Letter from Rich Pzena to our Clients and Friends

Tuesday, March 17, 2020

To our clients and friends,

Without question we are living through an unprecedented time.  How we respond within our communities, our families, and our businesses will no doubt impact how we remember this challenging moment.

I would like to report on the state of our business and how we are operating during this extraordinary environment.  As always, we seek to meet and exceed your expectations of us, and hope you will continue to judge that we surpass our high standards.

First and foremost, we wish that you and your colleagues, families and friends stay safe and healthy.  At Pzena, we have implemented all of the best practices encouraged by the WHO, CDC and US State Department regarding travel, social distancing and hygiene.  Our offices continue to be open, though we have made working in the office an optional decision for all employees other than a necessary skeleton staff.  In addition, we have implemented a rotating two-week schedule to make sure that at least half of our team are always out of the office and don’t interact in person with the other half.

As a business we have always managed the firm conservatively.  We could weather a 50% performance hit and still be profitable, as we were in 2007-2008.  We have strong liquidity and no debt.  So even if the markets were worse, we believe that we wouldn’t have to cut staffing levels.

We are fortunate that we have invested heavily in our Operations and IT infrastructure over the past decade, and I am proud to report that our team is operating as close to normal as I can imagine, even while working from home.  We have the ability to execute, check and double check accuracy, meet individually and in groups and effectively function as we always do.

Perhaps most importantly, our research team is engaging in portfolio and company-level reviews at an accelerated level. Our videoconference capabilities are enabling us to have research team meetings as though we were all in the same room.  Company managements are responding with increased accessibility, and we are taking this opportunity to benefit from the emotion-based market dislocations we are all witnessing.

We have developed “Special Reports” for most of our products and have shared them with our clients, and have also completed a research review piece on the opportunity in the energy sector.  No doubt we will produce more reporting for our clients in the days and weeks ahead.

Thank you again for your ongoing partnership with us.  We look forward to a future of health and success together.

Sincerely,

Richard S. Pzena