News Column

High Tech’s Unwavering Champion

Alberto Vilar

Despite recent setbacks, Amerindo’s Alberto Vilar says the world is on the verge of another technology revolution.

By Derek Reveron
March 2002

Alberto Vilar, founder and president of Amerindo Investment Advisors, is a study in contrasts. He was a self-described shy nerd as a youth. Now he loves to talk. His professional passion is technology investing. But his personal obsession is opera. He admires world-class musicians as much as star portfolio managers, and he is one of the most generous opera philanthropists in modern history. Given the anemic stock market, you might expect Mr. Vilar, 61, to pore over financial research every night. But he attends more than 130 operas a year worldwide. In one week, he might jet between London, Austria, New York, and Russia. He splits his time between his 30-room apartment in Manhattan and residences in London, Colorado, San Francisco, and Puerto Rico. Yet Mr. Vilar finds time to be one of the world’s top technology portfolio managers. He’ll do it forever, he says. “In this work, you can die with your boots on – pick stocks until your mind is no longer intact. Whereas if you run a corporation, they want you to leave at 65.” Along with Amerindo executive vice-president Gary Tanaka, Mr. Vilar was among the first money managers to tout the potential of Internet companies to institutional investors in the early 1980s. Today, Mr. Tanaka oversees day-to-day portfolio management. Mr. Vilar also picks stocks, but specializes mostly in deal-making and client relations. Each owns about half of the company. Like other portfolio managers, Mr. Vilar has watched his investments plummet in value along with the stock market. Amerindo manages a total of about $1.5 billion, down from $8.5 billion in March 2001. Institutional investors account for more than 90 percent of the total. The rest comes from mutual funds, which have taken a beating in recent years. The Amerindo Technology Fund’s annual return fell from 250.6 percent at the end of 1999 to minus 50.7 percent at the end of 2001. Through it all, Mr. Vilar has remained an unrepentant technology bull. While he has trimmed Internet holdings, his investment strategy remains basically unchanged: Invest in emerging hightechnology and health-care companies as well as businesses that stand to benefit from technology. He clings to the notion, discredited by many, that traditional stock valuation methods such as price-earnings multiples don’t apply to technology businesses. “I could easily say the hell with technology and invest in media companies or electric utilities. But we haven’t changed our stripes,” he says. In fact, he predicts that the world is on the verge of another technological revolution that will last through the decade. “We went too far up in exuberance and came down too far. Companies in the internetworking, broadband fiber-optic, B2B and chip spaces will stabilize over the short run and then rise. There will be an explosion over the next few years,” he says. Mr. Vilar grew up in Cuba, although he was born in New Jersey in 1940 during one of his parents’ short trips to the United States. His father helped run a sugar company and his mother was a socialite. Young Alberto grew up with two older sisters but spent lots of time with his grandmother, who lived with the family. “She was the one who really raised me,” he says. And she introduced him to European classical music when he was 7 years old. He sometimes spent hours alone in his room listening to music, playing conductor and memorizing musical scores (a habit he would continue for many years). One day he expressed interest in learning to play the violin, but his father would not permit it. “He was a typically macho male who didn’t think it was becoming for a boy to play the violin,” recalls Mr. Vilar. His parents divorced when he was 8. “My mother disappeared from our lives and I saw her very few times after that,” says Mr. Vilar. He claims that he always accepted his lack of a relationship with his mother matter-of-factly because of his nurturing grandmother. At age 10, he moved to Puerto Rico after his father accepted a job transfer to the island. As a teenager, he preferred classical music to merengue, boleros, and even baseball. By age 18, he had memorized a handful of musical scores and was a fledgling connoisseur of Russian opera. Mr. Vilar headed for Jefferson College in Washington, Pennsylvania, after graduating from high school. During his sophomore year, Fidel Castro seized power in Cuba. The family lost its wealth, and Mr. Vilar’s father landed a job with a small shipping company in Puerto Rico. Convinced that Mr. Castro would soon lose power, the elder Vilar encouraged his son to become a banker