WHO'S WHO - FAYEZ SAROFIM

While money managers across the country try to outdo one another by picking the next hot stock or industry, Houston’s Fayez Sarofim has amassed a fortune for himself and his clients by quietly sticking to a philosophy that even boisterous investors have followed: Buy stock in big companies and hold on to them through good times and bad.

The man whom Forbes calls the "buy-and-hold king" has a personal fortune of $1.2 billion. Fayez Sarofim & Co., his investment and money-management firm, manages more than $40 billion in assets. In the meantime, he has demonstrated that solid investment strategy can be formulated outside New York and Boston.

Sarofim was born in Egypt and immigrated to the United States in the late 1940s. After earning degrees from the University of California and Harvard Business School, he began his career working for Anderson Clayton, the Houston cotton firm. In 1958, at the tender age of 30, he founded Sarofim & Co. with $100,000 from his father, a cotton grower in Egypt.

Sarofim did enough marketing to land some major accounts early. He won management contracts for the pension funds at Mobil, General Electric, and Ford, among others, but his big coup was landing Rice University’s endowment. He now takes charge of $1.1 billion for the school, half its total endowment. He has done similar wonders for his share of the University of Houston’s endowment.

Sarofim also manages the Houston Fine Arts Museum’s $300 million endowment, which must be almost a barter situation, since Sarofim is one of the museum’s largest benefactors.

To be sure, there have been bumps in the road—his fund lost an estimated $475 million that bleak Friday in 1992 when Philip Morris cut cigarette prices—but Sarofim has outperformed the Standard & Poors 500 in 11 of the past 14 years.

Sarofim believes the top three companies in an industry usually will make the most money, therefore provide the best return. Many managers shy away from that strategy to get on the cutting edge of a company or industry, but Sarofim bets on stocks of companies with long-term track records and solid visions for future growth. He also invests alongside his clients, so his fortunes rise and fall with those of his clients.

While most investors sell their winners and hold their losers, Sarofim believes in selling the losers and doubling up on the winners.

When he does trade, it’s an event. He turns over only about 5 percent of his portfolio each year. One reason: an aversion to taxes. "I don’t want to become a patriot," he was quoted as saying in a Forbes 400 profile. He said $1 will become $16.37 if allowed to grow at 15 percent annually, but to just $5 if the investor has to pay 44 percent in taxes on income and capital gains.

Though Sarofim rarely grants interviews and is so unobtrusive that he is known as "The Sphinx," he is nor exactly hiding. He is a regular on the Houston social circuit, especially at events related to the art community. But one can be "The Sphinx" when one makes billions for his clients while making a billion or so for himself—especially using a conservative philosophy in an increasingly conservative time.