TERRY DIAMOND AND HIS WIFE, MARILYN, HAVE CLIMBED Mount Kilimanjaro, the Himalayas and Grand Teton, rugged ascents that require teamwork and trust. “We are on a very short list of Jewish-grandparent mountain climbers,” jokes Diamond.
In his day job as chairman of Chicago’s Talon Asset Management, the 71-year-old shares the risks and rewards with a close-knit group of fellow portfolio managers, analysts and salespeople; the registered investment advisor is 100% employee-owned. Talon runs about $1.1 billion spread among three hedge funds, individually managed accounts, private equity (Diamond was an early investor in then-private Starbucks), and venture capital.
And with Talon as their guide, clients have watched their assets climb. As of March 31, $10,000 invested with Diamond’s company in March 2000 would now be worth $26,279 — a particularly nice rise, given that the same amount invested in the Russell 3000 would now be at $12,064. Over one year, the TalCap Composite, which tracks the performance of the firm’s long-only separately managed accounts, came up about even with the Russell 3000 Index, gaining 52.47%, versus 52.44%. It was up 1.79% a year on average for the last three years, while the Russell fell 3.99%. For five years, TalCap was up 6.13%, versus the benchmark’s 2.39%. For 10 years, it was up 7.42% versus a drop of 0.07%.
Alan Wilson, president and co-founder of Talon with Diamond in 1983, runs the $19 million Talon International Select Partners hedge fund. Total Return Partners, a $238 million fund that invests in distressed debt, is overseen by Evan Dreyfuss. Diamond and Brian Washkowiak manage the $48 million Talon Opportunity Partners, a long-short strategy. There is also $55 million devoted to private equity.
The bulk of Talon’s money, however, is in separately managed accounts. The minimum investment is $1 million, with a 1% fee, but the fee is lower for larger accounts. From 1995 to 2010, the TalCap Composite had an 11.39% annualized return, compared to a 7.92% gain for the Russell 3000.
“Many clients are attracted to Talon because they can have a separately managed account as well as an alternative investment within a one-stop shop,” says Diamond, a 1963 University of Chicago Law School graduate who gave up his legal career in 1969 to become an institutional-equity salesman for Lehman Brothers.
DUE TO TALON’S PERFORMANCE and variety, clients tend to be “sticky,” says Diamond. The core assets of high-yield, long-short, and international hedge funds migrated from separately managed accounts.
Talon, whose original predecessor firm was created in 1979, focuses largely on mid-cap stocks, which Wall Street doesn’t track as closely as large-caps, and yet they’re still very liquid.
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