Interview With The CEO And Portfolio Manager: Diamond Hill Capital Management, Inc. (DHIL) - Ric Dillon
April 3, 2012 - The Wall Street Transcript has just published S&Ls, Investment Banks and Asset Management Report offering a timely review of the sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
Ric Dillon, CFA, serves as Portfolio Manager and Chief Executive Officer for Diamond Hill Capital Management, Inc. From 1997 to 2000, he served as Portfolio Manager at Loomis Sayles & Co., an investment advisory firm. From 1993 to 1997, Mr. Dillon served as the President and Chief Investment Officer of Dillon Capital Management, an investment advisory firm. He has a B.S. in finance, an M.A. from The Ohio State University and an MBA from the University of Dayton.
TWST: Please begin with a brief introduction to Diamond Hill, including some highlights from its history and an overview of your current operations.
Mr. Dillon: The company got started as Diamond Hill Investment Group in May of 2000. I was hired by a public company by the name of The Banc Stock Group based in Columbus, Ohio. They had gone public in 1993 and their independent board of directors decided to make a change in direction. So I was hired to do two things - to rationalize the existing business, which was a niche broker/dealer dealing with community bank stocks, and to build a money management business, which has been my career. And we embarked on that, as I mentioned, in May of 2000. We concluded early on that the niche broker/dealer really didn't fit into either what we were trying to do on the money management side or as a standalone business, so we made the decision to close it.
And fortunately, we were able to transition most of the people to other firms over the course of the first two years. So we completed that essentially at the end of 2002. Again, at the same time we started the money management business, the predecessor firm had a mutual fund, which was called The Banc Stock Group Fund, and that fund we then used to start other tailored mutual funds, and we also embarked on trying to develop relationships in the separate account business. And so that began at that time.
And from a hiring perspective, for the most part, the first people I was bringing on board were people who I had known or worked with over the course of my career in Columbus, Ohio. Tom Schindler, who I worked with at my prior firm, was the first hire; Bill Zox and Chris Bingaman were the next two hires; then Chuck Bath. And these are people, as I mentioned, that I've known and worked with. And the real benefit of that is the fact that we all share the same investment philosophy, and that certainly made it a lot easier for us to hit the ground running, and we did. And so over the course of the first dozen years, we have built the firm to grow assets under management a little north of $9 billion.
TWST: Please tell us about the firm's client base and its total assets under management.
Mr. Dillon: Our family of mutual funds, the Diamond Hill Funds, is approximately $4 billion. Separate accounts, institutional, subadvisory would be another $5 billion.
TWST: Please tell us more about your professional background, as well as the strengths you believe you have among the members of Diamond Hill's core management team.
Mr. Dillon: Well, I started in 1977, right out of school, and I worked for Ohio Public Employees Retirement System in their investment department. I went on to work at a bank in Dayton, Ohio. I started up a small money management firm in Dayton, Ohio, and then on to the Detroit office of Loomis, Sayles in 1986. And then in 1993, I started a firm in Columbus, Ohio, that in 1997 was acquired by Loomis, Sayles. And so I was back with them for another three years. And at end of my employment agreement with Loomis, Sayles, I came back to Columbus, Ohio and joined The Banc Stock Group.The people that I mentioned are all on the portfolio management side and still with the firm. And while we all share the same investment philosophy, we have varying experiences and strengths. Chuck Bath, who like me, has been in the business a long time, has a lot of strength as an investor. He had a great track record during his career at Nationwide Insurance running their flagship fund. And so he and I sort of serve as the senior investment team members.
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