Keith Lee: ‘We Think Revenues Are a Better Indicator of Size Than Market Capitalization’

Our guest this week is Keith Lee. Keith has been lead portfolio manager on the Brown Capital Management Small Company Strategy since 1992. He and the Small Company team were named Morningstar’s Fund Manager of the Year for Domestic Equity in 2015, and the mutual fund carries a Morningstar Medalist Rating of Gold. Keith is also a member of the board of directors and chairman of the management committee for Brown, and he has held the positions of CEO and CIO. He is a trustee of the Baltimore Community Foundation and active in many other Baltimore-based philanthropies. He holds a BA and an MBA from the University of Virginia.

Background

Bio

Brown Capital Management

Brown Capital Management Small Company Strategy

Brown Capital’s Proprietary Investment Philosophy

“Morningstar’s 2015 US Fund Manager of the Year Award Winners Delivered Superior Performance,” Morningstar.com, Jan. 26, 2016.

Brown Capital

“The Oracle of Apopka: Meet Eddie Brown, One of Wall Street’s Greatest Untold Stories,” by Antoine Gara, forbes.com, May 28, 2019.

“The Case for Going Small,” browncapital.com, March 27, 2023.

“I’m a Black CEO. I’ve Been Discounted on Wall Street Because of my Skin Color,” by Eddie Brown, washingtonpost.com, July 8, 2020.

“Team Decisions: Why Our Investment Team Structure Helps Us Make Better Decisions,” by Keith Lee, browncapital.com, Sept. 14, 2022.

“How We Think About Performance,” by Keith Lee, browncapital.com, June 30, 2022.

“Small Company Team Awarded Morningstar’s High ‘People Rating,’” browncapital.com, May 22, 2022.

Other

Beating the Odds: Eddie Brown’s Investing and Life Strategies, by Eddie Brown

“Opposites Attract: Why Financial Services Firms and ESOPS Are Made For Each Other,” by Mary Josephs, forbes.com, June 7, 2021.

“Mutual Funds 2030,” PwC study, pwc.com.

“Sizing the Prize—PwC’s Global Artificial Intelligence Study: Exploiting the AI Revolution,” PwC study, pwc.com.

Cognex

Bio-Techne

Veeva Systems

Dan Lefkovitz: Hi, and welcome to The Long View. I’m Dan Lefkovitz, strategist for Morningstar Indexes.

Christine Benz: And I’m Christine Benz, director of personal finance and retirement planning for Morningstar.

Keith Lee: It’s my pleasure.

Lefkovitz: We wanted to start by asking you for some history and context. Some of our listeners won’t be too familiar with Brown Capital Management, but the firm was founded in the ‘80s by Eddie C. Brown, who was the first African American portfolio manager at T. Rowe Price. And I read his memoir in preparation for this discussion, and you get a mention toward the end. Eddie writes that you’re like a son to him and talks about you in the context of succession. So maybe you could tell us a little bit about how you first crossed paths with Eddie and how you came to join the firm and how Eddie has shaped you?

Lee: It’s a pleasure for me to do that. Eddie is kind to say that I’m like a son to him. I would say he is like a father to me, but I would not want to embarrass Sylvia, his wife, and his two daughters. But Eddie and I have been together for, this is our 33rd year together.

How we met was quite interesting. A mutual friend—this just goes back probably 1987-88— asked if I knew Eddie Brown. And I said, “Most certainly, I know who he is, but I don’t know him. I’ve never met him.” And the mutual friend said, “Well, give him a call. You two should know each other. Have lunch.” And I was like, “I don’t know Eddie. I’m not just going to pick up the phone and call him.” And after literally a year of every time this friend and I spoke, him asking me if I called Eddie. I said, “You know, I’m tired of you asking.” So, I called Eddie, and we had a lunch, and it was just a life-changing moment for me, life-changing lunch. It was well over two hours. And the breadth of the conversation was just incredible. And then we talked about life; we talked about investing. And I just thought he was just really interesting and interested.

