Do you ever wonder why success looks so easy for others? In this episode Jimmy interviews Eric Marshall, President and Co-CIO of Hodges Capital, to discover the strategies and tools he used to become the leader of a company that has a role in helping thousands reach their goals in retirement and investing.
Episode Keys
- The importance of being adaptable in an ever-changing world to achieve optimum outcomes.
- Why you must maintain hobbies that help support your passions.
- How to find a mentor and the role that person plays in your success pathway!
- When you should pursue your goals toward an opportunity for career advancement.
- Why its important to continually build a foundation for greater success in your life.
Podcast Transcript
JW:
You know, there are times in life when people come up to me and ask, “I’ll bet you had the silver spoon in your mouth. You probably had all this support when you were growing up as a kid and through college. Did you ever really have any times in your life that you had doubt that you’d be successful?” Well, I’ve got news for you. We all go through that phase, whether you’re Bill Gates’ son or daughter, or whether you’re just Jimmy Williams. And today I’ve got a gentleman I have a tremendous amount of respect for… He’s a great friend and a great business partner, and I’m going to introduce him in just a moment. But what I want you to focus on today in this episode is not just the words that he and I may share, I want you to focus back on your history because the only way we can measure true progress is by looking backwards, not comparing ourselves to what would have been the ideal outcome, but to see where we’ve come from and how we’ve evolved and how we’ve grown. You know, the one thing I always tell people: there’s never, ever going to be all the capital you want. There’s never going to be all the time you need. There’s not even going to be all the team members you wished you had in your organization at the right levels, with the right skillset. It just doesn’t work that way in the world. But what does work is, is your tenacity, your perseverance, and your willingness and wanting to succeed where you are today. Hey, this is Jimmy Williams with Live a Life By Design, your Monday morning moments of motivation, and we’re here to help you become a bigger, better, and bolder you. Today I’m excited. Our topic is going to be, don’t look at where you started, but seek success in all that you do. This is the key to life for this gentlemen that I’m introducing to you today. He currently serves as the President, Co-Chief Investment Officer, and Director of Research for Hodges Capital Management. He joined the firm in 1997, serves on the board of directors of the firm’s parent company, Hodges Capital Holdings. He holds a BA in Finance from West Texas A&M University. He is an active member of the CFA Institute and the Dallas Society of Financial Analysts. He is a frequent guest, a resource of information, for CNBC’s Squawk on the Street, Street Signs, and The Closing Bell, as well as Bloomberg Television and Fox Business News. With that, I’d like for you to welcome in the studio today my dear friend, Eric Marshall. Eric, glad to have you.
EM:
Well, thanks for having me, Jimmy.
JW:
You know, with that introduction, buddy, you can do no wrong in my eyes today. So this is going to be a fun conversation here for our listeners. Before we get started, though, I just gotta ask a real quick question. You started out in west Texas. Now, does it ever rain out there? Because every time I’ve been there, it’s never rained.
EM:
You know, it’s been known to rain occasionally, but I’ll tell you this summer, they’ve had an unbelievable amount of rain. I was up there last week and I think it was as green as I’ve probably seen it in 20 years.
JW:
Wow. Well, I’ll tell you what, we are too in Oklahoma and I’ll take it, my friend. Anything in July and August, if it’s a half inch or two inches, we’ll take it. So hey, to get started with this, I’d like to know for our listeners sake, give me a little bit of background. Where does Eric Marshall land in the number of children? How many siblings do you have and where do you land in that? Are you like the Jan Brady in the middle or, you know, like the Cindy at the bottom? Or where are you?
EM:
Well, actually, I’m the oldest of four boys. So, you know, growing up in the eighties, both of our parents worked, and it was a little bit like Lord of the Flies, the household that I grew up in.
JW:
You know, four boys… So you’re the oldest. So I’m guessing dad… did he have any farming? Did you get around any kind of AG business?
