50+ & Beyond: A Pretty Good Idea That Went Pretty Far…

50+ & Beyond: A Pretty Good Idea That Went Pretty Far…

From a humble beginning in 1973 to industry veterans 50+ years later. The unexpected story of Cambiar Investors.

Click to read our prologueRemembrance and Reflection: 50+ Years of Cambiar


In August 2023, Cambiar Investors celebrated its 50th anniversary as an asset management business.

The company was founded in August 1973 by Michael Barish.  The world into which Cambiar was born was far different from the world of 2023.  Information traveled slowly and often by paper mail.  Ticker tapes were still a real way of finding stock prices and how stocks behaved over the day.  Industrial production cycles and commodity pricing cycles dominated the structure of the economy.  Tax rates were exorbitantly high, but could generally be managed and dialed in by individuals or corporations by gaming any number of contrivances.  The selective service military draft had just ended earlier in the year.  Trading costs for stocks were regulated and material.  Equity investing had yet to be institutionalized in a serious way, and the mutual fund, indexation, and ETF booms lay far into the future.  Outside of commodity futures contracts, few financial derivatives existed. Investing “styles” such as growth and value were not well-established.  Most individuals with the financial wherewithal to hold a portfolio of stocks did so via bank trust departments, which seldom traded positions or engaged in much investment research about them.

Prior to 1973, the U.S. stock market had enjoyed a spectacular run after emerging from the privations of the Great Depression and the Second World War.  But financial markets were about to experience a once-in-a-generation upheaval, not due to a spectacular monetary collapse or global war, but due to the United States’ own inability to manage its finances and a coincident loss of confidence in governmental institutions.  Price-to-earnings multiples plunged from nearly 20x in 1971 to less than 7x in late 1974. Higher multiple and more speculative stocks lost most of their value.  Individual investors were understandably dispirited not just by their losses but by the numb complacency that led to their losses, and looked for practical alternatives.

Cambiar was not founded as a vision to solve then-prevailing global financial challenges.  Mike Barish, who had managed money as part of a 1960s mutual fund complex and later as a private manager on behalf of a family office, simply wanted independence and a chance to do things his own way.  His own way meant seeking unique opportunities among “fallen angel” stocks, requiring a high return hurdle to commit client capital at all, leading to considerable price sensitivity, actively trading the portfolio around sharp market swings (of which there were many during the inflationary 1970s), and focusing portfolios into a handful of “better” investments than the broader rump of stocks, particularly stocks that embedded “positive developments not reflected in the current (market) price”.  Given that he was starting out on his own in a financial backwater (Denver, CO), the actual investment performance would have to be good.

He had a tendency to be self-deprecating in describing his own exploits, and accordingly described the decision to build his own firm around this investment philosophy as “a pretty good idea”.  But the philosophy embedded some great ideas:

  • Benchmark agnosticism
  • A high return potential requirement to commit capital
  • A willingness to run counter to momentum to scoop up stocks that disappointed an often fickle stock market
  • An aversion to over-indebted or acquisitive companies
  • Portfolio concentration

These were not things a lot of investment managers were doing much of at the peak of the Nifty Fifty era.  The discipline worked, and rather fabulously in the context of a very inefficient stock market roiled by high inflation and ineffectual government incursions to fix the problem.  Cambiar’s returns during the 1970s and early to mid-1980s trounced market averages by a massive degree.  The firm grew and attracted an institutional following, led by a loyal high net worth business built largely through word-of-mouth and a personal touch, and an institutional client base enamored of the returns and attracted by the unique style.

Cambiar in the 1970s and 80s was not a “Value” firm, per Mike Barish’s own admission.  He liked to own companies that generally grew and had tailwinds that would support higher multiples.  But he disdained paying up for these, chastened by the early 1970s bear market and the immense losses of principal experienced by those that did.  He naturally grew uncomfortable as consensus thinking evolved into crowded ownership, setting stocks up for steep losses when deified companies inevitably revealed their human limitations.  Stock market multiples were so low in the first 10-12 years of Cambiar’s existence that a broad demarcation between value stocks and growth stocks seemed pointless.  Value and growth stock indices were born much later, in 1984, and the so-called value factor (low book to market) was not baked into index construction until 1992.

