Where Is The Factory?

We are back from the weekend, and while driving around, I was struck by the unique nature of Atlanta as a distribution point. Obviously Hartsfield is the world's busiest airport; nearly everyone in the country has stopped over for a few hours on their way to somewhere else. The metro area is filled with regional distribution points for many industries. I don't know of any other American city that has the rules on trucking that Atlanta does. 18-wheelers are not allowed on the interstates inside the perimeter, and must use the right two lanes anywhere in the metro area. This does very little to help the traffic problem, but it's better than nothing. So there is an awful lot of moving people and stuff around Atlanta. People and stuff that almost always came from somewhere else.

So it should be no surprise that the same holds true in financial services. Every major investment bank has had an office in Atlanta for at least ten years. Insurance companies, commercial banks, and other financial firms have scurried to hire armies of salesmen to capture the unmistakable demographic migration from other areas of the country to the Southeast. If you want to speak to a local sales representative for a financial firm, there are 30,000+ ready and waiting to serve you.

But where is the factory? You will be hard-pressed to find the generators of ideas here. The manufacturing of new investment products and solutions is nowhere to be seen. There are a few small firms scattered about, but less than a handful have any national name recognition. Most people identify SunTrust as the top financial institution that is based in Atlanta, and they are right (Invesco is completing the transition from London to Atlanta). But since commercial banks are by definition devoid of thought, there is not much else for Atlanta to point to as a real thought leader.

Which is why I am excited, because we are going to be as much of a think tank as we are a hedge fund. There are so many investment vehicles to help clients make money and lower risk, and the salesmen don't know or understand about 90% of them. How are their clients going to understand? They aren't. We have our eyes on Citadel, Renaissance, and D.E. Shaw as examples of how to do it right. Those firms are factories of the mind, and their clients are much happier than any others. And when we need salesmen, we know exactly where to find them.