He didn’t know at the time, but I had planned on going back to graduate school. So, at the end of the lunch, I asked, how does one come to work with you? And he said, well, you need an MBA. I was like, great. That was already planned. And so, I went back to business school, and we stayed in touch. He and Sylvia would invite me over when I was in school. They had a vacation home close to where I was. They would invite me over for lunch and we stayed in touch. And then after I got out of business school, I called him and asked if he was hiring anyone. And at the time he said, no, but I got a call from him about a year after business school, and he said, I am thinking about starting this new strategy. Would you be interested in interviewing? And I said, absolutely. And so, I made the interview with seven or eight people, and I think they all said no. So, he was stuck with me.

Benz: We want to follow up on your history at the firm and where the firm stands today. But I just want to discuss Eddie Brown a little bit more because I remember watching him on Wall Street Week with Louis Rukeyser. I always enjoyed his appearances. Is he still active as an investor?

Lee: Very much so. Yes, he is still in the trenches here. His title now is executive chairman and founder, but he enjoys still being on the investment team. And you asked me about Eddie’s influence and just mentioned Wall Street Week. I think many people know Eddie as a great investor, which he is, but he is also an incredible entrepreneur. I think he is an equally good, if not better, entrepreneur. And that says a lot. But as a person, Eddie is just very cerebral, very intelligent. He is a long-term thinker and planner. He is very holistic in his thinking and approach to problem-solving. But he always looks for win-win outcome; very fair. And I always said he has an uncanny ability to accept people for who they are and where they are. And many of those traits have influenced me over the years.

In addition, I’ve been very fortunate in that Brown Capital is a small firm, but I got to work side by side with him over the years. And from a very early point, he would ask me my opinion. He wanted me to share in deliberations, considerations about decisions for the firm, direction for the firm. So, encompassing those conversations with those traits that I just mentioned, I guess I didn’t realize it at the time just how he was preparing me for this role. And it wasn’t a given. But over time, even he worked with me to overcome as I tease him all the time—”So, Eddie, you know, you helped shape me.” And we laugh. But anyway, I digress. Sorry.

Lefkovitz: It seems like you, as former CIO, CEO, and Eddie, have really built a very strong culture at Brown Capital. And I would love to hear you talk a little bit more about the culture. A couple of phrases that stuck out to me from the website: “It feels like a family”; “Brutal honesty in pursuit of the truth.” Where did you come up with that? And maybe you could elaborate a little bit about the culture.

Lee: Well, if you’re around Eddie, you know we take what we do very seriously, but we try not to take ourselves too seriously. So, thin-skinned people probably don’t like us as much because we’re messing with everyone. We have fun doing what we do. But as I said, we take ourselves very seriously. We are like a family. But the honesty question that you asked about, we look for exceptional growth companies across all of our strategies here at Brown Capital. And we’re decidedly a growth manager. We’re team-oriented and believe that teams provide better outcomes. But in order for the team to be effective, we don’t want people to go along to get along. We want people who are very direct and honest in our discussions. And that means at times saying to your colleagues, “Well, that was a poor analysis. This report goes from A to C. Next time, can we at least get to O or P.”

And the reason for that is by questioning and making people feel comfortable questioning, we think that we get to better answers, and better answers help us make better decisions. But in order to do that, you have to build an environment where people—I think today they call it having psychological safety—where people feel comfortable doing that. And the biggest difference is we know in our environment by challenging, by asking the tough questions by calling out people at times that it’s not personal. We’re not talking about the individual. We’re talking about an idea. We’re talking about a report. We’re talking about an analysis. We’re really fortunate here that we have very bright, capable, and good people, people that you want to spend time with. But by building that, once you get there, it helps to foster that brutal honesty discourse.

Benz: Brown Capital is 100% employee-owned. Can you talk about why that’s important and how you think it contributes to the firm’s culture?

