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Patrick Cunningham: Maintaining a disciplined approach

Patrick Cunningham knows the meaning of hard work, having fended for himself in some fashion since he was 14 years old.

Cunningham, 55, spent most of his childhood in a one-parent household, his mother relying on welfare, food stamps and Aid to Families with Dependent Children after his father left a troubled marriage.

He started working in his early teens to pay personal expenses. He worked as many as 30 hours a week to pay for his education while attending Massachusetts Institute of Technology, and he took a year off from college to work full time.

As CEO at Manning & Napier Advisors Inc., Cunningham oversees $30 billion in assets and 330 employees at its Perinton headquarters and at offices in Ohio and Florida. He was promoted to CEO this month from managing director of client relations.

Cunningham graduated from MIT in 1979 with a bachelor of science degree in biology. He started his professional career in chemical engineering and later became intrigued by money management and investments.

He left his job as a consultant in Boston in 1988 and convinced his wife, JoEll, that they should move to her hometown, Rochester. Four years later, he persuaded executives at Manning & Napier Advisors to hire him.

"We’re a firm believer in hard work," Cunningham says. "There’s no substitute for it. We believe in sticking to your disciplines. And it’s a place I’m very proud to be associated with. I feel like we really add value to our community."

Cunningham is not the only success story in his family. His older brother is a doctor, a younger brother is a lawyer, and his youngest brother is a marketing manager.

"The government has made an excellent investment in the Cunningham family," he jokes.

Manning & Napier ranked second on the Rochester Business Journal’s most recent list of money managers with $28.1 billion in assets under management as of Dec. 31, just behind the $28.6 billion overseen by the Rochester division of OppenheimerFunds Inc.

Manning & Napier has nearly doubled its assets in the last 18 months, from $16.2 billion at the end of 2008.

Paul Nickel, an executive with Sonitrol Security Systems of Rochester Inc., is a longtime friend and neighbor of Cunningham in Honeoye Falls.

"He’s an exceedingly hard worker," Nickel says. "I go out and walk just about every night on our street, and it’s not unusual to see him coming home-either driving himself or in a cab-at 10 o’clock at night because his flight from New York or wherever got in after 9 o’clock. How he juggles all that, I don’t know. …

"He’s a very funny man as well; he has an infectious sense of humor. He’s an easy guy to get to know and an easy guy to like."

Measure of success
Manning & Napier manages the only domestic equity mutual fund to outperform the Standard & Poor’s 500-stock index for 11 straight years.

"When we did it for 10 years-and there were only a handful of funds that had beaten the S&P for 10 consecutive years-we didn’t have a party," Cunningham says. "There was no congratulatory letter to research (staff). There was no picnic, no bottle of champagne, because we had lost money for our clients that year.

"Beating an index and losing your clients’ money is not a win for us. This last year, in 2009, because our equity accounts were up well over 30 percent in beating the index, we did have a nice congratulatory lunch this year for the research team."

Manning & Napier has more than 5,000 clients, from every state. They include individuals, companies and non-profits, and the firm oversees 401(k), 403(b) and 457 plans.

"If there’s a pool of assets and they have goals that are similar to our investment objectives, they’re a match," Cunningham says.

Manning & Napier’s local clients include Local 86 of the International Brotherhood of Electrical Workers in Henrietta. Cunningham has been the investment adviser for the $100 million union pension plan for more than 10 years.

"He’s very professional, one of the best in the region," says Victor Salerno, CEO of O’Connell Electric Co. Inc. and a trustee for the pension plan. "He doesn’t go into panic mode.

"He knows the strengths of long-term investing and investing for the future. We’ve had outstanding results for the union pension plan because of his efforts."

Cunningham was born in White Plains. His family moved to Queens when he was 6 and stayed for 10 years before moving to the village of Bloomingburg in Sullivan County, 65 miles north of New York City.

"We called it Upstate New York because it had cows," Cunningham says. "It had 800 people. We went from 8 million to 800, at a perfect age. I was a prepubescent man who all of a sudden had all the country in the world."

As he prepared for college, Cunningham was interested in prosthetics, or biomedical engineering.

"I studied that for several years and decided I didn’t care for it," he says. "The fastest way out was to get a degree in biology, at the time with no real intention of doing anything in the field of biology."