EM:
No, my dad and my granddad, my granddad was a farmer, but they were both electricians and I was actually the first person in my family to go to college. And you know, grew up on the outskirts of Amarillo, went to a relatively small high school and, you know, married my high school sweetheart. And we both actually ended up at West Texas A&M in Canyon, which is just south of Amarillo. And that happened to be Don Hodges’, Alma mater. Majored in Finance, came down to Dallas as a part of a portfolio management class. And that’s how I met Don, and he hired me right out of school. And I came down here, we moved to the big city. And, that was kind of how we got started.
JW:
Oh man. I’ll tell you what, that kind of a story is one that I always love to hear. People that look at talent, see that, and just go ahead and hire. You know, I call it hiring ahead, Eric, I know you and your company also, if someone just comes and shines to you, even if I don’t have a spot for them now, I will make something happen just to have them on my team, you know, to add some value. So let me ask you another question real quick regarding childhood. So, Amarillo. If I were to live, let’s say, next door to the Marshall family, and four boys. Goodness, what could I have seen out of an Eric Marshall? What kind of things could I expect out of 12-year-old Eric Marshall?
EM:
Well, you know, I guess we were very fortunate to grow up in the time and place that we did. But, there would have been a constant football game going on with all the neighbor kids in the backyard, you know, typical. You know, we didn’t spend a lot of time inside, but spent a lot of time outside. You know, we grew up kind of in a rural area. So a lot of time out, you know, hunting and fishing and doing those types of things as well.
JW:
Let me tell you friend, that’s the same lifestyle I had. Matter of fact, our mother, I’m the youngest of six children – three boys, three girls – and our mother would not allow us boys to be in the house on a pretty sunny day. You had to be at the barn, you had to be helping dad with cattle, doing something, anyway. Don’t be in the house, I’ll promise you. So, let me ask you a quick question. What made Eric Marshall decide, “Hey, you know, I’m just going to go and major in Finance.” What made you think that way?
EM:
Well, you know what, I was always fascinated by the idea that just anybody out there could go own part of a company through the capital markets. I mean, from the time I was a pretty young kid, I was fascinated with the idea that you could go own part of McDonald’s. You could go own part of Coca-Cola. You could own a small piece of it. Anybody could, even with a very small amount of money, through the capital market system. And, you know, I remember when the movie Wall Street came out, you know, with Gordon Gekko, and “greed is good” and all that. And I was in junior high school when that happened, and I just was always intrigued with the stock market. And from a pretty young age, I knew that’s what I wanted to do. I wanted to go out and, you know, be involved in capital markets.
JW:
So tell me, what’s a day in the life of Eric Marshall look like now at Hodges Capital Management? Just give me a kind of a rundown. How do you spend most of your day for our listeners to know?
EM:
Well, you know, most of our daywe spend doing research on individual companies. I mean, the lifeblood of Hodges Capital Management is really research. And that means going direct to the source, talking to the management teams of various public companies. We have an investment team here, as you know, Jimmy, that goes out and meets with the CEO’s and CFO’s of companies. Last year, we made over 2,300 contacts across about a thousand different companies. So that’s really it. I feel like, you know, I’ve been here for, you know, going on 24 years now, and I don’t feel like I’ve ever really done a day’s worth of work. It’s like, I get to come to work every day, I get to learn something new. It’s the most interesting work because no two days are the same. And you know, one day we’re studying a semiconductor company and maybe touring a fab that’s making semiconductor wafers. And then the next day, you know, we’re digging into learning about the cement business and how we take limestone and turn it into cement, what the barriers to entry are and the cost components and the pricing environment and all those types of things. So it’s something that, you know, when I very first came to work here in 1997, I came home my first day on the job. I told my wife, I said, “Oh my gosh, it’s not like I’m even going to work. I would do this, even if I wasn’t being paid for it.” And I still feel that way today when I get up in the morning and I come into the office. I’m excited about getting to participate in what we do here.
