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'Charles Theodore "Ted" Bauer ...(March 3, 1919 -June 28, 2004)

Achievements

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Mr. Charles "Ted" Bauer, Co-founder of AIM Management Group, the 7th largest mutual fund as of 1999 sold AIM Management Group to Invesco. Ted was recognized on the Forbes 400 "List of Wealthiest Americans" ranked #320 in the year 2000.[1]

Also in 2000, Ted was recognized on "The Philanthropy 50" [2] with his $65 Million co-gifts to Harvard University($25 Million), one of the largest Harvard has ever received [3] and the University of Houston ($40 Million), the largest gift ever received.[4] [5] The gift to the University of Houston as of September 1, 2011 ranks number 15 out of 139 on The Association to Advance Collegiate Schools of Business List of "Largest Single Business School Donations from a Single Source".[6]

Parents

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Ted Bauer was born to the renowned Dr. Louis H. Bauer who was a former President of the American Medical Association, Founder: Aerospace Medical Association, First Medical Director: Department of Commerce Aeronautics Branch (FAA), First Commandant: School of Aviation Medicine, Founder and 25 year Editor: Journal of Aviation Medicine, Aerospace Medical Association’s Louis Bauer Award (Awarded Annually) and Helena Meredith Bauer a Social Worker at Massachusetts General Hospital and a graduate of Wellesley University.

Background

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Educated at Boston's Roxbury Latin School, class of 1938 as captain of the football team, Harvard University class of 1942, United States Navy enlistment also in 1942, MBA from New York University at night after work in 1954, University of Houston Doctor of Humane Letters honoris causahis. Ted is survived by his family, wife Ruth Brouse Bauer, children Charles Douglas Bauer, Janet Bauer Hartman and Theodore Wingate Bauer.

Career

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In 1942, Ted entered Naval Cadet Flight Training - Corpus Christi, Texas. During World War II, Lieutenant Senior Grade Charles T. Bauer would go on to fly missions in Africa, England, and South America. After the war, Ted Bauer moved to New York to work on Wall Street as an Analyst. He then worked for First National Bank of New York and then in 1954 moved to Baltimore to work for U.S. Fidelity & Guaranty. It is while Ted Bauer and his family were in Baltimore that he founded and was the first president of the Baltimore Security Analysts Society. He would become a member of the Association for Investment Management and Research, which is now the CFA Institute[5] and he served on the initiating committee to establish the Chartered Financial Analyst professional designation (CFA) in Washington, D.C.

In 1969, Ted relocated to Houston, Texas to work with Gus Wortham, Founder and Chairman of American General Insurance Company. After building AGI's mutual fund business from a few hundred million to over $1.7 billion by 1975...his chapter with American General Insurance Company would come to a close in the spring of 1976, when after filing the first closed-end bond fund listed on the New York Stock Exchange and the passage of Gus Wortham, the company was sold and a change of ownership ensued.

A History of AIM Management Group

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At the age of 57, on August 4, 1976 Ted Bauer presided over the first corporate meeting as Chairman and President of American International Management with Ruth Bauer and a neighbor, Dewuse Guyton Jr., acting as proxies for Mandy Moross and a group of overseas investors, French Peterson and Manfred Gorvy. With the first shares of stock sold, the company had raised $500,000 in operating capital and $2.1 million in letters of credit. The goal would be to market fixed income investments to pension funds, manage private accounts over $100,000 and where possible invest in the fledgling mutual fund industry.

Ted then hired Gary Crum and Robert Graham. Crum had managed $450 million previously, and Graham had managed $300 million so it was a well formulated team that was strong enough and adaptable enough to stay ahead of the curve of change. Ted would then hire Stephen Pouns, a specialist in fundamental credit research in fixed-income securities as research analyst, Bill Murphy, a former senior accountant for a national accounting firm as treasurer, Tom Fiquet, formerly executive vice president of Variable Annuity Life Insurance Company as sales manager and Jayne James as secretary.Jack Amuny drew up a sketch for the "AIM" logo that would stand for almost a quarter century: Three A's signifying the scope of the business and an arrowhead in flight.

American International Management opened in the Marathon Building in downtown Houston with one room, a single card table, two chairs, a coffee pot and a partially working phone, but within two months Ted would move AIM into five offices in the Dresser Tower, at 601 Jefferson street. Pillars were added outside the doors for affect and the name was painted on the window: American International Management. The first corporate photo was taken in front of the Sachs offices some floors above where the the founders had friends who worked.

