Alternative Investments Spotlight: Latino Money Manager Empowers Young Hispanics to Foray Into Money Management
December 14, 2020
In this episode of Engaging Alternatives Spotlight, Elana Margulies-Snyderman, Senior Manager, Publications, EisnerAmper, speaks with Lorenzo Esparza, Founding Principal of Manhattan West Asset Management, a Los Angeles-based alternative investments and wealth management firm, about his views on alternative investments, how he got into money management, what is he doing to champion more young Hispanics to go into investing careers and what he is doing at his firm on a whole to embrace diversity.
EMS: Lorenzo, tell us a little about your firm.
LE: So Manhattan West is what I describe as a modern financial solutions company. And we really have two distinct areas. One that caters to private wealth clients that is designed to be a one-stop, kind of full service platform. And then the other side of the business is alternative offerings, where we have funds in private equity, venture capital, real estate, and private debt.
EMS:And Lorenzo, why do you feel alternative investments present attractive opportunities, currently?
LE: Well, I think we're living in interesting times, to say the least, certainly with respect to capital markets and the world liquid portfolios are behaving. So we think it's prudent to have alternatives that can act as an alternative to the income that one normally sees with bonds, and the growth that one normally receives with traditional stock portfolios. And so, we believe there's ways to accomplish the goal of getting growth and getting income, with a lot less risk and a lot less volatility. So, the way that we've done that in the area of fixed income replacement is that we've offered funds that are real estate oriented, that allow investors to generate income.
And then, as I mentioned, with our venture funds, our private equity funds, we're really seeking to replicate the growth you would see with equity portfolios, and instead we're investing in private equity and venture as our alternative to generate the growth that we're looking for. So, kind of as a final thought, we're really looking to control volatility more, and to just be less reliant on the capital markets because they can behave in ways that really unsettle our investors. So, that's what we're trying to do.
EMS: Lorenzo, you have an interesting background, having started in business and legal affairs at Paramount Pictures. What inspired you to foray into money management?
LE: Well, it's interesting, as a young man, my parents told my brother and I you should be a doctor or a lawyer. In fact, my brother's an MD, and I went to law school and graduated from Loyola Law School in Los Angeles. And while in law school, I interned in business and legal affairs at Paramount Pictures. I really wanted to understand the economics of Hollywood, and the profit participations that come from film and television, and what have you. And so, I loved the industry. I got a really strong understanding of how transactions are done and how profit participants enjoy returns on their work. And I always had an interest in the capital markets, and started to really focus on a transition into that space.
And after spending a number of years at Paramount, I moved into the private client group at Alliance Bernstein, which at the time was known as Bernstein Global Wealth Management. I really took my entertainment background and studio acumen, and lent that experience to working with private clients that had their industry in the entertainment space. And so, I moved to New York. I went through their training program, and spent time at Bernstein before I then transitioned to JP Morgan, and then eventually launched Manhattan West in 2016. So, we're really passionate about working with investors, and focused on how to generate positive investment return.
EMS:Thanks. And Lorenzo, as the son of Mexican immigrants, you really are true role model to Latinos, being a money manager, given that less than 1% of the assets are managed by Hispanic owned firms. I was just curious what you're doing to champion more Latinos to go into money management.
LE: Well, it's interesting. One of our clients at Manhattan Ralston's, this Hispanic scholarship fund, which is a 501c3 nonprofit organization that provides scholarships and resources for Hispanic students and in their endeavors for higher education. And so, I'm often called to speak on panels and to interact with that constituency. And one of the things that I observed is that they shared a similar belief that my parents had, which is that you needed to become a doctor or a lawyer to endure financial success. And so, part of what I do is talk to students about private equity, venture capital, private debt, and capital markets in general.
So they can understand that there's more than just this binary path of being a doctor or a lawyer. So that's part of what I do. And I think I learned that the hard way. While I'm excited and proud that I graduated from law school and hold a JD, I also graduated with $130,000 in law school debt. And so, it's probably substantially more today because that was in 2000. And so, really just trying to get students and folks to understand that there are other paths, and I've liked to be a resource to them as they look at what else is out there.
EMS:No, it's really inspirational to younger generations of Latinos to get into money management. And Lorenzo, follow-up question I wanted to ask is what are you doing as a whole to embrace diversity at your firm today?
LE: Well, I think we're doing it in a number of different ways. The first thing I'm proud of is I think that when you level the playing field and you have no bias about what the best candidate looks like, what their sexual orientation or gender looks like. All of a sudden, you really have a much broader pool. And if you have a broader pool, then you wind up with a more diverse group. So, if you look at our firm, we have exceptional people from top to bottom. They happen to be diverse in manners of color and gender and sexual orientation. And so, that's something we're proud of. It's not something that we were looking to go out and do. We just knew it would happen if we had a truly open opportunity set. So, I mean, that's the first thing we're doing in terms of our organization as a whole. Another thing we're trying to do is be thoughtful of the way that we're investing capital.
We don't want to put money into things that we don't think are bringing a positive social, economic output. So, I often talk about how tough it is to raise teenagers in this day and age. And the idea of keeping them away from vaping was one of the reasons that we didn't invest in Juul Labs. And we had an opportunity to be in that early, and we just wouldn't touch it, even if it was a jackpot investment. It's just not something that we want to put a single penny of our capital into. So thinking about investing in ways that are socially responsible, those are the ways that we can embrace diversity of our team, and also of our investment thesis.
EMS: Yeah, and Lorenzo, clearly, social responsibility has been a theme that's been top of mine this year, especially with all the current events going on. So with that being said, what are your future plans for Manhattan West Asset Management, looking ahead.
LE: So we're always in growth mode. I love how far we've come since we launched in 2016. We have over 25 people on staff. I expect us to grow in terms of the number of people that we have on the team, and also in terms of our AUM. We are striving to become a multi-billion dollar firm that manages money across asset classes, and as a firm that is a highly respected organization. We want to be known as a model of inclusion, a model of excellence, and because we're smaller, I'll often say to our staff that we have to be perfect. We have to do things that are really high level because we're not Goldman Sachs. But, let's pretend that we are, and let's not have any mistakes or errors, and do things at a really high level. So that's the plan for the firm going forward.
EMS: No. Great. And Lorenzo, are there any other final thoughts you'd like to share with us?
LE: I think this been a challenging year for so many people. And I think what we've experienced this year in all of the social re-learning that's happening as a result of COVID-19. It's just made us take a deeper look at our lives and to be grateful for what we have, and really just to focus on family and health, and having a positive impact on the world. That's really kind of a mantra of our organization, that we want to put people in a better place than how I found them. But yeah, we're very grateful for where we're at, excited and bullish about 2021, and just wanting to make a positive impact.
EMS:Well, thanks Lorenzo, for sharing your perspective with our listeners.
LE: And thank you so much for having me. I appreciate it. It's been fun and I look forward to continuing our discussions.
EMS:And thank you for listening to the EisnerAmper podcast series. Visit eisneramper.com for more information on this, and a host of other topics. And join us for our next EisnerAmper podcast when we get down to business.