Brad Henry is the Managing Partner at Natural Capital. He's an alumnus of the Walton College and has held many finance roles around Arkansas. Brad is passionate about the future of Arkansas and sees great value in investing in the heartland of the U.S.
00:06 Matt Waller: I'm Matt Waller, Dean of the Sam M. Walton College of Business. Welcome to Be Epic, the podcast where we explore excellence, professionalism, innovation, and collegiality, and what those values mean in business education and your life today.
00:29 Matt Waller: I have with me today, Brad Henry, Managing Partner at Natural Capital. Brad is an alumnus of the Sam M. Walton College of Business. He got his masters degree in economics here. He got his undergraduate in economics, business, and political science from Hendricks. He has served as a financial analyst with the Arkansas Economic Development Commission, a research associate at Stephens Inc, Vice President of Development Finance at the Arkansas Development Finance Authority. And now he is Managing Partner of Natural Capital. Thank you so much for joining me, Brad.
01:05 Brad Henry: Have to be here, Dean Waller.
01:07 Matt Waller: So, Brad, I'm really intrigued by Natural Capital, and I have to disclose I'm on the board of advisors for this company, and I wouldn't be if I weren't impressed with it, obviously, but this idea of having a private investment firm focused on investing in Arkansas and the Heartland in general. How did you come about that idea?
01:33 Brad Henry: Well, it actually was a long conversation among myself and my three partners, the other three founders of the firm, Marshall Saviers, Brock Gearhart, and Todd Simmons. And we've all known each other for a while now, and we were having various levels of conversations about opportunities in Arkansas and the region. We are all long-term Arkansas residents, Arkansas families, multiple generations, so we very much believe in the state of Arkansas and its economy for the long term. Very much believe in the opportunity and the economic growth that we'll continue to see in the Heartland.
02:28 Brad Henry: We are all long-term investors from a personal standpoint, in terms of how we think about investment strategy, and we just kept seeing more and more opportunities. Those opportunities here in the state, but also in the region continue to get larger. And we said, "Well we've been friends for a long time. We have the same ideas for how we think we should invest. Let's work together to do that." We felt there was an opportunity to put an investment firm together here in Arkansas that... It's headquartered in Little Rock and has a statewide focus, and also look for investment opportunities in the region. Because of our contact base, we feel like we'll be able to see opportunities where we can put capital to work for the long term and really generate positive investments.
03:36 Matt Waller: One thing I did wanna ask you about a little bit is your decision to focus on the Heartland. And what is the Heartland exactly? I'm from Kansas City, Missouri, originally, and I've heard the term used a lot, but I'm just curious, how do you think about the heartland.
04:00 Brad Henry: One, it's what we know; it's where we've done business. And very much believe that we should continue to stay in that area because it's how we've been successful. So to try and go to outside of that area didn't really make a lot of sense to us. And we feel like there are plenty of opportunities. The capital markets will continue to mature in the Heartland over time, and we wanna be part of that. How we define the Heartland is really think the south and the midwest, I think we would go as far west as Colorado. Some folks might say that's not in the Heartland, maybe it is, maybe it isn't, but definitely include Texas, all the Midwestern states. I don't think we'll go any farther east than... We might end up... I could see us investing in Atlanta or in North Carolina, just because we have some really strong relationships there, but that's really the footprint. And then of course the entire midwest. I don't think you're gonna see us making an investment on the west coast or in the northeast.
05:29 Matt Waller: You know, Ross Devall is a Walton fellow with the Walton Family Foundation, and CEO and founder of Heartland Forward. And he's done a lot of work studying national economic trends and how they're impacting America's heartland. And prior to this job, he was 19 years at the Milken Institute, and he was chief research officer there. Have you ever seen any of his work?
05:58 Brad Henry: We have. I've been lucky to get to know Ross since he moved to Arkansas a few years ago and really value his insight and research into the region. And then Brock has actually known him longer. I think close to a decade they've known each other and to have that resource, have Ross in our backyard is really, we believe will be a help to us as we review investment opportunities. To have that level of research right there to be able to include in our investment analysis we feel like gives us a leg up. We're happy to travel the back roads to find investment opportunities and think that that can be a place where others aren't necessarily looking and can provide value to the investment.
07:02 Matt Waller: So you also, I know your firm is really built on transparency and alignment of interests with an emphasis on long-term capital appreciation. Would you talk just a little bit about what you mean by long-term capital appreciation?
07:17 Brad Henry: Sure, yeah. I think we very much believe in investing for the long term. And what that means to us is if we make an investment, then we believe that we can hold it potentially forever. The four of us, we are on average right under 40. So we're not going anywhere, any time soon. Knock on wood. And we believe that wealth is built by buying at the right price, holding that investment, investing properly in that investment and building that over time. Not a buy and flip strategy.
08:00 Matt Waller: I know you have a diversified strategy for investing, and it includes regional private investment funds, real estate, and operating businesses. When you talk about private investment funds, what specifically are you thinking of?
08:16 Brad Henry: There's an opportunity to partner with other funds that we know that can help diversify our investment strategy and provide us increased opportunity for deal flow to invest because we know that we won't be able to see everything at first. And so to have those relationships and to diversify into asset classes that we may not be able to directly invest in right now really puts forth a diversified strategy. I think that really comes from wanting a diverse strategy. One comes from our backgrounds, which we've been over, all various industries, various backgrounds. But two, I think it comes from really how we personally and Brock professionally thinks about building an investment portfolio to be able to have a risk-adjusted portfolio, where you have real estate, you have companies that are in growing industries, and have companies with great management teams; that's really what we're looking for there. That have a history of generating cash flow, and then we have funds that can help us see opportunities that we may not normally get to see and to be able to back fund managers that have backgrounds that are value-add to our team, that we may not have a specific experience in an industry that they do.
10:13 Matt Waller: Brad, thank you for your willingness to work with the university, to basically help our students to gain experience and knowledge. What are some of the things that you're thinking of there that we could do?
10:31 Brad Henry: Well, I think the first and obvious is we're an Arkansas firm. Brock and I are alums, no telling how many alums that the Simmons family has hired over time. We will be looking for ways to have an impact on the state, not only through our investments, we always want our investments to have a very positive impact on the region, but for how our firm can help grow the state's economy in ways that aren't just investments. And we feel like a relationship with the university is a great way to do that.
11:12 Matt Waller: Thanks for listening to today's episode of The Be Epic podcast from the Walton College. You can find us on Google, SoundCloud, iTunes, or look for us wherever you find your podcast. Be sure to subscribe and rate us. You can find current and past episodes by searching Beepicpodcast, one word. That's beepicpodcast. And now, Be epic.