With the AIM founders believing that the infancy of the mutual fund industry was about to experience a growth spurt, in mid 1977 Michael Milken helped introduce the high-yield bond fund to the markets and helped Gary Crum to become one of only a handful of active high-yield bond fund managers. With Gary Crum writing his graduate thesis at UT Austin on computerized bond swapping earlier in his career, it was almost a natural fit that this would be one of the key markers to outline the company's future success. Ted Bauer and Gary Crum would fly to New York to put the underwriting group together for the company's first High-Yield Securities, Inc. fund. By September 29, 1977 the AIM fund had raised $78 million. The company had underwritten the first high-yield bond fund and the largest cash offering of a mutual fund in four years successfully.

AIM's second fund early in 1978, the AIM Convertible Yield Securities fund would launch and raise $23 million, net of expenses. To this day this fund is still in existence and is now known as the AIM Balanced Fund. The real cost of building and producing the thousands of prospectus as well as nationwide presentations to financial advisers would prove to be one of the next milestones. With the new mutual funds working Ted would hire AIM's first wholesaler Kirk Kirkpatrick, a Vietnam veteran and former Air Force flight instructor.

In November 1979, Ted would purchase the Edson Gould Fund for $50,000 of $5 million managed assets, from the well known market sage Edson Gould who had previously predicted the Market Crash of 1929 and the bear market of 1973-1974. The Gould fund was eventually sold to Provident Mutual for $200,000. May 30, 1980, AIM would relocate their corporate headquarters to 11 Greenway Plaza, Houston, Texas, north east corner, suite number 1919.

On November 4, 1980, the day Ronald Reagan was elected to the White House, AIM opened the Short Term Investments Company (STIC) fund which was the first of AIM's institutional funds to offer a low-fee money market fund that had lower management fees which gave higher yields thereby undercutting the competition and gaining market share. Within the first month of the fund being opened, AIM had successfully raised $325 million.

On September 1, 1981, Ted Bauer and Bart Harvey, managing partner of Alex. Brown would launch the Alex. Brown Cash Reserve Fund taking in $500 million in the last 4 months of 1981. AIM managed this fund for 11 years and at its peak it had assets under management of $2 billion.

In 1984, AIM partnered with Provident Mutual Life Insurance Company of Philadelphia and created Cortland Financial Group, Inc. AIM would go on to assist Cortland with three different money market funds which would grow to over $1 billion in assets. Ted would also partner with First Republic Bank of Dallas to open the Silver Star Fund which was marketed as private label and grew to almost $2 billion in assets. In 1985 Ted would partner with InterFirst Bank of Fort Worth to create the AIM Summit Fund marketed to U.S. Armed Forces in association with the USPA (United Service Planning Association, Inc.). The fund would reach $72 million in four years and crossed the $2.5 billion mark in 1999. David Barnhard, a prior Vietnam veteran would assume responsibility as lead portfolio manager in 1985. By the end of 1985, AIM's assets under management had grown to $6.4 billion.

In 1986, AIM aquired the Weingarten, Constellation, and Charter funds which would "form the core of AIM's product line". Weingarten portfolio manager Heinz "Harry" Hutzler, with a 10 year average return of 24.6% was a scholar, expert in statistical probability and bridge, as well as a collector of rare books. With Weingarten & Constellation on board for $9 million cost at 4 times earnings, it was a high price but gaining Hutzler as portfolio manager and more importantly a mentor for AIM's younger managers, these two funds would end up paying AIM back in spades. At the same time negotiations were ongoing with Weingarten & Company, Ted was speaking with Julian Lerner, out of Dallas, a lone wolf one-man mutual fund company that had 12,000 shareholders and $75 million in net assets. Started in 1968 with $1,000 of his own money and $1,000,000 million invested by a group of insurance companies Lerner would later buyout his shareholders in 1975 and work alone for 11 years. Ted would absorb The Charter Fund & Associated Planners Fund for $3 million. "Lightning in a bottle" was coined as timing would prove to be many things once again. Ted had absorbed three well balanced funds that all had superior records and no baggage in terms of excess employees. He kept existing managers on board to both appease current fund shareholders, and also once again to train his own internal AIM managers.