The interest in companies with positive “secular” characteristics and extreme price sensitivity does contain an inherent tension that is not easily distilled into a how-to manual.  For Mike Barish, and a few of us Cambiar faithful that have persevered onwards into the 21st Century, the inherent tension is not an impossible trinity.  Like a sweet and salty confection, dialing in the right combination of each is particularly tasty, yet it’s usually obvious enough if there is not a balance. By the 1990s, the substyle “Relative Value” had become adequately pervasive, and Cambiar fit best with it.

The name “Cambiar” means to change in Spanish.  It came from his fondness for the Spanish language (despite no such ethnic heritage) and understanding that financial & economic conditions, and therefore winners and losers, do inevitably change. The name “Barish Asset Management” also predictably led to cheap yuks about having a short-bias or other unflattering portfolio characteristics.  He chose something else.  The second half of the firm name, the active term “Investors”, was and remains distinctive versus the prevailing orthodoxy of ABC Asset Management, XYZ Capital Corp, references to ancient deities, and other similarly buttoned up and forgettable handles…  He wanted to connote something different, that the clients of the firm were, first and foremost investors, and not the glorified bookkeepers, accountants, or predictable consultants that he recoiled from as necessary but limited value conduits in the overall financial ecosystem.

By the late 1980s, the firm had grown beyond its initial intentions.  Cambiar built out more infrastructure: a troop of analysts, a more institutionalized marketing effort, and a larger back-office.  The firm aspired to have a more institutional customer base, but the iconoclastic style of investment and not neatly fitting in a box limited the appeal of Cambiar beyond a certain audience.  Add to this mix the stress endemic to the asset management business, and Mike Barish sought to unburden himself of carrying this stress individually, while also seeking some kind of external stamp of approval.  Enter United Asset Management in 1990, a Boston-based asset management consolidation firm that had acquired other Denver-based asset managers in earlier years.  UAM acquired Cambiar around the time Iraq’s armies rolled into Kuwait.

Under UAM ownership, Cambiar grew, but it was hard not to grow given the scope of the 1990s bull market.  UAM’s ownership formula involved holding 100% of its affiliates’ equity while extracting a revenue-driven contractual royalty off the top, leaving its affiliates to manage their costs net of this profit margin.  UAM affiliates had day to day autonomy, but this created a weak incentive structure.  The intended external stamp of approval began to be recognized as an anchor on firm growth and motivation.

Not many asset management companies endure beyond a generational change, a cash-out sale, and a poor incentive structure.  Cambiar somehow did.  The younger generation brought in during the late 1990s saw an opportunity to apply the core investment discipline across a broader range of global equity markets than the mid-to-large cap concentrated domestic strategy that Cambiar marketed exclusively in its first 24 years of operation.  That opportunity was crystallized in 2001, as Cambiar re-acquired itself from UAM and its successor firm, Old Mutual.

There is a longer story about Cambiar’s growth following the 2001 buyout, with some bits of good fortune and some bits of foresight.  The more important reflection as Cambiar passes beyond 50 years is how the company endured all this time, through an inherently risky generational and ownership change, through two stock market crashes that were statistically worse than the 1974 bear market into which Cambiar was born, and through today’s increasingly passive landscape.

The answer is Cambiar’s iconoclastic discipline remains the best, and most authentic way to invest that we know of.  The intended balance of price sensitivity, business quality, growth and return characteristics, portfolio concentration, and aversion to “nonsense” is unique, not just locally in Colorado but nationally.

Brian Barish is the President and CIO at Cambiar Investors and is responsible for the oversight of all investment functions…
Asset management sits at a crossroads today. The combination of indexation, thematic investing, private investing, and hyper-fast information dissemination have diluted the historic price discovery role of public equity managers.  It is certainly possible that the world needs less of them, or alternatively that the market share gains of these more automated forms of investing are a natural consequence of the digital age.  However, it is also very possible that Cambiar’s discipline remains as authentic and necessary to a changing world as it ever was.


Click to read the Mike Barish Memoriam Honoring the Legacy