and prepare to return to Cuba to run a sugar business. After graduating from college with a bachelor’s degree in economics and spending two years as a lieutenant in the army, Mr. Vilar heeded his father’s advice. “I began my job search with one wash-and-wear suit and little money. I was Hispanic and I didn’t have an Ivy League education. Offers weren’t banging down my door,” Mr. Vilar says. In 1964, he joined Citibank and eventually became an international credit officer. While assigned to Colombia, Mr. Vilar subscribed to a stock newsletter and got hooked on the market. He embarked on a series of portfolio management positions at Drexel Burnham Lambert, M.D. Sass Investor Services, Endowment Management & Research Corp., and the Boston Co. Along the way, he earned an MBA from Iona College and completed a doctoral studies program in mathematical economics at New York University. By the late 1970s, Mr. Vilar became frustrated with Wall Street bosses who shied away from investments in emerging technology companies. Convinced that Internet stocks could yield portfolio riches, he launched Amerindo in 1980. “Nobody knew how to evaluate technology, so there was no real competition for what I knew would be really big,” he says. He named Amerindo after its first investor, the American Indonesian Singaporean Investment Co. In 1981, Mr. Vilar brought in Mr. Tanaka, a former portfolio manager for Crocker Bank who was born in a U.S. Japanese internment camp. They made the rounds to institutional investors and pitched stocks of then-emerging companies such as Microsoft, eBay, Intel, and America Online. It was a tough sell. Institutional investors knew little about high technology. Amerindo landed enough rich private investors, however, to carry the company until institutions climbed aboard. In 1996, Amerindo reached out to smaller investors by starting the Amerindo Technology Fund, followed later by the Health & Biotechnology Fund and the Internet B2B Fund. Two companies Mr. Vilar believes will supply hardware for the next technological revolution are Sycamore Networks and Siebel Systems. Sycamore makes switchers and routers for optical data transmission, which it sells to Internet service providers and telecommunications companies. Siebel makes customer relationship management (CRM) software, which routes information among call centers, production distribution, salespeople, and customer relations staffers. Large corporations form its core clientele, and as more of these companies’ operations move online, their CRM needs will expand. According to Mr. Vilar, the Internet serves two functions – helping companies transact business electronically, and helping them communicate. Products or services that facilitate those functions stand to benefit. Besides Sycamore and Siebel, he names VeriSign Inc. and ONI Systems Corp. as well-positioned players for the future. Despite the current downturn in the market, it’s easy to see why Mr. Vilar maintains a long-term faith in technology: Amerindo has made him a billionaire. He enjoys the opportunities that come with wealth, particularly the chance to support favorite causes. His list of beneficiaries includes New York’s Metropolitan Opera ($35 million), England’s Royal Opera House ($20 million), the John F. Kennedy Center for the Performing Arts ($50 million), Carnegie Hall ($5.6 million), and the Kirov Opera and Ballet in Russia ($20 million). In all, he has donated nearly $200 million to his love of opera. He also donated $10 million to establish the Vilar Center for the Arts in Beaver Creek, Colorado, where he owns a home. The money lends Mr. Vilar access to the world’s greatest musicians and conductors. Recently, while recovering at home from surgery, he received a call from Placido Domingo, who was performing in Austria at the time. The Grand Tier at the Met bears his name. The Royal Opera House named its main foyer Vilar Floral Hall, and the gift earned personal thanks from Prince Charles. After surgeons repaired Mr. Vilar’s arm following a skiing accident in 1996, he donated $4 million to open the Alberto Vilar Center for Research of the Hand and the Upper Extremity at New York’s Hospital for Special Surgery. That’s a high price for an operation, but to hear Mr. Vilar tell it, the sum will be insignificant once his technology investments start to mature. “In terms of price appreciation, you could say [the stock market of 2000–2001] was a bubble,” Mr. Vilar announced on Public Television’s Wall Street Week With Louis Rukeyser. “But in terms of technology, we are in the first inning. You are going to see the most important change in 20 years from the so-called client-server technology.”

Source: HISPANIC BUSINESS magazine

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