October 19, 1987 or Black Monday as it is referred to would prove to be a pivotal point in AIM's history. With the Dow dropping 22.6% and equities losing over $500 billion, it was a day that saw many changes to the world, but Ted would stand fast. He would keep his nerve and individually walk around to his employees to instill in them his trust, support and jobs during what would become a very difficult time. He once again had proved his strength and respect of his employees. Ted also saw Black Monday as a tremendous buy opportunity. He knew that even with the crash of 1987 the market was still up that year several percentage points. A sign of things to come.

Ted hired Mike Cemo in 1988, AIM's 50th employee, as the new President of Retail Banking who had strong connections to the broker/dealer community. He offered Mike a buy in and with that he cemented his trust in the changes to come. As a good portion of his previous experience was in dealings with Merrill Lynch, Mike would go on to "blitzkreig" every Merrill Lynch office for 30 days to gain a foothold. AIM would end up being successful at 485 of the 517 Merrill Lynch branches. Understanding the history of markets, sales, technology and trust would allow AIM to by 1988 grow assets under management from $9 billion to $12 billion.

By 1991, Merrill Lynch informed AIM that "The Case for Equities" had been responsible for a 50% increase in equity sales in the mutual fund industry. Sales would grow from $250 million in 1989, to $2.5 billion by 1991. Momentum had been gained and Ted's ability to provide a strong equity investment to his customers and shareholders was solidified.

Also in 1991, Bob Graham and Gary Crum hired Jack Caldwell, from Templeton Funds to head AIM's internal transfer agent. Up to this time all of this work had been done through a third party, The Shareholder Services Group. Jack rearranged processes and hired 25 internal staff. Jack then hired Lois Murphy, one of the best trainers in the industry to help facilitate the transition, and make the long term goal of bringing the internal transfer agent in house.

Back in 1980, Ted had hired Abbott Sprague, who had been working on the institutional marketing side of the house for the first ten years as AIM's 16th employee hired. Abbott would go on to make a strategic hire in Karen Dunn Kelley, a sell side manager of both short term and long term funds. Abbott and Kelly would provide two more key parts to the already successful AIM team. When this was coupled with Mike Cemo, and his sales and technical expertise, AIM once again would prove that it had over a decade built a world class, structurally sound investment house. AIM's placement of safety, liquidity, and yield on institutional money markets had proved to be correct.

Over a six year period, AIM's Institutional Marketing division had tripled its staff, internalized its transfer agency function, and introduced an automated trading system - AIMLINK.

Talks would begin in 1988 with National-Nederlanden, N.V., who by December 1992 had sent representatives to Houston to determine whether it would exercise the option to buy a controlling interest. The next NN team came in February 1993, 3 months before the option expired. With Mandy Moross ready to liquidate his long term position as well, Ted and the team would structure a deal with Citibank to buy out NN's equity position and a $10 million loan NN previously had made to AIM to acquire the CIGNA Funds in 1992. Citibank would lead a syndicate of close to ten banks lending AIM $180 million, with $10 million of that for working capital. TA Associates was brought in to act as a leveraged buyout firm with no majority interest. TA Associates bought 32% of holdings at $33.75 per share. After the recapitalization buying out most of the non-management shareholders, over 68% of of the company's stock was owned by Ted and the management team. Ted and his team would now be able to control their own destiny.

Back in June 1992, with the NN loan of $10 million, AIM through a valuable and influential friend of Gary Crum's, Roberto de Guardiola, was able to negotiate the CIGNA funds buyout in Hartford, Conneticut. 14 funds with a total of $1.6 billion in assets under management were purchased for $35 million. Three of the funds each had over $200 million and another four had assets under management of over $100 million. Ted would coin another AIM term: "like putting wheat in a barn." This would prove to be true as the CIGNA funds would grow in just eight short years to more than $40 billion under management.

During 1993, Ted also made a powerful move to become more competitive to the marketplace. AIM introduced Class B shares on selected AIM funds. Up until this point AIM funds had been sold as Class A shares with a front-end sales charge. As Class B had become increasingly popular among financial advisers, once again Ted would steam through with the previous Citibank recapitalization facility in 1993. With a NN exemption to allow AIM to enter the variable-annuity market in hand, AIM would join with CIGNA to clone existing AIM funds and create the AIM/CIGNA Heritage Variable Annuity fund. As of 2000, AIM has opened 17 different variable annuity funds. By 1994, AIM had successfully completed the internalization of its transfer agency, and AIM Fund Services (AFS)was formed. At the same time Jack Caldwell had been internalizing the transfer agency, AIM was implementing a micrographics system to convert every incoming item to microfilm and then track for auditing purposes. Implementing this step enabled AIM to reduce research time from an average of 10 business days down to one. It would also complete its addition of its Interactive Voice response (IVR) allowing shareholders and dealers 24 hour access to a wide array of account detail. The AIM Investor Line was born and would end up fielding 25% of all incoming calls.

