Value Investor Made Merrill Lynch a Force in Fund Management
By James Hagerty, 12/16/21, Wall St. Journal

As a student at City College of New York in the early 50s,
Arthur Zeikel had little ambition and no sense of what he
might do with his life. Then an inspiring professor
introduced him to economics and markets.

Zeikel discovered he was smarter than he thought and went on
to earn an M.B.A. degree at New York U. and establish a rep
as a bright young Wall St. fund mgr. Merrill Lynch hired him
in 1976 and put him in charge of its tiny asset-management arm.

By harnessing a nationwide sales force and building a record
of reliable performance, he made Merrill one of the nation’s
leading fund managers. His operation proved “one of the
company’s greatest success stories,” Winthrop Smith, a former
Merrill exec, wrote in a history of the firm, “Catching
Lightning in a Bottle.”

By inclination and training, Zeikel was a value investor,
seeking bargains on securities other investors had overlooked.
That worked well for him in the long term but became a problem
during the tech-stock euphoria of the late 90s. Partly because
of Merrill’s caution, some of its funds lagged far behind
competitors in that period.

In late 1997, Merrill appointed a new president of its asset-
management business, Jeffrey Peek, succeeding Zeikel, who was
bumped up to nonexecutive chairman of that unit. He retired
in 1999. Meanwhile, Merrill brought in outsiders to try to
jazz up its performance.

Zeikel was gone by the time the crash of dot-com stocks made
value investing look better. “He was late to the game” of
internet mania, said Launny Steffens, who was a vice chairman
of Merrill in the late 90s, “but that game ended very badly
for lots of people.”

In 2006, Merrill sold its asset-management business to
BlackRock Inc. for about $9.5 billion of BlackRock shares.

Mr. Zeikel died Dec. 7. He was 89 and had kidney disease.

In 1994, a spike in interest rates led to a crash in prices
of closed-end municipal-bond funds. Customers who had bought
those funds from Merrill were furious, and there were calls
inside the firm to exit that segment of the fund business.
Zeikel decided an exit would be premature. The funds recovered
sharply within a year. “Zeikel stuck to his guns,” said
Vincent Giordano, who oversaw municipal-bond funds at Merrill.

Likewise, Zeikel was reluctant to ditch fund managers simply
because their performance lagged for a few quarters. “People
do have slow periods,” he noted in a 1998 interview.

“He was the best boss anyone could ever have,” said Joseph
Monagle, who oversaw bond and money-market funds. “When you
went in to see him, you would have about 5 minutes at most
to get your point across. He would ask penetrating questions,
and then he would let you do your job.”

In a 1994 memo on money-management basics written for one of
his daughters, Jill Zeikel, Zeikel warned against getting
carried away with current trends. “No system works all of
the time,” he advised. “History is a guide, not a template.”

Arthur Herman Zeikel was born June 1, 1932, and grew up in
the Bronx. His father was an accountant, and his mother
sold tickets for Broadway shows.

A high school counselor advised young Arthur to try trade
school, but his mother informed him he was going to college.
At City College, an economics prof, Jerome B. Cohen, became
his mentor and lined up a job for him at Ira Haupt & Co.,
a stockbroker. In the 60s, he worked for Dreyfus Corp.,
where he eventually headed research and managed investments.

His self-assurance inspired confidence. “People would ask
me questions, and I'd answer,” he said a few years ago,
discussing his early years on Wall Street. “Did they ask me
if I knew what I was talking about? Probably not.”

He picked up more experience at Standard & Poor’s and
Oppenheimer & Co. before joining Merrill in 1976. The stock
market was weak in the late 70s, but Americans shifted large
sums from savings accounts into money-market funds in the
late 70s and early 80s and then herded into equity funds as
the stock market rebounded. Merrill’s innovative cash-manage-
ment accounts put the firm into a strong position to attract
individual investors’ money.

Zeikel made a priority of pleasing Merrill’s coast-to-coast
army of local brokers, who sold the funds to their clients
and wanted reliability. He excelled at entertaining and
reassuring the brokers with witty presentations.

In the early days, his superiors gave him plenty of freedom.
“If I wanted to do a new fund, I did a new fund,” he said.

Later in his career, he taught finance as an adjunct prof
at New York U. He was a co-author of a textbook, “Investment
Analysis and Portfolio Management,” among other volumes.

Zeikel’s survivors include his wife of 61 years, Terrie
Zeikel, two daughters and 7 grandkids. A son, Jeffrey
Zeikel, died in 2019.

His career, Zeikel said, worked out “better than anybody
could have imagined.”

https://www.wsj.com/articles/value-investor-made-merrill-lynch-a-force-in-fund-management-11639666802