Investment manager Elizabeth “Beth” Lilly has never been shy about making a call.
Lilly has been a well-regarded stock picker for a generation. She doesn’t hedge opinions. And she’s a reasoned voice for women in the male-dominated trade.
And she’s opening her own shop, Crocus Hill Partners, in St. Paul.
For the past 15 years, Lilly worked from the Twin Cities for New York-based Gabelli Asset Management Co. (GAMCO), specializing in Wall Street-unloved-or-unnoticed small firms.
“It’s always been my vision to open a firm that focuses on my particular value-investment philosophy in the micro-capitilization and small-cap sectors,” Lilly said. “We buy them when they are ‘Rodney Dangerfields’ and they [sometimes] become ‘Bob Hopes.’
“I’m marketing to high net worth individuals and family offices. I could imagine five years from now, with the performance I’ve generated in the past over that of the [benchmark] Russell 2000, I could grow the firm to $500 million.”
Lilly managed the $1 billion-asset Mighty Mites Fund and had a hand in GAMCO’s small-cap value fund.
Lilly made millions for investors with her acquisition several years ago of 400,000 shares of Brooklyn Park-based Mocon. The rebounding maker of testing equipment for the packaged-food industry last week agreed to sell at a rich premium to Ametek, a much larger Pennsylvania-based consolidator for $182 million.
Lilly also was a long-term believer in Toro, Deluxe Corp. and SurModics as they went from unloved to shareholder-huggers, significantly beating the market in recent years.
Lilly, 53, began her career on Wall Street, followed by a stint at Fund American Companies in Connecticut, under the tutelage of Jack Byrne and his buddy, Warren Buffett, who would visit for homemade lunch at the office every couple months to talk value investing.
“Warren would drive up in a rental, and we would cook burgers there in the kitchen and drink cherry Cokes,” she recalled. “He was brilliant, fascinating, humble. He makes complex subjects easy to understand. That formed my philosophy.”
Lilly came home to the former First Asset Management (FAM) in Minneapolis and started Woodland Partners with two FAM colleagues in 1996. Gabelli acquired Woodland in 2002.
Last year, in a pointed centerpiece talk at a conference sponsored by Minnesota CFA Society, Lilly lamented the small minority of women in the investment trade even though studies show female-run portfolios outperform the average and industry benchmarks.
According to Girls Who Invest, less than 10 percent of investment managers in the U.S. industry are women.
As more investors, frustrated with more-expensive “active” asset managers turn to huge, cheap market index funds, Lilly has demonstrated that a smart woman can find diamonds in the rough and often beat industry benchmarks.
Lilly likens her career to part analyst, investigative reporter, number cruncher and management psychologist.
“People need to view the investment industry as a creative field,” she told her mostly male listeners in 2016.
Lilly applauds the mission of Girls Who Invest to have 30 percent of the world’s investable capital managed by women by 2030. It focuses on education, industry outreach, accessibility and career placement.
“I think what they are trying to do is very impressive,” Lilly said.
The only way to build a more diverse pipeline of talent, she added, is to tie compensation for managers to developing diverse teams.
Lilly, who lives with her family in St. Paul, acknowledged that motherhood and societal pressures can pull women in different directions.
She added that she benefited from good male mentors in the early years and she believes in a mixed-gender approach to investment teams.
Her partners at Woodland were two men. And GAMCO founder Mario Gabelli long has praised her work and tried to get her to stay.
But it was time for Lilly, a St. Paul native, to put out her own shingle. And also easier to speak her mind as an independent business owner.
“I’m coming at this from a capitalist viewpoint,” Lilly insisted. “Women are great investors so we need to have more women in the industry.
“At the end of the day, the firms will generate higher returns from their portfolios, and clients will be happier.”