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Fast Track: Dreman’s new president is dreamin’ big

It has been a topsy-turvy year for Scudder Investments in New York.

Deutsche Bank AG closed its acquisition of the money manager in the first quarter, and since that time, at least 39 Scudder funds have undergone management changes.

That climate at Scudder benefited Thomas Littauer, 47, who in April was named president of Dreman Value Management LLC in Jersey City, N.J. The firm has a total of $7.5 billion in assets under management, about $6 million of which it manages for Scudder.

Before leaving in March 2001, Mr. Littauer served as managing director of Scudder Kemper Investments Inc. and as head of its Asia Pacific and Americas global mutual fund group. He says he left because the company was considering transferring him to Asia, and he didn’t want to be separated from his wife and five children in Boston.

Mr. Littauer also worked for William Shiebler, the former president and CEO at Putnam Investments Inc. in Boston, running that company’s broker-dealer division. Mr. Shiebler was appointed CEO of the Americas at Deutsche Asset Management, the new parent of Scudder Investments, in March.

“[Dreman has] a lot of subadvisory relationships with Scudder,” says Burton Greenwald, a mutual fund consultant in Philadelphia. “I would assume they’re trying to galvanize that.”

Mr. Littauer admits that Dreman would like to expand its relationship with Scudder.

Dreman manages three Scudder funds: a large-cap-value fund, a small-cap-value fund and a financial services fund. Mr. Littauer says Dreman also is looking at launching other value funds under the Scudder name, such as an all-cap fund and a fund that combines small-cap and mid-cap stocks.

It is a strategy based on the belief that the changes being made at Scudder will help the company increase assets across all its funds, including those managed by Dreman.

“We’re really excited … because we know they have the potential to ramp up distribution,” he says.

But Mr. Littauer, whose background is in marketing, doesn’t plan to focus solely on Scudder.

One way to build the business is to branch out into Canada, he says. To that end, he adds, Dreman is shopping around for a subadvisory relationship there.

Mr. Littauer knows a little something about selling mutual funds in Canada. He headed up Boston-based Fidelity Investments’ early-1990s push north of the border.

Dreman also is looking to expand its wrap account business, he says. The firm currently has $100 million in wrap accounts.

The company wants to partner with a third-party marketer to make its presence better known to brokerages or build a sales force from within. Currently, Mr. Littauer says, he represents the one-man sales force.

Building a sales force would be a change for Dreman, which always has traded on the good reputation of its value-oriented founder and chairman, David Dreman.

Mr. Littauer, however, says he would like to see assets in the firm double within five years.

In addition to making a push into Canada and building Dreman’s wrap business, he says, he wants the company to expand its management of annuity subaccounts. The firm already manages annuity subaccounts that are clones of the mutual funds it manages for Scudder.

BRANCHING OUT

Mr. Littauer also says that he would like to see Dreman develop alternative investments such as hedge funds, and funds of hedge funds. Dreman already has developed a long-short contrarian hedge fund that has been incubating for the past two and a half years, he says.

The increased interest in annuities and alternative investments, however, doesn’t mean Dreman will turn its back on value investing, Mr. Littauer adds.

That could be a problem from a marketing perspective for Dreman if and when growth takes the crown back from value as the flavor of the month.

Mr. Littauer, however, says he thinks value will continue to remain strong for some time to come.

“The big question is, what inning of the value cycle are we in?” he says. “Many of the strong growth proponents say we’re in the eighth inning, but many of the true value players such as ourselves say we might be in the fourth inning, at best.”