JW:
Man, that is a compelling story. I’ve often been told in my life – my dad instilled in us, in me… My dad was real entrepreneurial, had his own trucking company and also had another career and other things. And he always told me – Eric, you may have heard this from your dad – it’s this, he said, “If you find something you’re passionate about and love to do, you’ll never work a day in your life.” And he was right. I mean, that’s exactly what you’re saying is you just enjoy so much helping learn about how you can help others build their wealth and how they can grow their family’s security and so forth. So, tell me just a little bit about though, what’s your leadership style like to the next generation? You know, we hear all this talk about, oh, goodness, millennials. They don’t want to work and they don’t want to spend the time and do it the old fashioned way. And I gotta be honest with you, Eric. We’ve not seen that with our team and I have hired, now, three millennials that just knock it out of the park. What’s your thoughts in terms of the millennial workforce, especially as it pertains to your sector?
EM:
Well, you know, I think within our sector, I think every generation views things differently. And I think in a lot of cases, it really comes down to really empowering and enabling people. And I think in a lot of cases the millennials just want to have the intellectual freedom to go out and do what they need to do. So, you know, our philosophy here is really to, hire hard, made it easy. So if you had the right people in place, you don’t have to micromanage them. And really what you have to do is inspire millennials by giving them a purpose, giving them a clear understanding of how their contribution really plays into the whole big picture, because that’s what everybody really wants, is to see that they’re having an impact on what’s going on around you. And, you know, one thing I learned fromone of my key mentors, Don Hodges, is that this business is really a calling to help people. And that was the one thing that really drew me to coming to work here for Hodges. When I was just a college student and we met with a number of financial firms here in town, we met with the folks there at Stearns, and Alex and Brown, and Merrill Lynch and Pinnacle, and all these different money management firms, many of which had alumni from West Texas A&M. And when we got to Hodges, I heard a very different tone of things about how this business was really a calling to help people and that having that purpose and being able to provide leadership to pass that purpose on to the next generation is really, I think, important in what we do and has been really a key to our leadership style.
JW:
Oh, that is a great story. And I do recall, I think it was Craig telling me one time, one of the co-founders, Craig Hodges, the son of Don, of course, for our listeners. They set up this business with Don’s leadership style of “I’m just here to help the next person.” And so Don always had this thing, Craig would say, you know, that they don’t have $50,000, you’re spending all day with them, you know, kind of thing. And, I think that just shows the heart and passion that Don Hodges has always held for helping others, not necessarily based on their economic means, just based on them being a person that sought out his help. And would you say that’s a fair assessment?
EM:
Absolutely. You know, Don, prior to starting this firm, he was the president of Pierce, which is now part of RDC, but he left at much larger firm to come back because he wanted to focus on the clients, he wanted to focus on helping people. And he wanted to eliminate conflicts of interest where he wanted to work for the benefit of the client, not for investment bankers or, you know, all these other things out there that weren’t necessarily the focus of some of the big bulge bracket firms.
JW:
So, at the end of this day, if you were to look back on this week and you said you made all these calls, I think you told me you had 18 meetings already this week on calls of earnings and so forth for different companies as they declare earnings for the quarter. At the end of the day, would you say that if I were a young person coming right out of undergrad school, that I would have that same opportunity that Don Hodges gave a young Eric Marshall when he first came to work there at Hodges Capital?
EM:
I certainly hope so. And you know, things are going to look different when you’re looking at the financial service industry and you look at the capital markets, they look completely different than they look like 20 years ago. And if you went back another 40 years ago, they look even more different. So, you know, I think there will be opportunity as much as ever going forward, but it’s going to look different. So I think your ability to adapt to change and recognize change and accept change will be really key to, you know, finding the next opportunity out there. And obviously if somebody was coming in today right out of school and really wanted to be involved in investing money, working for a mutual fund or a hedge fund or something like that, just recognize it’s going to look different than it did 10 or 20 years ago, or even how it looks today.
