Fayez Sarofim Strategy To Succeed | Spiking

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Fayez S. Sarofim, an Egyptian-born banker and mega collector who lived in Houston and was well-known for his investment acumen, passed away at the age of 93. On May 28, he passed away at his home in Houston, a family representative told the Houston Chronicle.

Sarofim was one of three kids and was born in Cairo in 1929. His father was a well-known wholesaler of agricultural and pharmaceutical items. Sarofim moved to the United States in 1946 to study food technology at the University of California at Berkeley after attending a boarding school there. He received his degree there in 1949. He finished his M.B.A. at the Harvard Business School two years later.

After serving for Anderson Clayton & Co., a cotton marketer and processor located in Houston that conducted business in Egypt, he formed Fayez Sarofim & Co. in 1958 when he was 30 years old.

Top-Tier customers

As per a 2000 profile in Texas News magazine, his firm’s clients entailed pension funds of Mobil Corp., General Electric Co., Ford Motor Co., the city of Baltimore, the state of Oregon, in addition to the foundations of Houston’s Rice University and the University of Houston.

In 2006, a team founded by Kinder Morgan Inc. chairman and co-founder Richard Kinder paid $22 billion to acquire the Houston-based pipes transportation and energy-storage business. Sarofim was a member of that company. In 2011, the company reintroduced Kinder Morgan to the public. Since about March 2018, according to information gathered by Bloomberg, Sarofim has controlled more than 38 million shares worth approximately $685 million. From 1999 to 2020, he was a member of the board of directors at Kinder Morgan.

As per Forbes, his wealth topped in 2015 at $2.2 billion, and as of April, he was believed to be valued at $1.5 billion. He had to pay settlements totaling hundreds of millions of dollars due to acrimonious divorces, which made local news in Houston.

Sarofim invested some of his wealth in acquiring priceless works of art. At addition to displaying works by Pablo Picasso and Mark Rothko in his office at the elevated called as 2 Houston Center, he purchased a Crucifixion picture by El Greco from the 16th century.

Don’t Ever Sell

Sarofim recalls selling a Childe Hassam painting for $25,000 in the 1950s after purchasing it for $1,100 for a 1999 Money magazine article. According to Sarofim, it would now be worth $400,000. The knowledge he gained from the encounter? Don’t ever sell.

That axiom also guided his investment decisions.

He kept taxes to a minimum while maximising compounding by just turning over a small portion of his overall holdings each year (very little as 5%). In 1999, Sarofim’s company owned 2% of Coca-Cola, or nearly $3 billion. According to information gathered by Bloomberg, as of mid-2018, he still owned 22.3 million shares, or a 0.5 percent interest, valued at roughly $1 billion.

Before Intel Corp. came out publicly, he started purchasing the company in the 1950s, and by 1980, he possessed over 5% of it, as per the Money. He said that by cashing out in 1985, he lost “several billion dollars” in earnings.

“Biggest Error”

Never once again, he vowed. “Selling your winners is the worst error. The successful ones should be kept, and the unsuccessful ones should be sold. The majority of people typically do the complete opposite.

For Dreyfus Corp., which is now a division of the New York-based Bank of New York Mellon Corp., Sarofim oversaw mutual funds. Sarofim possesses “Buffett-like time horizon: forever,” according to a 2012 article by Forbes on fund managers who use Warren Buffett’s choice for businesses with a lasting competitive advantage over rivals.

On November 19, 1928, Shalaby and Mary Simaika Sarofim gave birth to their third child, Fayez Shalaby Sarofim, in Cairo. According to a 1970 Institutional Investor biography, his father was a successful dealer of medications and food products.

After attending an English-speaking boarding school in Cairo, his father sent him to the University of California at Berkeley in 1946 to learn food technology. He received his degree there in 1949. He obtained his MBA from Harvard Business School after two years. By 1961, he was naturalised as an American citizen. After serving Anderson Clayton for seven years, he started his own business in 1958.

IT Bet

Three years later, Sarofim’s Harvard classmate and buddy Arthur Rock co-founded Davis & Rock, one of Silicon Valley’s first venture capital firms, creating investment prospects. Sarofim invested on behalf of his customers in Rock’s initial investments in companies like Teledyne Inc., which developed from an electronics and engineering company to one that acquired more than 100 businesses, and Scientific Data Systems Inc., a software firm that Xerox Corp. acquired in 1969 for roughly $1 billion.

Sarofim wed Louisa Stude in the early 1960s; she was Herman Brown’s adopted daughter and co-founder of the engineering firm Brown & Root, which is now a division of Houston-based KBR Inc. They contributed millions to museums and organisations while raising their two kids, Christopher and Allison, in a house in Houston’s River Oaks district.

The Houston Chronicle reported that Louisa received $250 million as part of their divorce deal in 1990, which was “suspected to be the highest divorce payment in Texas history.”

As per the Texas Monthly, Sarofim then married Linda Hicks, with whom he had previously fathered two children, Andrew and Phillip, and was granted legal custody of a kid she had with another person. In 1996, that couple’s marriage also terminated in a difficult divorce. Linda died in 2000 while scaling Tanzania’s Mount Kilimanjaro.

The former Susan Krohn was Sarofim’s third wife. The Museum of Fine Arts, whose three main exhibition buildings are located on what is recognized as the Susan and Fayez S. Sarofim Complex was among the Houston couple’s many beneficiaries.

What Did He Say About His Company?

Our company, Fayez Sarofim & Co., is guided by four basic tenets that permeate every aspect of our operations. We have one investment philosophy and one goal in mind: identifying dominant companies that have the potential to sustainably increase their income over time.

  • We engage employee and company capital into the same strategy like our clients, so our interests are congruent with theirs.
  • We have a solid basis that has been built over the course of fifty years, with little personnel turnover and a large capital base.
  • We are a privately held independent investment manager that the company’s staff owns.

What’s more? Check out the insights related to top 100 fund managers at Spiking!

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