After graduation, Cunningham was hired by Apollo Technologies Inc. in New Jersey. He worked as a chemical engineer with process industries such as petrochemical plants, electric utilities and refineries.

In 1982, he went to Houston to work as a sales engineer with Autodynamics. He moved up to a management position with the company before leaving in 1984 to launch a small company, Guardian Utility Services Inc., with two colleagues from his days at Apollo Technologies.

"I’ve always had interest in being an owner, and that was the first ownership opportunity," Cunningham says. "I worked in Texas, with power plants."

Two years later, he sold his shares and moved back to the Boston area.

"My wife and I met in Boston, and we loved Boston, and I thought it was a large sum of money at the time," Cunningham says of the buyout agreement.

"It wasn’t really that large a sum of money. But for me, with my background, it was large enough. So I moved to Boston without a position to see if I could get some type of consulting work."

Entering the industry
The sale of his stake in Guardian Utilities Services prompted his interest in investments, he says.

"I had some money, and when I get interested in something I like to dig into it. I got fascinated with the investment field and said I’m going to try investments."

Cunningham took a job as an independent analyst and consultant with Hearn Financial Services LLC. Meanwhile, JoEll was about to give birth to the couple’s first child, Sabrina.

"I had a consulting position, but I was traveling 52 miles each way to work in Boston," he says. "That’s three hours every day."

When Cunningham suggested the family move to JoEll’s hometown, she agreed. They arrived in 1988, and Cunningham enlisted local headhunting firm Wetering & Agnew Inc. to search out job possibilities.

"I got several interviews with financial institutions because I wanted to be in the financial industry," he says. "For some reason, they wanted someone with experience, and I didn’t have any experience. And the economy was slow."

If Cunningham did not impress the financial firms he interviewed with, he impressed Wetering and Agnew, which hired him to recruit for technical positions. He was with that company for four years, twice as long as his previous places of employment.

"Manning & Napier was one of my clients," Cunningham says. "I placed people in their-in our-information technology area."

Eventually, Manning & Napier executive Richard Barrington suggested Cunningham as a candidate for a client consultant position with the firm.

"He described the job to me, and I asked a ton of questions," Cunningham recalls. "I was with him for an hour and a half, just finding out about the job."

The client consultant was to work with wealthy individuals and institutions and would be responsible for developing new business.

"It was exactly what I was looking for, both in terms of the nature of the position and what the income potential was," Cunningham says.

He discussed the possibility with his wife and then arranged another meeting with Barrington.

"I said there’s one candidate who, if you hire this person, you will not be charged a head-hunting fee," Cunningham says. "And I handed him my resume."

He interviewed with company co-founders William Napier and William Manning, and with Barrington and Edward George, and was hired in 1992.

Cunningham was a vice president and client consultant for seven years.

"I used to work from Rochester to Utica to Watertown to Binghamton and every little town in between," he says. "I know every rest stop on the Thruway."

Cunningham became a shareholder in 2000. The shareholder group was started shortly after Napier retired from the company on Dec. 31, 1992.

"That’s something I was made aware of when I was hired," he says. "It was one of my goals."

In 2003, after Manning decided to step down as president, Cunningham was named to a six-member executive group that would direct the firm. He and Reuben Auspitz were named co-directors, a title Cunningham retained until this month’s reorganization resulted in his becoming CEO.

"The firm is clearly evolving," Cunningham says, "but the heart and soul of what we do is sticking to ways of looking at businesses, and ways of pricing those businesses, that have worked for many different market conditions.

"One of the things that’s very important to us is to stay very disciplined. We have a very specific process that we use in managing money. It has proven itself for 40 years now."

Investment approach
That discipline is delivered in separate accounts, in collective trusts or in a mutual fund, he says.

"We have been developing different ways of delivering our services to the marketplace, which has resulted in some substantial growth, by our standards," Cunningham says.

Most individual clients have a pool of money that Manning & Napier invests in stocks and bonds to meet specific objectives, he says. The typical minimum investment is $500,000.

Manning & Napier’s stock purchases are voted on by a team of nine senior researchers who have been with the firm for an average of 15 years, Cunningham says.

"We literally will vote on whether that stock meets our strategies," he says. "Scores are averaged and there’s a cutoff point, and if it’s above the cutoff point and trading below the price we’re willing to pay, we will buy it.

