Houston billionaire Fayez Sarofim dies at 93. ‘The Sphinx’ made a fortune betting on top-notch American entrepreneurs

Billionaire fund manager Fayez Sarofim died at his Houston home on Saturday at the age of 93.

“I have always said that it takes someone from abroad to recognize the true potential of this country,” said Fayez Shalaby Sarofim in his first interview with Forbes magazine in 1969. At the time, Sarofim – 41 at the time – was a rising money man. The native Egyptian was known as the Sphinx for his inscrutable demeanor and calm, unwavering faith in American exceptionalism. He bought blue chip stocks like P&G, Coca-Cola
Philip Morris, was an early investor in Intel
and Teledyne, and he wholeheartedly believed in the economic power of the United States not just to make money, but to make it worse.

“The United States is still a relatively young nation among industrialized nations. It can still put effort into becoming more competitive through technology,” he said at the time. “It is endowed with natural resources and, equally important, intelligence. And the American political system is still the most stable of all.

His Coptic Christian family had left their native Egypt after the government ordered Sarofim’s wealthy father to sell his land or have it seized by the state. He arrived in the United States in 1946 and after his studies at UC Berkeley and Harvard, the owl Fayez went into finance and developed a talent for stock picking.

With $100,000 from dad, he started Fayez Sarofim & Co. in 1958. In addition to start-up capital, his father gave him advice: “He told me not to get a salary but to put the profits back in the company in order to give customers the best possible service. The benefits would come later.

This fish-out-of-water belief in American exceptionalism has played well among oil tycoons in his adopted hometown of Houston, where despite the heat and humidity, he has stuck to his suits three bespoke pieces in London. But it was his first wife Louisa Stude – a Grace Kelly lookalike and niece of George Brown, one of the founders of Brown & Root’s oil services company, now a subsidiary of Halliburton
– which really opened doors for Sarofim. An early coup was the management of Rice University’s $65 million endowment.

By 1969 he had over 400 clients and $1.2 billion under management. In the mid-1970s, he bravely bought stocks at very favorable prices. By 1980, assets had reached $7 billion. He held onto oil stocks too long in the early 1980s when they crashed. But he kept the faith, and in a 1980 Forbes cover story he lamented that the market was weighed down by “too much pessimism”.

He was right, of course, to have faith in America and in entrepreneurial capitalism. “Betting on people is the most important thing,” he once said. Entrepreneurs “just seem to produce better investment results, when they have their money – and their ego – on the line.” Its average holding period of 5 years was eons longer than its flaky peers.

In 1987, he ran $15 billion and first appeared on the Forbes 400 with a net worth of $300 million. Its worst day was “Marlboro Friday” in 1992, when Phillip Morris slashed cigarette prices and Sarofim’s fund lost $475 million. He later made up for it by driving customers away from Enron. Today, assets under management exceed $30 billion and his son Christopher Sarofim runs the business.

Sarofim spent a lot of money on divorces. In 1989, Louisa (who bore him two children) filed for divorce after being the last person in the tony River Oaks neighborhood of Houston to know that Fayez had had an affair with one of his employees, Linda Hicks, with whom Sarofim had three more children. . He settled with Louisa for over $100 million in 1990.

Although he bought Linda a 22,000 square foot mansion on River Oaks Boulevard, their subsequent marriage ended in 1996 and cost at least $60 million. Ever the ladies’ man, Sarofim raised eyebrows all over town when he remarried in 2015 to Susan Krohn, the mother of his son Phillip’s (now ex) wife Lori, herself ex- wife of Houston oil magnate Tracy Krohn.

His passion (apart from spending afternoons in a haze of cigar smoke at the Coronado Club in downtown Houston) was art. He started buying in the 1960s and built up a collection including masterpieces by John Singer Sargent, Winslow Homer, Mary Cassat, Edward Hopper, Willem de Koonig. In his office he kept El Greco’s painting of the Cruxification of Christ on the wall, near a Picasso and Rothko. Sarofim’s last major philanthropic gift was $75 million for the just-completed expansion of the Houston Museum of Fine Arts.

It’s only fitting that Sarofim’s favorite TV show is Wheel of Fortune, which he enjoyed watching at home with his children, always dressed in the three-piece suit of the day. Growing up in timeless Egypt, having lived through the experience of being a Christian in a Muslim country, seeing his family forced to sell their ancestral lands, Sarofim had a deep enough perspective to know that America had truly been blessed by the fortune, but did not always appreciate it. .

For this first story from 1969, Forbes journalists asked Sarofim, “How did you come so far so fast? His answer remains relevant more than half a century later. Because he was foreign, he says, he simply didn’t care about some of the “problems” that plague so many American fund managers. “At every turn in my ten years of business,” he said, “there have been hordes of doubters – worried men preoccupied with fear of impending disaster. But look what’s really happened and promises to keep happening.” Indeed, America has survived and thrived after every bear market so far, and will do so again.

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