JW:
Yeah. I’ve been in this business 27 years and I’ve got to tell you, I think I’ve been through maybe three or four paradigm shifts, I’m going to call it. I mean, from regulatory to operational to managerial, it just seems to always evolve. And so one of the reasons, like you, that I got into this business was, it’s never the same tasks or challenges every day. It’s something different that comes across the old table, you know? So let me ask you this then, in terms of, if I were seeking to gain my CFA today, and I was looking at a finance degree, what do you like better about the smaller, more specialized operations versus, say, the big guys? And I’m not going to mention their names to disparage them, but you know what I’m talking about, the big four or five that are wirehouses. What would you say to someone like me if I came into that kind of a situation?
EM:
Well, I do think, with the smaller boutiques, such as Hodges Capital, you do have that intellectual freedom… You know, I was meeting with an oil company this week. I won’t tell you the name of it, but the CEO said, “Hey, you know we’re smaller than some of the big guys out there, but people want to come to work for us.” I said, “Why?” He said, “Because they want to be oilmen. They don’t want to just be a geologist or just do one little silo of things. They want to be oilmen. They want to be able to participate in this bigger construct of what they do out there in the E&P business. And I think that’s true in our business as well that we get t, cover a lot of ground. And really, I think it’s a much easier to adapt to change when you’re working for a smaller, more nimble, boutique firm that is constantly adopting new technology and pivoting to adapt to constantly changing business conditions out there and in your district.
JW:
Absolutely. And you know, in any organization, even the smaller boutiques that specialize in areas, I know you specialize in one of the areas you help manage as a portfolio manager is a small cap fund for Hodges, as well as our intrinsic value fund, as well as even the Hodges fund, which has the ability to go to any size cap, and invest it’s appropriate under its guidelines. But do you find that sometimes when you look at your team and you always see, “Hey, I’ve got some people just not pulling their weight.” Like if their names might be Craig Clark, do you see that in your organization now that just, you know, sit around and drink coffee all day? Do you see those kinds of people?
New Speaker:
Well, you know, that’s a thing about being on a small team, is everybody carries their own weight. They have to. And it’s kind of like being part of a family. You know, everybody has their function. Everybody has to work together in order to really be successful at what we do. So it really is a collaborative team approach here, but, you know, having everybody in one roof, in one location here in Dallas, it really has created that type of culture. You know, Jimmy we have very low turnover. I mean, of the three senior portfolio managers, I’m the new guy and I’ve been here 24 years… And even my analyst… I have analysts that, most of my analysts have been with me over 10 years. I only have one analyst out of the five that have been with me less than 10 years. So, you know, it’s really a collaborative environment where we’re all working together as a team, and we were having a lot of fun doing what we do.
JW:
Man, that’s awesome. I just had to poke a little fun at my buddies, Craig and Clark. They’re the next generation of Don Hodges’ family in that organization. They’re good guys, just great guys, along with yourself. So let me ask you, why is it important for Eric Marshall to be an influence, not just for his team, but I do know you’re involved in some organization that I love as a kid. I’d just adore this thought I was going to be an executive in this organization, the boy Scouts of America now known as Scouts of America. But tell me a little bit about why it’s important for you to influence those young men and women.
EM:
Yeah, well, as you know, Jimmy, I have a son who’s been involved in Scouts and over the years, my wife and I, we’ve been been involved in kind of supporting him in that. But it’s been a great tool to build young leaders. And I think that’s really what Scouts is about is, you know, teaching self-reliance, leadership, accountability, and really building future leaders of our communities at kind of a grassroots effort. So I’ve really enjoyed it. And it’s something that’s been near and dear to my heart the last few years.
JW:
You’re going to laugh, man. We did 50 mile canoe trips. I mean, we did hike Philmont. We did everything you could imagine under the sun and nature, and all the while, not really knowing as kid at the teenage level, Eric, that we were getting life lessons that were planted in our brain that I use today at the age of 56, my friend. I mean, be prepared. I mean, I don’t come to a meeting that I’m not prepared that just rings in the back of my head. Right?
