Diverse Portfolio

In Focus
NAME:Kathryn Vorisek & Leo Harmon
COMPANY:Mesirow Equity Management
POSITION:Senior Managing Director, Head of Equity Management / Senior Managing Director, Chief Investment Officer
LOCATION:Chicago, US
In an industry that is seeking to increase diversity, Kathryn Vorisek and Leo Harmon, Senior Managing Directors at independent, employee-owned Mesirow, foster an inclusive team that has consistently outperformed the market.

Working in equity management is particularly challenging in the current environment, with extreme volatility this year creating headaches for investment managers around the world. At Chicago-based Mesirow Equity Management, however, a strong focus on risk management has helped to prevent a lot of pain.

“Our markets are down more than 30 percent since last November’s peak,” Kathryn Vorisek, Mesirow Equity Management’s Senior Managing Director and Head of Equity Management, says. “We have historically delivered greater capital preservation and lower downside risk relative to the market and our peer group, so our strategy is down nowhere near 30 percent.”

“In fact,” she adds, “all of our strategies are outperforming their relative benchmarks year-to-date, and on a one-year, three-year, five-year and 10-year basis.”

“All of our strategies are outperforming their relative benchmarks.”

- Kathryn Vorisek

“I think we always take a longer term perspective of markets in general, and we try not to be overly influenced by near-term volatility,” Leo Harmon, Senior Managing Director and Chief Investment Officer, adds.

Mesirow Equity Management’s emphasis on risk management does not mean the team avoids smaller, lesser known stocks. In fact, it sees these as great potential sources of growth, and the team’s expertise in finding value in small businesses is a key differentiator.

“We certainly think small-cap companies provide opportunities for investors to drive excess outperformance,” Harmon continues, “particularly with good active management. And for us, an active manager that can employ their strategies with lower levels of risk – we think that, over time, creates a great opportunity for investors.”

Embracing Differences

Mesirow Equity Management is part of Global Investment Management at Mesirow, a diversified financial services firm founded in 1937 that takes pride in its long-standing, authentic commitment to diversity, equity and inclusion (DEI). In turn, Mesirow Equity Management boasts a team that benefits from its unusual degree of diversity.

Harmon – who also plays a key role in leading the Mesirow Diversity, Equity and Inclusion Council – considers the diverse environment that he has helped to nurture at the company to be among its greatest successes.

“We’ve created a diverse environment within our team, and have also helped to institute that across Mesirow, deepening policies, practices and initiatives that were already present here, but giving them even more impetus as a core goal,” he stresses.

“Approximately 65 percent of our team is diverse,” Vorisek adds, “either by race or by gender. That fact is something that differentiates our team and contributes to our success because we’re capitalizing on inputs from varied and multiple sources.”

Vorisek and Harmon both worked in senior positions at a predecessor firm, Fiduciary Management Associates, which was acquired by Mesirow in 2016. That firm, Vorisek says, boasted being woman-owned and minority-owned, and she saw firsthand the many ways that diverse experience and perspectives contribute to better decision-making.

Collaborating with professionals from different educational, financial and cultural backgrounds, and working together towards a common goal, increases the chances of new, creative ideas being brought forward, adds Harmon.

“Focus on DEI is one of the things that attracted us to Mesirow,” he asserts. “Every day, we attack problems and seek opportunity creatively, and a range of perspectives enables us to get to better solutions in our investment strategies.”

Driving Value

In 2014, Vorisek and Harmon began working with an educational program in Chicago called The Big Shoulders Fund to help improve financial literacy among eighth-grade students in some of the city’s poorest communities. Mesirow also offers a summer internship program where a large percentage of interns are from diverse backgrounds.

This passion for reaching out into communities is in part about wanting to give back, but it also reflects the firm’s understanding that diverse teams are stronger, that the future of financial services will be enriched by a diverse pipeline, and that many of the clients and prospects that Mesirow serves are savers from diverse backgrounds too. One central goal of such programs is to break down the invisible barriers that tell people from diverse backgrounds or historically marginalized communities that finance is not for them.

“People tend to be intimidated by financial services and the terms used,” Vorisek says. “It’s really part of our culture to invest in breaking down those walls that people feel around financial literacy.”

Vorisek recalls when she first developed a passion for finance and investment, while managing a paper portfolio as part of her college degree. Harmon “caught the bug” even earlier, when as a child he would calculate interest rates to charge his siblings and cousins when he lent them money.

“I was always the kid growing up that was interested in money and finance,” he says.

“An active manager that can employ their strategies with lower levels of risk – we think that, over time, that creates a great opportunity for investors.”

- Leo Harmon

Though he showed that enthusiasm from a young age, it was a long time before he realized that there were career paths open to him in which he could pursue his passion.

“I didn’t know these careers existed,” he says. “I think when you can see yourself embodied in a place, it gives you confidence that you may be able to create a successful track or a successful avenue.”

Mesirow’s outreach work is aimed at making sure the next generation can see role models in the financial sector who come from the same backgrounds as them.

“It’s also about impacting those young students and getting it in their head that this is not something that is out of reach for them. This is something that they can also potentially embrace as a career,” Harmon says.

Ultimately, both Harmon and Vorisek view such work as an investment in the future of the industry. “We think it creates an ecospace for us where we are driving value through more than financial contributions alone,” Harmon declares. “Where we are driving outcomes and not just participating in an event or dinner.”

Complementary Leadership Styles

Vorisek and Harmon lead the team at Mesirow Equity Management with two distinct styles that overlap and complement one another.

“I focus on the bigger picture and on the team. I like to set goals for them in terms of what we want to achieve,” Vorisek explains. “And then Leo will work with them to a greater extent in asking questions such as, ‘How do we do that? What are the best practices? How do we approach this issue?’”

“Kathy has been such a mentor to me,” Harmon says. “She thinks about the big picture and all of our strategic alternatives. She’s the consummate optimist and has this intuition for how to position our capabilities and offering to the marketplace.”

“People tend to be intimidated by financial services and the terms used. It’s really part of our culture to invest in breaking down those walls that people feel around financial literacy.”

- Kathryn Vorisek

While Mesirow Equity Management has historically outperformed the market, that success is built on lessons learned over time. In an industry as volatile and unpredictable as finance, both leaders recognize the importance of taking a longer-term view.

“We focus on building long-term relationships with our clients,” Vorisek notes. “And over time, what we consistently find is that institutional investors, particularly pension funds, are drawn to our expertise because of our specialty in small- to mid-cap investing, our ability to generate alpha and the diverse backgrounds of our portfolio management team.”


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