Lee: And again, it goes back to Eddie, that sense of fairness, wanting people to have ownership. When you’re an owner, you become more invested. And in October of 2016, we created an ESOP, employee stop ownership plan, after trying many different approaches to disseminating ownership broadly here. And with our ESOP, it’s 100% employee-owned. You get ownership after being at the firm for one year. So, all those eligible are owners, except for two people, Eddie and myself. And if you know Eddie, that’s not surprising because he wanted to ensure that, at least out of the box that we could contribute as much to the ESOP as possible. And by doing that, we eliminated the two of us.

So, just as a quick story. It was funny about a month or two months after having the ESOP, one of my colleagues walked in and said, you know, I was thinking, and it was about how we purchase something. And he said, “I don’t think that’s the most efficient way of doing that,” and actually had a better idea. So, I said to him, “You’ve been at the firm for a long time. Why now?” He said, “I think differently about things when I see things.” And, Christine, to answer your question, and I think that’s why the ownership is important. It really does encourage buy-in and ownership.

Lefkovitz: The investment lineup is very compact at Brown—only four investment strategies, if I’m not mistaken: small and mid on the domestic side and then international small and international all company. Why are there so few and why focus on the smaller end of the spectrum?

Lee: Well, first, we’re not trying to be all things to all people. We’re not trying to build a Goliath or a behemoth in terms of an investment management firm in terms of the number of people. You want to focus on and do those things that we think we do well. And so, the strategies that we now have, we think we leverage our expertise. Brown Capital is a growth company. We are a growth-oriented investment management firm. And we look for exceptional growth companies and we do that in all of our asset classes. And so, we think we’ve leveraged our expertise to these areas, and we’re building these areas. But we’ve always considered other investment strategies. In fact, we have had others that we closed over time, and we will continue to look at strategies and the likelihood is that we will increase our offering in terms of growing our public growth equity offerings.

Benz: Earlier, you said that Eddie Brown, you thought, was even more impressive as an entrepreneur than as an investor or at least equally impressive. Do you think that running this small business or running the firm and also evaluating firms that are small, do those things work together? Does running this firm give you a sense of what you’re looking for in companies that you might buy?

Lee: I think it’s symbiotic. I think it works both ways. Certainly, it does. Some of the things that we look at, look for, and what we consider an exceptional growth company that they offer, mission critical, not that we’re mission-critical, but mission-critical products or services to their customers that they look for to the long-term for sustaining revenue growth for their balance sheets are very strong, usually having a high degree of cash on their balance sheets. Their people, just really high-quality people. They treat their people fairly. People want to work for them. Their customers, they tend to have very long and durable relationships with their customers. And I think, many of those things we have at Brown Capital Management and those companies, they really take care of their employees. That’s important to them as it is at Brown Capital Management. We say our most important assets walk out of the front door every night. We want to make sure that they come back, that they’re growing both personally and professionally, and that they’re enjoying their work experience.

Lefkovitz: You’ve been a small-company investor for decades and you differentiate between small company and small cap. You look at operating revenue instead of market capitalization. Why do you make that distinction?

Lee: We think revenues are a better indicator of size than market capitalization. And I’m going to go way back—when I came to Brown Capital in 1991, soon thereafter, IBM was in a downward price spiral. And we said that if the stock price of IBM drops far enough, IBM could appear in small-cap portfolios. And at that time, it was multibillion dollars in revenue, multibillion dollars in assets, hundreds of thousands of employees—anything but small. Fast forward to the dot-com era, dot-com was just the opposite. Many of these companies had market caps that were well in excess of a billion dollars and no revenues. And then in the great recession, a firm like GM, GM had $46 billion of revenues, but yet their market cap was a billion dollars. So, we just think that identifying and investing in companies early in their life cycles, particularly companies that can sustain growth over long periods of time. These companies tend to be innovative. At times to cutting edge of new technologies, of new areas. It’s exciting. But it’s also, when we get it right, it can be very rewarding for our clients and our shareholders.

