Summit Hill Capital’s top exec shares: It’s no easy task

By Richard Schnaller, Jennifer Scott, and Ted Johnson The CEO of Summit Hill Capital has this to say about running a company that plans to continue growing: “Be realistic. Be very ambitious, but keep…

Summit Hill Capital’s top exec shares: It’s no easy task

By Richard Schnaller, Jennifer Scott, and Ted Johnson

The CEO of Summit Hill Capital has this to say about running a company that plans to continue growing: “Be realistic. Be very ambitious, but keep the costs in mind. … There are no easy solutions. If you say you’re going to do something and you’re not willing to commit, it’s better to say, ‘I’m not prepared’ and the board moves on.”

James M. Madio III, chairman and CEO, won’t sugarcoat his assessment of Summit Hill’s current situation. “We’re facing a very difficult market. … Our IPO could have taken place yesterday,” he says.

The Boston-based firm raised a group of new private equity funds during the Great Recession, two of which are well into their investment-decision cycles. (The firm doesn’t disclose its portfolio.)

Madio spent nearly 20 years at Google before joining Summit Hill Capital. That background allows him to share his market-outlook worries. “It’s the No. 1 concern. … [The] valuation of the S&P 500 is at an all-time high, in terms of multiples [of earnings].”

He knows that he should build cash reserves, given the uncertain equity market. “A good company doesn’t have too much or too little,” he says. “I like to have a lot of money on the sidelines so we can afford to have either a short-term correction or a long-term market correction.”

Madio would also steer clear of company stocks, even though Summit Hill Capital would not.

“Part of the strategy in getting the returns you’re looking for is you’re trying to pick deals right, you’re trying to buy companies that you think we can build value into over time,” he says. The risk of losing everything, he adds, is what keeps him away from equities.

That’s not to say that Summit Hill Capital has completely removed equities from its portfolio, though.

Madio mentioned the case of Clear Channel Outdoor, another company that he’s been involved with. Clear Channel Outdoor uses Summit Hill Capital’s investor-relations firm, Catalyst Digital Group, to manage its capital-market strategy.

Madio invests in the remaining holdings after he decides to sell Summit Hill Capital’s holdings. The portfolio, he says, generates returns that are “above our benchmark.”

(This article first appeared in Government Executive. For more Government Executive coverage, click here.)

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