Fayez Sarofim’s firm owned blue-chip stocks for decades, and more recently, shares of leading tech companies.
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Fayez Sarofim, an Egyptian immigrant who built a successful investment firm with an approach similar to Warren Buffett’s, died in Houston on Saturday at age 93.
Sarofim, who became a billionaire, had as good an eye for art as he did for stocks. Over nearly 60 years, he amassed a large, museum-quality collection including works by John Singer Sargent, Winslow Homer, Edward Hopper, and a variety of abstract expressionists such as Robert Motherwell and Willem de Kooning. It is one of the finest privately held collections in the U.S.
Sarofim began his collection in the 1960s and kept it hidden from the public until an exhibition last year at the Houston Museum of Fine Arts, of which he was a major benefactor. In announcing the exhibition, the museum said the “scope, scale, and quality” of the Sarofim collection made it “a rarity” among those held privately.
One of Houston’s wealthiest men and a longtime pillar of the city’s business and cultural community, Sarofim founded Fayez Sarofim & Co. in Houston in 1958 and remained its chairman and co-chief investment officer until his death. That extraordinary run rarely has been matched in the investment business.
He was known as “the sphinx” for this Egyptian background and for his limited but well-chosen public comments.
On its website, the firm declares: “We are owners of businesses rather than traders of stock.” That Buffett-esque philosophy was reflected in Sarofim’s penchant for owning blue-chip businesses such as Coca-Cola (ticker: KO), Philip Morris, Procter & Gamble (PG), and Exxon Mobil (XOM) for decades, starting in the 1960s.
The firm shifted to leading technology franchises such as Microsoft (MSFT), Apple (AAPL), and Amazon.com (AMZN) in the past 10 years.
Fayez Sarofim & Co. held $31.6 billion of stocks at the end of the first quarter, Bloomberg data show. A Sarofim spokeswoman didn’t have an immediate comment about the firm’s total assets under management.
A good chunk of Sarofim’s wealth came from investments he made alongside clients in companies such as Philip Morris—now Altria (MO) — and Philip Morris International (PM) and Coke.
He rarely gave interviews, and one of his few in the past decade was with Barron’s in 2013, when he reflected on his long career and investment philosophy. “It takes a foreign-born person to appreciate the United States, and the ability of the American people to adapt,” Sarofim said over lunch with this reporter at the wood-paneled Coronado Club in Houston.
Enjoying a cigar and an espresso, he stated his dislike for trading. “Nervous energy is a great destroyer of wealth,” he said.
At that time, he wanted to continue working. “I’m like Buffett,” he said. “Retirement is not in my vocabulary.”
The firm’s offices in downtown Houston had hundreds of paintings from his collection on the walls. In his own office, Sarofim hung one of his most valuable works, a small El Greco masterpiece from the late 16th century, The Crucifixion, one of the few works by the artist in private hands.
Most of the firm’s money is run for institutional investors and high-net-worth clients. The firm’s chief retail vehicle is the $2.2 billion BNY Mellon Appreciation fund (DGAGX).
The mutual fund’s largest holdings are Microsoft, Apple, Alphabet (GOOGL), Amazon.com, Chevron (CVX), and Visa (V). Reflecting Sarofim’s buy-and-hold approach, the annual turnover ratio, at 4%, is among the lowest in the fund industry. The fund is ahead of the S&P 500 over the past three and five years, but behind the index during the past 10 years.
Of his penchant for great franchises, Sarofim told Barron’s: “People always look for the needle in the haystack. Why not buy the haystack?”
Sarofim’s patriotism reflected his only-in-America success story. “Here’s an Egyptian who came here with nothing, went to Harvard Business School, and made a fortune in Houston. Not New York, Houston,” Byron Wien, vice chairman of Blackstone Advisory Partners, told Barron’s for its 2013 profile of Sarofim and his firm. “He’s a warm and wonderful person. He has a quality that is so critical in business, which is to make you feel important.”
Sarofim told Barron’s that Houstonians called him a fly by night after he opened his firm in 1958. At that time, there were few independent equity management firms, let alone one run by a 30-year-old Egyptian immigrant with no real track record. The investment business then was dominated by New York banks and Boston firms such as Loomis Sayles and Scudder Stevens & Clark.
Sarofim’s fortunes turned in the early 1960s, when he married Louisa Stude, the adopted daughter of Herman Brown, a founder of the Brown & Root construction company. At that time, Brown & Root had close ties to the most powerful man in Texas, Vice President Lyndon Johnson, a relationship detailed in Robert Caro’s biographies of LBJ.
The Brown family was well connected in Houston, and Sarofim soon was running money for the Rice University endowment, a client of the firm at the time of our 2013 profile. Sarofim had three marriages and two messy divorces that were chronicled in the Houston press. He married Susan Krohn, his third wife, in 2015.
Sarofim’s son, Christopher Sarofim, is vice chairman of the firm, which has many long-tenured investment managers. Fayez Sarofim’s intention in 2013 was for the firm to remain privately held after his death. There was no immediate comment from a firm spokeswoman on the firm’s future.
Sarofim also was part of a group that brought a pro football team, the Houston Texans, back to the city in 2002 after the Oilers left town for Tennessee.
That investment, which he jokingly called a “civic duty,” has worked out well, with the team valued at $3.7 billion, according to Forbes. The group paid $500 million for the franchise rights.
Sarofim’s favorite sport was tennis, and he sponsored the U.S. men’s clay courts championships in April in River Oaks, the tony Houston neighborhood where he lived.
Write to Andrew Bary at [email protected]