Benz: We wanted to ask about the state of the state for small caps. They’ve badly underperformed large caps in the US. And it seems like a lot of investor portfolios these days are pretty heavy on the large-cap stocks. How do you account for the small-cap underperformance?

Lee: I think if you look, like the last five years, large cap has certainly outperformed—the Russell 2000 Growth has returned a little over 5%, whereas the Russell 1000 Growth has been up about 17%. I think a lot of that has come from the larger tech companies—the “Magnificent Seven” has really added to that difference as well as the background drop. You looked at rising inflation. That certainly has not boded well for growth companies and certainly not small-growth companies. And I was reading a Wall Street Journal article within the last couple of months that said that small-cap stocks are historically cheap. And the S&P—don’t hold me to these numbers, but I think they’re pretty close—the S&P SmallCap 600 was on a forward P/E basis 13 times versus about 19 times for the S&P 500. And the Magnificent Seven—the Apples, Microsoft, Amazon, Metas of the world—they were at 32 times. Whereas the Russell 2000 was at about 15 times. And so, we know that small caps have struggled, as I mentioned, in high inflation or interest-rate environments, more than large companies. But I think that will change. Small cap generally outperform markets, large companies when there is an anticipation of Fed rate cuts. I think Morningstar has said that the Russell 2000 has risen about 25% during periods of increasing growth and slowing inflation since the ‘70s versus about 17% for the S&P. So long-winded way of answering your question, but those are some of the reasons why.

Lefkovitz: Your asset base has obviously come down quite a bit. I think you had over $13 billion in mid-2021 and you’re, I don’t know, $6-billion-odd now. You also were closed to new investment for many years and you reopened. I’m curious how that fluctuating asset base affects your investment flexibility and decision-making.

Lee: Well, thanks for reminding me of that, Dan. Our assets have come down as you indicate. But we have not changed how we go about investing in exceptional small companies. We’ve made tweaks over the years. For example, we started defining the small companies with revenues of $250 million or less at the time of initial investment. We would have a 10% max on a company portfolio. We moved that to 6%. We moved the $250 million up to $500 million. And so, we made those types of changes. But the types of companies and the way we invest, we have not changed much over the years and it’s not because we’re unwilling to change or can’t change. But it’s because we still believe that this approach will provide incredible returns over time by approaching it this way.

Let me just be direct. You talked about the asset loss. Our performance has sucked. It stinks over the last couple of years. But when you look, even including the great recession, even including the tech-bubble burst, including covid, including 2022, our returns have averaged about 11% since inception, going back over 30 years versus about 8% for the Russell 2000 Growth. And that’s more than a 300-basis-points of outperformance annualized. That’s not inconsequential, at least in my opinion. And it was interesting. I had been saying at least for the last five or six years that our Small Company—this was before our downturn—that our Small Company performance couldn’t continue forever. And unfortunately, I’ve been right about that. I guess that’s something I have been right about. But I do believe we have the ability to return to outperformance at some point. I think at times, our outperformance has been because of disconnects in the marketplace where fundamentals—there’s a disconnect between fundamentals and stock prices. And so, when that occurs, that has impacted us.

Benz: Sticking with performance for just a minute, we wanted to home in a little bit on 2022, which seems like that was a particularly bad year in terms of absolute losses of about 40% as well as, I think, bottom-decile performance relative to other small growth funds for Brown Small Companies. So maybe you can elaborate on what went wrong in that year and why you don’t think it’s indicative of how the fund is likely to behave over the long term?

Lee: Yeah. In ‘22, most equity benchmarks were down.

Benz: Yes, for sure.

Lee: And we certainly were down more than that. And you saw really the first dramatically rising interest-rate environment, I think it was in almost 40 years. And we look for exceptional growth companies and our growth rate tends to be higher than most growth managers. And so, we were impacted more than the index in that year. But when you look at our portfolio, it’s not like we had any blow-ups in the portfolio, or at least that I could remember sitting here right now. And as a result of that interest rates rising, we were impacted by that and that’s to be expected. And one of the things that I’ve learned is that in this business, people take profits where they have them. And our companies have done well on both an absolute and relative basis for a long period of time. So, there were profits there to be taken.