EM:
Yeah. That’s the boy scout motto: “always be prepared.”
JW:
So let me ask you this now, I’m sure that you have challenges beyond just work stuff from time to time. Things do happen as a leader of your organization. If you had a magic wand and you could wave that wand, what area of our profession would you wish that you could fix? By waving that one that would make life simpler and better for everyone? What would that be?
EM:
Well, I don’t think I would be alone in this, but I do think that over time, one of the biggest things that I get concerned about is the regulatory environment out there becoming too restrictive and affecting the efficiency of capital markets in a lot of cases. And this is true in every industry, not just financial services, but the more government regulation that is involved, it actually benefits the incumbents and the larger players out there. So the smaller, more innovative companies out there that are doing new things, it kind of creates a barrier to entry to the incumbent. So if there was one thing that I was concerned about is over time, I see more and more rules and regulations and whatI would be concerned about over time is that impacting the ability for capital formation to occur for people to access capital markets, because if you think about what we do in the stock market every day, buying and selling companies and the price discovery that happens through natural means of supply and demand that really provides businesses with the ability to create jobs and to fund new research and new ideas and new capacities and new ways of doing things that have really been critical to the success of the whole story that America has been over time. So that over regulation and that burden is probably the one thing that if I could curtail something, that would be it.
JW:
You know, I hear what you’re saying. I agree, totally. I think any of us that have been in this profession for any period of time, as I said earlier, saw paradigm shifts. What we have seen is that long-term planning, effective managerial planning, for our companies, if you’re in the financial services business, can’t exceed about two years. It seems like they come out with something new that I’m going, “Oh, goodness. Okay.” So now we sit down with our attorneys that help us take care of compliance and stuff for the purposes of SEC regulations and so forth, and I’ll go, “Okay, so this just came down the pipe, how do we need to make changes with our team to make sure we’re doing things compliantly as you do there at Hodges?” So, so let me ask you this, what do you see on the horizon as the next opportunity for our profession to really bring value, not just to the marketplace, but to the people we serve?
EM:
Well, you know, I think as the market becomes more and more passive, it creates opportunities for active portfolio management. So, you know, as more and more money is being invested in things like index funds and ETFs, which there’s nothing wrong with. There’s definitely a place for those in portfolios, but you have less individual company decisions being made. So I think that there’s opportunities, especially within smaller companies where nobody’s paying attention, nobody’s out there meeting, you know, evaluating, “Is this a management team that I really want to be invested in? Is this a business model that makes sense?” And I think that, you know, going out and doing the type of bottoms-up research has kind of been forgotten about, and it’s really critical to efficient capital market. So I think that there’s actually less efficiencies out there in the market today within small cap companies, because of the efficiency of passive investing, if that makes any sense.
JW:
No, that makes a lot of sense. And you know, one of the things I tell people is, sometimes you have to do the hard work to get to what is actually the reward, right? I mean, it’s not everybody just says the sky fall down and there’s a ton of opportunities that are handed to them. And I’ll never forget, there was a gentleman that was Jonathan Winters. I don’t know if you remember the old comedian that’s a little bit, maybe before your time, I’m a little old. But Jonathan Winters was a big, big comedian back in the seventies for me, you know, and he had an essay and he said, “If your ship doesn’t come in, swim out to it.” So I’m the kind of person I always tell people, I knew I would be successful just like Don Hodges, because I had a real purpose of life to go out. Success to me, wasn’t defined purely economically. It was defined in a way that I could help my fellow man reach whatever their objectives, goals, and criteria were for life to be successful for them. So I tell people, you know, I go speak at universities, before COVID anyway. And I spoke at one just the other day post-COVID. And I told the young people, I said, “Look, it’s not like you can send your resume to Indeed, Monster, and so forth and just expect people to start calling it. Doesn’t work that way. Go out there and meet these great people.” So I encourage our listeners to go talk to those companies of which they have a real desire to work. So for example, if it’s your company at Hodges Capital, one I have visited there a couple of times, now. The hospitality that we feel there and see there, I know it’s just not because it’s Dallas, but you just have some great support team members. I’m going to call them that, your assistant, for example your director, first impressions, those people. What can someone expect from Hodges Capital as a company? If I were walking off the street, not knowing anything about you, except that you were an excellent money manager, what would I learn about you? If I just walked in off the street, what could I expect?
