March 17 (Bloomberg) -- Thomas Judge, one of the first institutional investors to dip his toes into venture capital as a portfolio manager for the pension fund of AT&T Corp., has died. He was 83.
He died on March 10 at his home in Garwood, New Jersey, his son, Thomas Judge III, said in an interview. The cause was pulmonary fibrosis, diagnosed last year.
As head of alternative investments for AT&T from 1980 to 1995, Judge helped establish the first ties between institutional investors and startup ventures. Such investments were made possible by a 1979 U.S. Labor Department decision that pension funds wouldn’t violate the “prudent man” rule of the Employee Retirement Income Security Act by putting money in riskier asset classes.
The venture-capital portfolio started by Judge when AT&T was still operator of the Bell System telephone monopoly swelled to $1.5 billion, invested in 180 partnerships by his retirement in 1995, according to a biography on a website of Burgiss Group LLC, a Hoboken, New Jersey-based company where he was an adviser. By then his unit was called AT&T Investment Management Corp.
“He was a pioneer in the institutional acceptance of private equity and venture capital,” James Kocis, founding president of Burgiss and a friend and colleague of Judge for 25 years, said in an interview. “Back in those days, deals were done on a handshake, and a big deal might have been $10 million or $20 million, tiny deals by any standard today.”
Two years after Judge’s 1995 retirement, AT&T Investment Management turned over its private-equity portfolio, then valued at $3.8 billion, and its seven-member management team to JPMorgan Investment Management Inc., according to a report in the trade publication Pensions & Investments.
That was the start of what today is JPMorgan’s Private Equity Group, which has about $27 billion under management. It is part of JPMorgan Asset Management, which manages $1.5 trillion.
Lawrence M. Unrein, managing director and global head of the Private Equity Group, worked with Judge at AT&T. He said in an interview that upon learning of Judge’s death, he sent a note to colleagues saying that “he was our leader, our mentor and our friend, and without him we would not be here today.”
Today’s AT&T Inc., based in Dallas, resulted from the 2005 purchase of AT&T by SBC Communications Inc. Its defined benefit post-retirement plans had a balance of $7.35 billion as of Dec. 31, according to a filing with the Securities and Exchange Commission.
In recent years, Judge was an adviser to firms including Burgiss, which makes software to help manage private-equity portfolios, and Vienna, Virginia-based Valhalla Partners. On its website Valhalla said, “He was a guiding force at our firm. We will miss him deeply.”
Thomas Barry Judge Jr. was born on July 27, 1930, in Oswego, New York, one of three children of Thomas B. Judge, a hotel manager, and the former Florence Lynaugh.
He graduated from Pennsylvania State University in 1953 and served two years in the U.S. Army. Judge received an MBA from Seton Hall University in South Orange, New Jersey, taking classes at night while working at his first job, for New Jersey Bell in Newark, according to his family. He spent two years in market research at AT&T in New York City, then 17 years in a variety of positions overseeing AT&T’s employee-benefit assets.
Judge started investing in venture-capital partnerships on behalf of AT&T employees in 1980, when the pension funds of its 23 Bell System operating companies were consolidated. This merger created the largest pension fund in the U.S., with about $30 billion in assets, the Economist magazine reported in 1981.
“I discovered that there was very little information available about venture capital that I could get my hands on,” he wrote in a foreword to “Inside Private Equity: The Professional Investor’s Handbook” (2009), which Kocis co-wrote. “There were no performance numbers available. In fact, it was almost impossible to get my hands on any information.”
Judge preferred to invest indirectly in startups, sending AT&T money to venture funds and limited partnerships, Unrein said. They included Alan Patricof’s Apax Partners; New York-based Welsh, Carson, Anderson & Stowe; Silicon Valley firms Kleiner Perkins Caufield & Byers, Sequoia Capital and Accel Partners; and Boston-based TA Associates.
Judge said he came up with 15 percent as his target for expected return when investing in seed, startup and early-stage partnerships, based on an expected return of 10 percent on safer investments in large-cap stocks.
He said he moved AT&T into his first venture-capital investment in Europe in 1983, with London-based Alta Berkeley LLP, and in Japan in 1985, with Jafco Co.
By 1989, early investments were beginning to pay distributions, and he asked Lionel Pincus, founder of Warburg Pincus, to manage the distributed stocks in AT&T’s portfolio.
Judge said he helped call a 1990 meeting at a hotel near O’Hare Airport in Chicago that led to formation of what today is the Institutional Limited Partners Association. The group includes 300 member organizations from around the world representing $1 trillion of private assets, according to its website.
In a 1993 article for Private Equity Analyst magazine, reprinted in the book co-written by Kocis, Judge urged partnerships to improve the clarity and quality of reports to big investors.
“When it comes to information about each investment, please refresh my memory,” he wrote. “Remember, I am trying to keep track of 1,900 portfolio companies. Give me the town and state where each company is headquartered. Briefly remind me (10 words or less) of the business they are in. Then you can talk about how they are doing or not doing, prospects for the future, etc.”
Private Equity Analyst, a Dow Jones & Co. publication, named him to its hall of fame in 1995.
Judge served as mayor of Little Silver, New Jersey, in 1970 and 1971, his son said.
In addition to his son, survivors include his wife, the former Barbara Holzka; two sisters, Jackie Seuffert and Connie Judge; three daughters, Lauren Bartkus, Linda Ferrogine and Dana Farabaugh; and 10 grandchildren.
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