On May 2, 1994 AIM closed AIM Agressive Growth Fund to new investors. As the fund had performed well, it was also attracting the attention of financial advisers. Assets had doubled to $312 million as the fund remained near or at the list of top-performing small-cap funds for the trailing five-year period.

On July 17, 1995 AIM would jump start the mutual-fund asset growth industry with the reopening of the AIM Agressive Growth Fund resulting in $1 billion in new assets under management and setting an industry record opening for a two-day period. While at the same time, AFS was handling more than 1.2 million calls per year, the first full year it served as AIM's internal transfer agency, and with the number of AIM shareholder accounts doubling between 1993 to 1995 this was another wise play in the history of AIM. To help facilitate business continuity concerns, on July 2, 1996, AIM opened its internal transfer agent secondary site at 301 Congress in Austin, Texas on two floors of the Temple-Inland building.

In 1996, Ted acquired three funds from Robert W. Baird & Co. of Milwaukee for $3.6 million: AIM Blue Chip Fund with $76 million and the AIM capital Development Fund with $50 million in assets. As a side benefit of the acquisition, AIM gained access to Northwestern Mutual Life Insurance Company's 3,500 strong sales force of financial advisers as they were 80% owner of the Baird funds. Due to a technical difficulty, one of the funds was seeded and merged with the existing AIM Income Fund and Ed Larsen was hired to serve as portfolio manager for the new AIM Capital Development Fund which launched on June 17, 1996. Within five years, these funds would grow to over $7 billion in assets under management. The name Ted Bauer and the word visionary were becoming synonymous.

By the end of 1996, Ted had grown AIM to become the 12th largest U.S. based fund company with $62 billion in assets under management. AIM was now ranked No. 1 in terms of equity performance by Worth magazine and in early 1997 Barron's ranked AIM 3rd among all fund families based on 1996 performance in five diversified categories. AIM was profiled in The Wall Street Journal, American Banker, Forbes, Morningstar Investor, and Pensions & Investments.

On February 28, 1997 AIM Management Company and INVESCO merged into the holding company AMVESCO, which shortly there after was named AMVESCAP PLC. The initial price of $1.6 billion in stock and cash was pegged to share price, but as the deal completed INVESCO paid $2.2 billion as INVESCO stock had appreciated from $37 to $50 in just four months. Ted, Bob Graham, Gary Crum and Mike Cemo joined the AMVESCP board of directors with seven INVESCO seats and Charlie Brady becoming Chairman and CEO. Robert de Guardiola, and former AIM board members, Rod Canion and Steve West were selected as non-management directors. As turnover at AIM and for Ted had been almost nonexistent for 20 years, Ted solidified his position for all of his employees by requiring that "No AIM employee would lose his or her job" during the merger.

By, 2000 AIM had more than $176 billion in net assets under management, more than 7 million shareholders, and more than 2,500 employees. Ted would serve as Chairman of AIM Funds until September 2000, Chairman of AIM Management until January 2001, and Vice Chairman of AMVESCAP PLC until ?.[8]

AIM Foundation

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In 1997, Bob Graham and Gary Crum in conjunction with Ted Bauer, his wife Ruth and son Charles Douglas Bauer through the Ruth & Ted Bauer Family Foundation endowed the AIM Foundation. [7-Per DB]Ted would serve as President of the AIM Foundation until his passing. [8]

AIM Alumni

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www.aimalumni.com

The AIM Center

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Ted Bauer personally gifted to the University of Houston's Bauer College of Business The AIM Center. Located on the first floor of Melcher Hall consisting of a 16 station trading laboratory, executive conference room and a 36-seat classroom, the $5 million learning laboratory allows practical learning in the areas of Security Analysis, Portfolio Management, Sales Force Automation, Business Forecasting and Gas & Power Markets.[9a]

