January 28th 2024.
Channing Capital Management, a Black-owned boutique investment firm based in Chicago, is implementing a number of strategies to drive both current and long-term growth. These include gaining a deeper understanding of a company's investment value, forming partnerships, and expanding their client base. The firm has set a goal of reaching $5 billion in assets under management by 2025, compared to just over $4 billion at the end of last year. They also anticipate a 20% increase in revenue this year, although they did not disclose specific dollar figures.
Rodney Herenton and Wendell Mackey founded Channing in 2003 with just $70 million in seed assets. Over the past two decades, the firm has flourished and regularly appears on the BLACK ENTERPRISE Asset Managers list. Now, Herenton and Mackey are focused on sustaining this growth. They expect to achieve revenue growth by continuing to prioritize research-intensive intrinsic value investing strategies, especially in small-cap investing. They also plan to expand their subsidiaries, Channing Global Advisors and Channing Alternatives LLC.
BLACK ENTERPRISE recently had the opportunity to connect with Herenton and Mackey via email to discuss their firm's growth prospects. "We are excited about the next twenty years of growth," says Herenton. "From the very beginning, our goal was to build a firm that provides exceptional value to our clients through a strategy rooted in intrinsic value investing." Mackey agrees, noting that this approach has allowed the firm to successfully navigate market fluctuations and deliver success for their clients. As co-founders and co-CEOs, Herenton and Mackey complement each other's strengths. Herenton, a native of Memphis, and Mackey, with roots in Chicago, are leveraging their talents to excel in one of the most competitive and volatile industries in the country.
Intrinsic value, in simple terms, refers to the worth of a company based on its fundamental business and other metrics. This investment method is famously used by legendary investor Warren Buffett. At Channing, Herenton is responsible for business development and strategy, while Mackey serves as the firm's chief investment officer and lead portfolio manager of its flagship small-cap strategy. Together, they have built key partnerships with prestigious institutional investors, such as state and local pension funds, Fortune 500 companies, endowments, foundations, and family offices.
Channing plans to continue using their intrinsic value investing style to drive growth over the next 20 years. In October of last year, the firm made a strategic move by launching Channing Alternatives, which invests in asset classes that are not correlated with public equity markets. They have also formed a partnership with Preserver Partners LLC, a rare African-American woman-owned hedge fund. According to Mackey, this collaboration will allow Channing to further expand their alternative investment strategies and meet the growing demand in the market.
In 2017, Channing also established Channing Global Advisors, which provides emerging markets and international equity strategies to institutional clients. This business had assets over $500 million as of December last year, positioning it to play a significant role in driving Channing's overall growth. However, the firm's main challenge is to continue expanding their customer base. Currently, most of their clients are public and corporate pension funds. Herenton explains, "We want to bring in new clients from different areas like 401 plans, endowments and foundations, and individual investors. To tackle this challenge, we are focusing on promoting our new investment options, such as the small-cap value mutual fund we introduced in the last 48 months. This will give these investors the opportunity to benefit from our strategies."
In addition to driving growth, Channing is also committed to giving back to the community. For example, Herenton and Mackey were the Honorary Chairs for the 2023 Chicago St. Jude fundraiser, which raised $1.9 million for Cancer and Sickle Cell research. To learn more about this initiative, click here. Channing Capital Management also recently launched their first publicly traded mutual fund, further solidifying their position as a leading investment firm.
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