ANDREW M. CARTER: HEY, PYTHAGORAS, HERE’S A WHOLE THAT MAY EXCEED SUM OF ITS PARTS

The combination of Lewis Ranieri, largely considered the father of the asset-backed security, and Andrew Carter, among the first money managers to trade individual bonds actively, will likely be a force to reckon with.

Mr. Carter, 58, was named chairman and chief executive of Mr. Ranieri’s New York firm, Hyperion Capital Management LP, in December. He succeeds Ken Weiss, who recently left the company. The deal, in the works for a year, brings together longtime friends who are visionaries in their respective bond market niches.

“Watch out for these guys,” says Ron Ryan, president of Ryan Labs Inc., a bond trading firm in New York. “Andy understands the math of bonds, the quirks of bonds. Through this merger you have one of the finest math guys and one of the finest traders.”

closed own house

Mr. Carter, who shut down his six-employee Boston firm, will oversee a staff of 31 that manages $5 billion for institutional clients, and face the challenge of molding a second-generation staff. Mr. Ranieri and Mr. Weiss remain directors of Hyperion’s four mutual funds.

“It’s a big step and I’m terrified, of course, but I’m doing just what I want to do,” Mr. Carter says, noting that he jumped at the opportunity to work at Hyperion.

“I admire Lew so much,” says Mr. Carter. “We’ve done tens of billions of dollars worth of work together over the years. And when we decided this, we shook hands and didn’t discuss my money. They’re letting me decide what I make.”

It was Mr. Carter who provided the confidence boost back when Mr. Ranieri was a trader at Salomon Brothers inventing new ways to invest in pools of mortgages. “In the early days, 20 years ago, when I started inventing the asset-backeds, I tried to get someone to see me as important. I explained it to Andy — he was at Jennison (Associates Inc.) then — and he gave me a bid, and we started buying this stuff.”

Mr. Carter ran Jennison’s bond department for 17 years before leaving in 1992. He started Andrew Carter & Co. two years later. “Everyone landed on their feet,” he says of his five co-workers there.

Portfolio manager Ozzie Frankel is about to be hired by an undisclosed major money manager, trader Martha Ewing now runs the personal wealth department of an undisclosed bank subsidiary and two secretaries and a bookkeeper have also found new jobs.

Mr. Carter is a wealth of anecdotes, including a tale about his handlebar mustache: He fell from a horse in 1970 and was unconscious for eight days. His wife, grateful he had survived, made him promise to keep his upper lip unshaved as a sign of their victory over death, Mr. Carter recalls.

“I just love what I do,” he says. “I feel 23, like I haven’t done any work since 1964 when I started at Irving Trust. I will probably be working when I’m 85,” he says.

In the 1960s, when he was managing money for Harvard University’s pension fund, he had this notion that it was dangerous sometimes to hold bonds if you could get a better return by trading them.

“You have to stay on it,” he says of an idea that seems so obvious now. “When they were starting a crazy war in Vietnam and Johnson had his war on poverty, the yield was 4% and I invested defensively in the bond market. When it reached 9%, that was a contract for the future and it even continued up to 18%.”

Mr. Carter managed Harvard’s $500 million bond portfolio from 1964 to 1968 and later helped form the bond groups at Wellington Management Co. and Jennison, both in Boston. Between the latter two stints, he ran his own firm, Standard & Poor’s/Carter Doyle, from 1972 to 1975.

“You shouldn’t fool yourself that you’re important in this world,” he says, “but when you run a portfolio with lots of zeros on the right, you have a sense of meaningfulness in life.”

Crain News Service