Robert Graham and Gary Crum would gift the University of Texas at Austin McCombs School of Business with the second AIM Investment Center.[9b]

Ruth & Ted Bauer Family Foundation

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In 1997, Ted Bauer established the Ruth & Ted Bauer Family Foundation. The Ruth & Ted Bauer Family Foundation is a Houston-based private foundation that supports nonprofit 501(c)3 organizations whose primary mission benefits education and/or children. Over the years the foundation has granted millions in operating funds to group such as Boys & Girls Harbor, Greater Houston Collaborative, KIPP Houston, Small Steps Nurturing Center, The Children's Museum of Houston, The Monarch School, The Parish School, The Roxbury Latin School, Teach for America, Yellowstone Academy and the YES Preparatory School to name a few.

Charles T. Bauer Foundation

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In 1997, Ted Bauer established the Charles T. Bauer Foundation. In 1999, due to his continued commitment to education Mr. Bauer through the Charles T. Bauer Foundation endowed the Roxbury Latin School Charles T. Bauer Science Center. (10) The Roxbury Latin School founded in 1645 has a well known history of providing exceptional students as consistently ranked SAT scores year after year prove. Class of 2011 median scores: 2250. Ted Bauer Roxbury class of 1938 would also gift Roxbury Latin School with The Jarvis Refectory in 2004 in honor of Headmaster F. Washington Jarvis. Ted Bauer was also a Roxbury Latin School Board of Trustees lifetime member.

On July 12, 2000 Ted Bauer would offer half of the necessary commitment for the University of Houston’s new Business School $40 Million, the universities largest gift ever received.(5) Shortly thereafter it was renamed the C.T. Bauer College of Business or Bauer School of Business as it is commonly referred to.(11)

On November 30, 2000, Ted Bauer endowed Harvard University’s 62,000 sq ft. 5 story Bauer Laboratory to house the Bauer Center for Genomics Research with a $25 Million dollar gift. (12)(13) On March 4, 2002 the Bauer Laboratory was officially dedicated with Harvard University President Lawrence H. Summers, Charles “Ted” Bauer and Jeremy R. Knowles, Dean of Faculty of Arts and Sciences in attendance. (14) Ted Bauer's legacy continues today with Harvard University’s FAS Center for Systems Biology (15) which grew out of the Bauer Center for Genomics Research. (13) Included within the FAS are the Bauer Fellows Program (16) and the Bauer Core Facilities (17) which are “part of a university-wide initiative in systems biology, which also comprises the PhD program in Systems Biology and the Department of Systems Biology at Harvard Medical School. (18) “The Bauer Fellows program is the core of the Center for Modular Biology (19), one of a dozen National Centers for Systems Biology funded by NIGMS”(20) or National Institute of General Medical Sciences (21), part of the National Institute of Health. (22)

References

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[1]http://www.forbes.com/static_html/rich400/dist.html [2]http://philanthropy.com/article/Philanthrophy50/65182 [3]http://news.harvard.edu/gazette/2000/11.30/04-genomics.html [4]http://aacsb.edu/resources/facilities/donors.asp [5]http://en.wikipedia.org/wiki/CFA_Institute [7]Conversation with Doug Bauer-RWR [8]http://www.mfwire.com/article.asp?storyID=7504&template=article&wireID=2&bhcp=1 [8a] http://www.invesco.com/portal/site/global/History/ [9] [9a] http://www.bauer.uh.edu/centers/acim/ [9b]http://www.mccombs.utexas.edu/Centers/AIM.aspx [10]http://roxburylatin.org/about_rl/campustour.aspx [11]http://www.bauer.uh.edu/centers/acim/our-story.asp [12]http://news.harvard.edu/gazette/2000/11.30/04-genomics.html [13]http://sysbio.hardvard.edu/csb/about/index.html [14]http://news.harvard.edu/gazette/2002/03.07/10-bauer.html [15]http://sysbio.harvard.edu/csb/about/index.html [16]http://sysbio.harvard.edu/csb/research/fellows.html [17]http://sysbio.harvard.edu/csb/resources/index.html [18]http://sysbio.harvard.edu/csb/index.html [19]http://sysbio.harvard.edu/csb/research/center.html [20]http://sysbio.harvard.edu/csb/about/index.html [21]http://www.nigms.nih.gov/Research/FeaturedPrograms/SysBio/Centers/ [22]http://www.nih.gov/


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