis helps us construct a portfolio that we believe is poised to appreciate over time.”
Investing for the long-term
His team’s investment philosophy is “grounded in the belief that companies that have a sustainable competitive advantage, operate in a large addressable market, and have a high-quality business model have the potential to increase in value over time.” Focusing on the durability of competitive advantage, Meade says, is critical in small-cap investing — “any small company that demonstrates success will inevitably face competition from larger companies; its long-term fortunes will be based not only on how it defends but also advances its overall market position.”
He looks for “long-term value creation opportunities,” rather than “the fad or the flavor of the day, which often absorbs Wall Street’s time and attention.” This longer-term focus, he points out, is reflected in the turnover of his funds’ portfolio — “less than 50 percent, which translates into a holding period of over two years. Our competitors typically have turnover in excess of 100 percent, or less than a one-year holding period.”
He is fortunate to be able to do what he loves, Meade says, while seeking to nurture the nest eggs of his investors. “While money is certainly not the key to happiness, having funds to cross off Maslow’s bottom few categories is a helpful start. Delivering exceptional investment performance that can have an immediate and lasting impact on people’s lives is the most rewarding thing I can do.”