Jean-Marie Eveillard: Reaping the rewards of discipline

The late 1990s were a tough time for Jean-Marie Eveillard. While everyone was jumping into Internet and technology stocks, he was on the sidelines, unable to see the value in the sector.

“I would go home and say, “What am I missing?’” said Mr. Eveillard, who was managing three funds for Société Générale Asset Management. “I was wondering if I was an idiot for not seeing what everyone else was seeing.”

Between 1997 and 2000, his funds lost six out of 10 shareholders, and assets declined to $2 billion, from $5 billion.

The press and members of the board of Société Générale put pressure on Mr. Eveillard, but he didn’t give in.

“Investors wanted returns and instant gratification,” said Bridget Hughes, an analyst at Morningstar Inc. “People said he had lost his touch and was an old fuddy-duddy because he wouldn’t buy technology.”

But just months later, after the dot-com bubble burst, Mr. Eveillard was applauded for his discipline. In 2002, Morningstar named him International Manager of the Year.

Nearly a decade later, Mr. Eveillard has been chosen by advisers as the winner of InvestmentNews‘ Lifetime Achievement Award.

In the wake of one of the worst bear markets in decades, Mr. Eveillard is still renowned for his steadfast refusal to follow the herd. It is a philosophy that has served him well.

Today, he is senior vice president of First Eagle Investment Management. Within the First Eagle group, the $7.45 billion First Eagle Overseas Fund (SGOVX) and the $20.83 billion First Eagle Global Fund (SGENX) have outperformed their categories for the most recent five and 10-year periods, according to Morningstar. The $1.15 billion First Eagle U.S. Value Fund (FEVAX) has outperformed its peers for the past five years, and the $2.3 billion First Eagle Gold Fund (SGGDX) has outperformed its category for the past 10 years, although it slipped in the five-year category.

“If you are a value investor, you have to be a long-term investor. And if you accept that, then you understand that you will lag your peers or the benchmark at times,” Mr. Eveillard said. “The truth is, it’s warmer inside the herd. It’s moving outside the herd that is hard to do.”

Mr. Eveillard believes that his Catholic upbringing helps him stay disciplined. “I grew up going to Mass every week, and the priest would talk about how this earth is the valley of tears, and anything good that happens will happen in the afterlife,” he said. “I think that’s where my willingness to suffer comes from.”

Born in Poitiers, France, in 1940, Mr. Eveillard started his career with Société Générale, and relocated to the United States in 1968. Two years later, he began as an analyst with the SoGen International Fund, and in 1979, he was appointed portfolio manager of the fund, which was later named the First Eagle Global Fund. He went on to manage the Overseas and Gold funds, and the U.S. Value Fund.

Mr. Eveillard retired in 2004, only to be asked to come back two years later after his successor and one-time co-manager, Charles de Vaulx, abruptly left.

Upon his return, Mr. Eveillard had to rebuild the firm’s asset management team, replacing three analysts who also had left the firm.

“He not only helped with the recruiting, but he really served as a mentor for the younger analysts,” Ms. Hughes said.

Mr. Eveillard’s key hire was Bruce C. Greenwald, academic director of the Heilbrunn Center for Graham & Dodd Investing at Columbia University’s School of Business, as director of research.

The First Eagle funds, like most investments, were down in 2008, but they all outperformed their benchmarks, according to Morningstar.

But that doesn’t stop Mr. Eveillard from thinking about what he could have done better.

“I saw the crisis coming, and I spoke publicly about it,” he said. “I took a haircut, but I should have taken a much bigger haircut so that instead of being down 20%, I could have been down 5%.”

Still, being down only 20% when most funds saw losses of at least twice that is noteworthy and is emblematic of the risk management for which Mr. Eveillard is renowned, Ms. Hughes said.

“When he sees a downtrodden area that is really cheap, his first question is, “Can this go down further?’” she said. “At the same time, he expects equity-like returns. He is really an equity manager, and he isn’t trying to build a bond portfolio that gives you smaller levels of returns.”

Mr. Eveillard also is unique in that he is very accessible to clients and advisers.

“If an adviser asks him out to dinner at a conference and he is free, he will go have dinner with the adviser,” Ms. Hughes said. “He is very approachable.”

Mr. Eveillard said he has always made it a habit to stay open to advisers and clients. “When we were small, we had to reach out to advisers, and I just kept up with it,” he said.

Today, Mr. Eveillard tries to be just as accessible to First Eagle’s analysts and portfolio managers. He retired from daily portfolio management in March 2009 but still serves as a senior adviser to the funds, and he continues to come to the office at least once a week.

“My door is always open, and my assistant always knows how to reach me,” he said.

When he isn’t at the office, Mr. Eveillard, 70, is often traveling with Bette, his wife of 38 years, and spending time with his daughters, 33-year-old Suzanne and 27-year-old Pauline.

Mr. Eveillard also makes sure to read the financial news every day and still is an avid follower of the markets. While he won’t predict what’s going to happen with the sovereign-debt crisis in Europe, he believes that gold — of which he has always been an advocate — continues to be a good bet in uncertain markets.

“Gold is insurance against governments’ debasing currencies,” he said.

E-mail Jessica Toonkel Marquez at [email protected].