(Bloomberg View) -- John Montgomery's firm, Bridgeway Capital Management, where he is chairman and chief investment officer, of course wants to make money. But what it does with those earnings is a little different: It gives half of its annual net income to nonprofit organizations.
SoundCloud: Bridgeway's John Montgomery Gives Away Half of Its Profits by Bloomberg View
Most of the recipients focus on education, community development, disaster relief and homelessness, and include groups such as the Eastern Congo Initiative and the Human Rights Documentation Initiative at the University of Texas Libraries.
Montgomery, whose firm has $8.4 billion under management, is highly critical of the inflated pay scale at the top of corporate America. Because of this, Bridgeway's highest paid employee earns no more than seven times the lowest paid employee -- compared with a several hundredfold difference at some big companies. All of the employees are equity holders in the firm, via an employee-stock ownership plan.
Bridgeway, Montgomery said, is an “evidence based investment” firm, relying on quantitative analysis, factor modeling and other data-driven strategies.
Montgomery has an unusual background for someone in finance: He worked as a transportation engineer, using computer modeling and statistical methods at Massachusetts Institute of Technology in the late 1970s. He investigated methods to apply modeling to portfolio management and began using these methods in his own investments in 1985.
Some of his favorite books are referenced here.
You can stream/download the full conversation, including the podcast extras, on Bloomberg, iTunes, Overcast, and Soundcloud. Our earlier podcasts can all be found on iTunes, Soundcloud, Overcast and Bloomberg.
Next week's guest is Jean Case, chief executive officer of the Case Foundation and chairman of National Geographic.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Barry Ritholtz is a Bloomberg View columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He blogs at the Big Picture and is the author of “Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy.”
To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net.
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