EM:
Well, I think when people walk in here, the first thing that they comment on is, “Wow, you guys aren’t like everyone else.” I mean, we have management teams walk in here all the time that are out doing road shows. They’re going to New York, Boston, San Francisco. They stop in Dallas, they’re going into large buildings, glass buildings, meeting with investment teams and they walk into our office and they see this old house. And it’s a more like a library. You know, people are very thoughtful in what they do. And, you know, I think one day, I think back to early on, I heard Ziegler give a talk and he said – and he said this all the time, and in a lot of the speeches that he gave – but “You can have everything, anything you want in the world, if you help other people get what they want.” And that is really at the heart of what we do here at Hodges. And that’s really the attitude of everybody here that works here. We’re all trying to help our clients help each other. And really, be servants. Really have a servant’s heart in everything that we do.
JW:
Oh, that’s just awesome. And I found that to be true the times I’ve been down to your office. But folks, just so you don’t get the wrong idea. They’re not in a disheveled old, old house in a very nice area of Dallas. This is the Bradford house. Give me a little bit about that for our listeners. It’s a very historic house.
EM:
Yeah. If you go to uptown Dallas, we’re now surrounded by, you know, glass buildings, but it was a house that was built in 1900 by one of the early mayors of Dallas, Mayor Bradford. And he built this17,000 square foot house. And it’s one of the only houses left on Maple Avenue in uptown Dallas. And, it’s a historical marker. We turned it into an office in the mid nineties. And, it’s been a fun place to work out of the last few years.
JW:
Well, I just didn’t want our readers to think that you didn’t have an appropriate office because that building is awesome and fantastic. I love how Eric says, “Well, it’s just an old house,” you know, but he was being very modest, I can tell you folks. So, we’re getting down to the end of this. I just want to ask a couple of favors. If you could leave our listeners with just one statement of advice about leadership, legacy, influence, a career of whatever field you would like or whatever topic, what would it be?
EM:
Well, I think one of the things that I learned, you know, from Don Hodges and some other early mentors in the business is, be ready to be wrong. You know, the sooner you identify your mistakes, the more successful you’re going to be. And kind of formulating your ideas and changing your mind in a lot of cases may mean that you had a better idea and you don’t always have to be right. I think a lot of times, younger people who get into this business, they think it’s so critical. Like, failing is not fatal and that going out, sticking your neck out, taking a risk is very important and just be ready for it to not always work out and being able to identify when you’re wrong and, you know, address that, is really key to be in success rather than trying to always be right and not take the risk.
JW:
Yeah. You know, at the end of the day, I cannot recall where I read it. I read a ton of books and I love inspirational quotes. And this one said, “fail and fail often to succeed in life.” That’s an oxymoron, Eric, but that’s what he said. Hey, you have been a wonderful guest today. I know you’re very busy. I appreciate you this morning and helping us give some guidance, some inspiration as well as some insight to our listeners. We’re now in 52 countries. And I hope that everyone takes as much from this conversation today as I have been given, because it has been awesome. Eric, thank you so much for your time. Appreciate you and your team at Hodges Capital for joining us today.
EM:
Jimmy, really enjoyed it.
JW:
Today’s episode is brought to you by Hodges Capital Management. Hodges Capital is an investment advisory firm, managing assets for institutions, endowments, family offices, and individuals. Hodges Capital is also the advisor to five mutual funds. Hodges capital was founded in Dallas, Texas in 1989 by Don and Craig Hodges, and the Hodges family has been involved in assisting clients with their investment needs for more than 25 years. If you wish to learn more about Hodges Capital, please go to www.hodgescapital.com.
