A CEO’s Guide for How to Build an Asset Management Firm
Fundamental Global founder Kyle Cerminara left Point72 in 2012 to start his own firm. Here’s how he did it.
Click on Kyle Cerminara’s Twitter page and you’ll find an image of him and Warren Buffett smiling into the camera. Scroll down to his pinned tweet, and there’s another photo with Buffett — but this time, Cerminara is hunched over, with Buffett’s arm locked around his neck.
The caption: “When Warren Buffett puts you in a headlock at a football game...”
For Cerminara, founder and CEO of Fundamental Global, relationships with other investors and industry professionals are critical to his success, a point he made clear in a series of tweets last week. In the thread, Cerminara offered “some unsolicited advice on how to build a multi-billion dollar asset management firm (from someone who did it).”
His first tip: “You will likely not succeed if you do it all yourself.”
Cerminara started Fundamental Global in 2012 with help from Joe Moglia, the former chairman of the board at TD Ameritrade. Moglia is now the chairman of the firm.
“People try to do too much all at once,” Cerminara told Institutional Investor. “I really wanted to focus my time and effort on investing. We brought in an exciting financial advisors team.”
Looking to set his firm apart from other asset management firms, Cerminara decided to make its financial advisory team client-facing.
“A lot of asset management companies these days are buying exchange traded funds or indexing,” he said. “And, quite frankly, anybody can do index funds, so I didn’t understand why that was of value to people. I thought that we could create something using active management.”
To turn this vision into a reality, the firm built an advisory team in a 50/50 joint venture with a firm called Capital Wealth Advisors. Under this structure, advisors met face-to-face with clients and reviewed their risk-reward parameters and liquidity needs, Cerminara said.
“It really freed me up to really be able to invest the money,” he said.
Cerminara has an interesting pedigree: He started his career as an equity research analyst at T. Rowe Price, where he worked his way up to a portfolio management role before leaving in 2007 to work for celebrity hedge fund manager Steven Cohen. Cerminara worked with Cohen over the next five years, taking a brief hiatus in 2010 to run a portfolio for Tiger Management descendent Highside Capital Management.
There was nothing particularly special about 2012 that prompted him to start his own firm. It was just the right time in his career, Cerminara said. Together, he and Moglia built an investment team from the ground-up, pulling talent from their former firms.
“In 2012 when I was starting my own firm, [Moglia] decided to bet big on me,” Cerminara said. “He initially gave us $30 million of capital to manage and became a partner of the firm.”
In December 2020, FG divested its interest from Capital Wealth Advisors. By then, Cerminara said the firm was handling about $2 billion in assets under management. In 2021, Cerminara sold his stake in the asset manager. He now spends his time building public companies, including working as a sponsor for special purpose acquisition companies.
Cerminara said his relationships with his mentors, specifically Moglia and Cohen, “compounded over time,” producing a rolodex of investors and partners for him throughout his career.
“Networking is critical,” he said. “I think some people that are great investors can sometimes undervalue that.”