Investing in Your Future with New Team Member Charles Scavone, CFA® at Oak Harvest Financial Group

In this episode of Stock Talk Podcast, Keeping You Connected To Your Money, We’re changing it up a little bit this week. We’re going to introduce a new member of our investment team. His name is Charles Scovone. I have a lot of history with Charles over the last 28-plus years. We’ll highlight some of that History and some of the processes of how we manage investments.

Welcoming Charles to the Team:

Chris Perras: Hey, I’m Chris Perras, chief Investment Officer at Oak Harvest Financial Group here in Houston, Texas, and we’re going to change it up a little bit this week. Some of you are tuning in for the getting connected to your Money episode. This week, we’re going to introduce a new member of our investment team. His name’s Charles Scavone. I’ve got a lot of history with Charles over the last 28-plus years.

What’s going on here is we’ve got some great changes to the investment team and the investment process. Taking you backwards in time, about six years ago, Oak Harvests on the investment side, we were small. We were about 35 million in assets under management. Troy and Jessica were looking out towards the future, brought on James McFarland to help manage the money, and they were looking forward and they brought me in.

I’ve been here about five years. We’ve grown from 55 million in assets to almost 575 million in assets. With just Troy, James, myself, and a few others’ input into the investment management process. We’re looking towards the next five years. We’ve brought Charles Scavone in to the team. I’ve known Charles for 28 years. He is a great money manager and even a better team leader. Charles.

Charles Scavone: Yes. Thanks, Chris. I can’t begin to tell you how excited I am to be here, to be working with you again, to be part of the Oak Harvest team. As I got to know the people involved all the way from senior leadership to everybody in the organization. Very impressed. I think what you’re doing makes a ton of sense and I think we’re on the right path. I’m really excited to be here.

Chris: We’re super pleased to have you here. Charles, can you tell me a little bit about the early years in investment management and the skill sets that you bring to the team?

Charles: Yes, thanks. I got started in the business actually building and managing fixed-income research department for what ultimately became JP Morgan Asset Management. It supported a multi-billion dollar corporate, municipal and money market operation there. He was here in Houston. After that, I moved into equity research doing fundamental equity research, talking with companies, building earnings models, and really, really hands-on. Had the opportunity to go to work for a local mutual fund firm, Van Kampen in American Capital. That’s where our careers together started.

There I was an associate portfolio manager working on our emerging growth fund. Had the opportunity then to incorporate more of a quantitative process in addition to this fundamentally driven process. I believe that’s really served me well. That was our first opportunity to work together and got me introduced into the institutionalized aspect of the equity management business.

Chris: It was really interesting. Charles and I have been catching up both personally and professionally over the last year. I had forgotten when we were catching up. Our careers began at the same place. My first three years in the business was also on fixed income, bonds, doing leverage buyouts before I came down here to Houston the first time around. Charles and I were on parallel paths on different teams at the same level, associate portfolio managers on equity teams. I was on a large-cap growth team. Charles was helping run faster aggressive growth, emerging growth companies.

Charles: It was more of a log mid and large-cap type focus. Then I had the opportunity to join this early-stage growing mutual fund company. That was AIM Management, which is now known as Invesco. I was the first outside portfolio manager hired there to be the lead manager on the AIM Constellation Fund. It also helped with the AIM aggressive growth fund. It was a wonderful time to be involved. We were able to devote a lot of resources to what we were doing.

We had to be able to really scale what I’ll call now a quantamental investment process where we were doing fundamental research, really digging into companies. Because the whole scale of the operation was bigger, we had to figure out how to leverage that. How do you take your resources? How do you take computer technology? How do you take all the available information, and focus it in and build tools that are useful for people like you and me to look at and bring our focus to bear on the objective of just delivering the best possible investment returns for our clients?

AIM provided just a wonderful format for doing that. It also created the ability for me then as I began to see additional products that we could run. I had the opportunity to give you a call because you were out on the West Coast and bring you into the AIM team to contribute there.

Chris: I left to go to the West Coast to be an analyst and associate portfolio manager on a smaller startup, technology-focused money manager. Charles left Van Kampen to go over to AIM, and reorganized, lead a team. When we stayed in contact, and he recruited me back to Houston, I guess I was out in San Francisco two, three years. Charles recruited me back. He was basically my boss. He put together a team of– How many were at the max?