Lefkovitz: You’re far from the only actively managed mutual funds that has experienced outflows. This is a space that’s clearly under pressure. So curious, from your perspective, how do you survive and thrive in an era where passive investing seems to be really capturing investor attention and capital? ETFs seem to be winning. Brown does not have ETFs. Brown does mutual funds and separate accounts.

Lee: Right. I was looking at a study recently. I think it was by PWC who was forecasting passive funds to continue to grow and to be about 58% of a $38 trillion market by 2030, up from about $24 trillion in 2022. I think passive investing—and you mentioned ETFs—ETFs are here. They’re here to stay. They’re growing. They’re offering a wider type of product. I think recently I was reading about an ETF with a single stock. I thought that was interesting. So, there are always passive investment. That’s not new. We’ve been seeing this trend for a while. I think there will, though, always be a role for us and for active investors. As an active investor, we can go out and do what I said. We can find companies that can sustain growth over large, long periods of time. We can invest in them. And we do that. Our outsize returns, I think, find for investors a reason to always seek out active managers.

Benz: Well, sticking with your strategy, you describe your approach as looking for exceptional growth companies, which you define as having products or services that save time, lives, money, or headaches. It’s an interesting thesis, but it seems broad. So maybe you can talk about what types of companies don’t qualify.

Lee: I think that many years ago, I used to say that companies that are characterized by severe cyclicality of demands don’t qualify. Companies, in the consumer space, that can be seen more as a fad, not having really long-term potential or long-term sustainabilities. I’ve always said utilities, financials. And I said this long before the subprime debacle, that the reason we didn’t invest in banks that in order to do that we really would have to have access to their loan portfolio to really see who was borrowing, what the borrower looked like in terms of their financial stabilities and things of that nature. So that gives you hopefully an idea of the types of companies that we don’t think would qualify. Instead, we like companies, and again, I said this earlier, that are mission-critical, that have some type of economic moat, that their customers, they need them for their business in some way. And I used to say—software companies as an example—you could see a company maybe not do an upgrade cycle, maybe two, but if they didn’t do it, at some point, it was going to impact their revenues, their business. Those are the types of companies that we like, companies that can, again, sustain revenues over long periods of time and what they offer, it’s mutually beneficial to their clients.

Lefkovitz: When we look at your portfolio, the Small Company strategy, using Morningstar’s holdings-based analysis, it looks pretty concentrated in a couple of sectors, technology you mentioned, healthcare as well. But I know that you have your own proprietary classification system for stocks. Curious if you can talk a little bit about that, and where you think that traditional sector classification comes up short?

Lee: It came about over, gosh, probably over about 30 years ago. And we use traditional, I guess, sectors. And we had about 40 names at the time in the portfolio. And when you put them into those sectors, we had almost 20 industries represented. And it really didn’t tell us much about our portfolio. And so, we believe in diversification, and we thought that those areas are proprietary, really were where we were investing. And it really did a better job of telling us about our portfolio. And let me just say it’s very, very subjective in doing it that way.

Benz: We wanted to ask about benchmarks. Dan is a member of our indexing team. He noted that you said benchmarks are a distraction. We want to talk about how you compare performance, how you think people should use indexes, and what their utility might be, and I guess, how the firm uses indexes, engaging its own performance.

Lee: Dan, you might kick me off the call at this point.

Lefkovitz: Never.