"We’ll buy it generally across the board for our clients. If you’re a conservative balanced portfolio, you get a little bit. If you’re more aggressive, you get a little more. That is the bread and butter of Manning & Napier Advisors."

The minimum investment for the firm’s mutual fund portfolio is $2,000.

"That’s a pooled vehicle," Cunningham says. "There are other people investing in that same mutual fund. But they could still avail themselves of our services."

Manning & Napier representatives manage nine mutual funds, which have grown to $12 billion from $1 billion five years ago. The portfolio was ranked 21st by Morningstar Inc. on a list of 559 fund families for one-year cash flows as of April 30, Cunningham says.

Its World Opportunities Fund was awarded a Lipper Award for 10-year performance, he says.

"We’ve won awards for one- or two- or three-year performance, but those don’t mean anything to us," Cunningham says. "You can be a hero for any one-year period. Being consistent over a long period of time is something we’ve strived to do."

In addition to its Perinton headquarters, Manning & Napier has a client service office in Dublin, Ohio, and an office in St. Petersburg, Fla., that was opened five years ago.

"Rochester is a wonderful place to live and to raise a family, and it actually has quite a few money managers, but it doesn’t compare, obviously, as an opportunity with the money centers," Cunningham says. "So we opened that (St. Petersburg) office because we wanted to increase the retention we would have for our analytical staff.

"If we hire a young analyst, they have to spend a number of years in Rochester. But if they want to, we will allow them to apply for a position and have the ability to move to St. Petersburg, where there (are) major-league sports and beaches and warm weather, and things that you really can’t get as much of in the lovely city of Rochester."

Cunningham would like to hire 30 additional employees this year, in various departments.

"We rarely fill all the positions we have open," he says. "But if we could, we would. It’s a question of finding the talent.

"We tend to hire people who have a passion about what they’re doing and have drive. When I was interviewed, I think that was one of the things they looked at and found to be of value. No. 1, I know the value of money and how important it is for security. Secondly, I was willing to do what I had to do to be successful."

On the water
Cunningham’s passion away from work is boating. He has a cottage on the east side of Canandaigua Lake, with a dock and a hoist, a Crownline 210 that he bought five years ago, and a Jet Ski.

"He loves to run that Jet Ski up Canandaigua Lake, I’ll tell you that," says O’Connell Electric’s Salerno, who has a cottage not far from Cunningham’s.

Cunningham spends most of his summer weekends at the lake.

"I love the Finger Lakes," he says. "If you go into a pool, you have to take a shower to get the chlorine off. If you go into the ocean, you have to take a shower to get the salt off. You jump into Canandaigua Lake, you don’t have to do anything.

"I’ve always loved the water. I like sailing. I like little skiffs where you get soaking wet. I like bigger boats. I did predominantly sailboats in my earlier life; then I went to the dark side and tried motorboating."

His interest in boating is what led Cunningham to JoEll.

"We met in Boston," he says. "We met at a place called Community Boating. It was a little sailing club on the Charles River. At the time, for $35 you could sail anytime you wanted during daylight from April to September."

Cunningham also likes to fish and to read.

"I’ve been reading mostly mental munchies," he says. "That’s probably it. I’m not a golfer. I do occasional client golf, which can be embarrassing."

Nickel, for one, thinks Cunningham is a golfer badly in need of lessons. But, he adds, there is no lack of devotion to his family.

"I’ve known him for a number of years," Nickel says. "He’s a family guy."

As for his father, Cunningham made peace with him before he died several years ago. He was the best man at his dad’s second wedding.

"You’re dealt a hand," he says. "You have to play it.

"You’re saddened because your mother is not happy. That didn’t make us happy. I was disappointed, more than anything else. I reached out to him several years after, when I was just starting college. Since then, he became very close to all of us."

(c) 2010 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.

Patrick Cunningham

  • Title: CEO, Manning & Napier Advisors Inc.
  • Age: 55
  • Home: Honeoye Falls
  • Education: B.S. in biology, Massachusetts Institute of Technology, 1979
  • Family: Wife JoEll; daughters Sabrina, 22, and Danica, 19
  • Hobbies: Boating, fishing, reading
  • Quote: "We help people retire with dignity."

 

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