Charles: About five or six.

Chris: Five, yes. Over the three or four years, the assets under management that our team was responsible for–

Charles: Went from about 7.5 billion to about 32 billion in total. Along the way, and bringing you a newer instrumental in helping us restructure our primary vehicle AIM Constellation Fund, which was a large and mid-cap growth fund. Again, and that was very, very vital, but we had the resources to begin to expand out what we were doing. We had all these research capabilities. We had developed a process.

We had developed this fundamentally driven, quantitatively supported research process that allowed us to expand what we were doing. We actually created a series of products that were long, short products. They’re like a hedged equity product and it really caused us to bring the focus and bring the bear what we were doing and driving that research process. Those products were leading edge and really helped us in what we were doing across the board.

Anyways, ultimately I left AIM, and decided to start my own hedge fund operation, Rock Ridge Capital. It was an interesting experience starting and running your own RA. I have a tremendous amount of admiration for what you guys have done here because it’s a difficult process. Long story short, the investment program was fine, but the global financial crisis just made the business case for running your own RA at that time, just untenable.

Everything works out for a good reason because I had the opportunity to join Patriot Wealth, which was a local investment advisory firm, not dissimilar from what Oak Harvest is doing. They had absolutely just been shaken by the global financial crisis, and so I was able to go in and put in place a very disciplined, process-driven investment management program for research portfolio management and utilizing proper risk management techniques.

It got me acclimated to understanding the nature of that client base. What I would tell you is that if you were to summarize my history, I’ve been very fortunate to be paired with very talented individuals but to manage money in different asset classes, across different investor bases, and I think that’s been a huge advantage for me.

Chris: Charles left AIM, I left AIM a little before him to go with entrepreneurial opportunity to help turn around another set of funds with a former business partner of mine at DG Capital. I had done that for about five and a half years and into the great financial crisis. Got a job in the hedge fund world as well. I went to Citadel and managed a portfolio there for about a year in the midst of the great financial crisis.

Our paths have crossed multiple times over the years we worked parallel. Charles was my boss, now he’s over here with our team. I am not his boss, I will never be his boss because Charles is probably the best person I’ve ever found in the financial industry at not only managing money, but managing people and that’s a very rare skill set in the financial business. What Oak Harvest is trying to do the next five years is we went from entrepreneurship to professionalism. Now we’re trying to move towards almost an institutionalization of the process with the people.

You can’t run 34 billion in assets or 35 billion at the peak like we did at AIM with six people without a very strict process. Adherence to risk management tools, using technology, having a process of weekly meetings, monthly meetings where you can get the best ideas of everyone. What we’re trying to do here going forward is build a team with complementary skill sets where everyone can contribute. I’m weak in a lot of areas, Charles is fantastic in those areas. In the future, we’re going to be looking for more people probably on the investment team. We’re going to look to fill out the team with complementary skill sets.

Charles: Agreed. What we always try to focus on is understanding what the goal is. If we all are trying to achieve the same goal, then bringing the best players with different skill sets and let your players play and that’s why I smiled. I was like, I was your boss, you’re my boss, it’s like we all work together. We’re all on the same team. We’re all on the same page of the playbook. What is so exciting about what Chris just described, is a lot like AIM in the early days, we were at a great firm that’s focused on providing the resources necessary to do what we’re talking about and give us the best opportunity to do it. It’s up to us to actually execute on it.

Chris: Viewers, we’ve got some changes here at Oak Harvest on the investment management team and in this case, change is great. We’re bringing on some new team members like Charles, who has a fantastic bio that isn’t just portfolio management, isn’t just stock selection, it’s team management. It’s process driven. It’s quantamental. Look for continued changes over the next year, two years, five years, because we want to provide even better services, more products, a helping hand to our advisors, our financial advisors, our financial planners, the tax people here at Oak Harvest as an investment management department.

It’s in-house, it’s right here. You might be able to call us up and talk to us. We do have the marketing team that has a walled garden because we’re busy trying to manage the money. Right now, it’s earnings reporting season. It’s a waterfall, a fire hose of news that we’re trying to sort out, but continue to expect change here and in this case, change is very good. From the whole team at Oak Harvests, from Troy, Jessica, Charles, myself, James on the investment management team, thank you for joining us. We hope you tune in to future broadcasts of our keeping you connected to your money.