Lee: We don’t remotely manage or construct our portfolio relative to a benchmark. So, then for us to spend time analyzing or looking at the benchmark really doesn’t add much to how we go about investing. But we do use the benchmark, we’re pitted against a benchmark for performance. And this strategy started—I came to help start this strategy in 1991. And talking that way back then, people looked at you quite strangely. But we said that they needed a benchmark—“they” being our clients, shareholders, consultants, and RIAs—to evaluate how we were progressing. And so, we thought that finding an appropriate benchmark to do that made sense. Because ideally, the reason that a shareholder or a client hires us or invests with us, are we meeting their needs, their expectations? But that wasn’t going to fly. So, we said, it makes sense to use a benchmark to monitor our performance. Did I answer your question?

Lefkovitz: Yes, I’m not offended.

Lee: OK.

Lefkovitz: Switching gears a little bit, Keith, we wanted to get your perspective on AI. It’s dominating the investment conversations, we all know. And you’re not a thematic investor at all, but several of your companies are involved directly or indirectly. You started investing before the internet, not to age you. But curious how you compare AI to the internet?

Lee: They both are transformative. The internet was transformative. It is transformative. I think AI certainly is transformative and will be bigger than the internet. I saw a report that said by 2030—it might have been the same PWC report now that I think about it—that AI could contribute 16 trillion to the global economy by 2030. That’s huge. When I think about AI, I can’t think of any industry, aspect of life that might not be impacted by AI. I look internally, we have embarked upon a major digitalization and AI initiative within our firm. And I can’t imagine how you won’t use it going forward. It will create so many—at least this is our hope—so many more efficiencies within our organization, it will free up time for both our operation team members, investment team members, administrative team members to do more substantive things, to think about things differently, to gain access to information faster, to do analysis, not only faster but broader in terms of the data that we’re looking at and how we’re able to utilize that data and interpret that data. I just think it’s an exciting time.

Now, having said that, since, Dan, you called me older than dirt, I do remember…

Lefkovitz: Not a direct quote.

Lee: Dan, as my colleagues always say, “Keith, at least you think you’re funny.” I just go back and look at other transformative periods, at least over the last 30 years, and there were several, but I will mention a couple like genomics. Internally, we argued over the pronunciation. Is it genomics or is it genomics? But what we agreed upon was that it would be transformational, and the proliferation of data in itself, you go back, and you look at the data that was generated, and how it was mined, and then what we started to do with it. And then nanotechnology and now AI. And when you look, all of these areas, any company remotely associated with it, you saw their stock prices just increase dramatically. Not all of them stayed up. And so, for us, it’s not going out and finding the best AI company.

One of the first things that we did, we went to all of our portfolio companies, and we asked, how are you utilizing AI? How will AI impact you? What are the benefits to you? And the reason for doing that, it really helps us understand the technology, but it also helps us understand how companies are preparing to position themselves for future growth, and in some cases, for future viability. And so, I always think about—and I’m not this old, Dan and Christine—but the beginning of the automobile industry. I think at peak, we had close to 100 automobile manufacturers. And then look what that has reduced to, and that’s just in this country. It’s the same with AI. Not all the AI companies will be great companies, but the technology can enhance companies in many, many ways. And that’s consistent with how we invest.

Lefkovitz: Wondering if there’s an example of a particular portfolio, a company where AI is part of the thesis?

Lee: That’s a good question. I think most of our companies, they’re using AI in the way in which I said, but are they turning directly to AI? No—that I’m aware of. I’m sure they are, but that I’m aware of. Cognex, which has been in the portfolio for a very long period of time. They do machine learning, and for Cognex—it’s an acronym for cognition expert—it’s been in the portfolio since about 1993. And they married a video camera with a computer for guidance, reading numbers that are very, very small in very caustic environments, and you look at them today, they’re in many industries today that you could never imagined 30 years ago. And I’m saying that because that was, in some ways, machine learning, a precursor to AI. But anyway, I digress.

Benz: What’s another company in the portfolio that you’re particularly excited about right now?

Lee: Christine, I generally try not answering that question because I answer it this way: I’m excited about most of the names in the portfolio because if we weren’t, they wouldn’t be there. But we always have six, eight, 10 names that are on our challenge list. Having said that—because I know you’re going to want to talk about a name—let me just talk about a couple of companies in the life science area that have been in the portfolio for a long time. I think Bio-Techne has been there for 30 years, but it continues to innovate. Bio-Techne, they develop and manufacturer and sell life science instruments and solutions such as protein antibiotics and reagents for cell and gene therapy research and clinical diagnostic markets, and that’s a technical way of saying what they do. They provide—and this is a very technical description—all the stuff that biotech companies and large pharma need for research and drug development. And a company like that, even though we’ve owned it for a long time, and they’ve had different periods where they haven’t done well, they continue to innovate, knowing what their customers need. And those types of companies excite me. This company has grown—revenues today would be over a billion dollars, between $1.1 billion, $1.2 billion. We bought that company when, or first put it in the portfolio when revenues were less than $250 million. But these are types of companies that you can still get excited about.

And then another one, just life science, as I’m thinking about that—Veeva Systems, it’s a cloud-based software company, again, to the global life science industry for both biotech and pharmaceuticals. They do customer relationship management solutions for both clinical solutions to help run clinical trials and marketing solutions that help companies better target customers for commercial drug marketing. Their forte is selling content management software to life science services companies, sales and clinical teams. What they’re able to do, what they provide is exciting. And we initially thought—this company has been in the portfolio since about, probably about 2015 or so—we initially thought that their Vault, which is their contact management platform, could be used in other industries. That has been slow to gain traction, but it still is a possibility there. And so, we have many companies like that in the portfolio, not all in life sciences, but in technology, industrial types of companies. We talked about it, but I didn’t give the areas that we utilize. We classify our portfolio, Domestic Small Company portfolio, to business services, consumer related, industrial products and systems, information/knowledge management, which is technology, medical/healthcare. And if we can’t force a name into those areas, we put it in the all-encompassing miscellaneous.

Lefkovitz: Well, Keith, I think we only have time for one more. And I wanted to ask you about diversity. Brown Capital describes itself as one of the premier and oldest African American-founded asset-management companies in the US. Curious why you think there aren’t more and why don’t we see more African American portfolio managers like you, and Eddie, and your colleagues at Brown?

Lee: I think that’s a great question. There is, as you know, a dearth of African Americans in this industry. And hopefully, that will change. Certainly, there’s been a focus and an emphasis on diversity, equity, and inclusion over the last several years. Quite frankly, I’m not optimistic that that in and of itself will change the landscape for Blacks in corporate America in general. But in this industry specifically, I think there needs to be more intentionality about doing that. And we do it because we see the benefit of diversity. Having diverse thoughts, diverse experiences help in terms of providing perspectives that help us to make better decisions. All too often—again, this is in my opinion—I think diversity is seen as being more philanthropic-oriented as opposed to being valued in terms of benefiting the organization. But anyway, that would be my take on that.

Lefkovitz: Can you elaborate on why you’re not optimistic that the current DEI efforts will make a lasting change?

Lee: Well, I hope I’m wrong on that. But I think it has to be intentional, and it has to start at the top for D, E, and I. And oftentimes, that’s not the case. It’s to check a box or it’s not seen as this is really beneficial to the company.

Lefkovitz: Well, Keith, thank you so much for joining us. We really appreciate your time and insights.

Lee: Well, thank you and thank you for having me. I really enjoyed the discussion.

Benz: Thanks so much, Keith. We appreciate it.

Lee: Thank you as well, Christine.

Lefkovitz: Thank you for joining us on The Long View. If you could, please take a moment to subscribe to and rate the podcast on Apple, Spotify, or wherever you get your podcasts.

You can follow us on socials at Dan Lefkovitz on LinkedIn.

Benz: And @Christine_Benz on X or Christine Benz on LinkedIn.

Lefkovitz: George Castady is our engineer for the podcast and Kari Greczek produces the show notes each week.

Finally, we’d love to get your feedback. If you have a comment or a guest idea, please email us at TheLongView@Morningstar.com. Until next time, thanks for joining us.

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