As a kid growing up on the Jersey Shore, John “Sean” J. Hanlon IV loved numbers. He memorized the batting averages from the newspaper of his favorite ballplayers every day and imagined himself as a successful businessman one day.
When his grandfather, John J. Hanlon Jr. — an attorney contracted with Stevens for outside legal counsel— strongly encouraged him to apply to the university, it seemed that goal of working in finance might have to wait. But Hanlon took his grandfather’s advice and immersed himself in math and science “and the minimal humanities” classes, graduating with a degree in mechanical engineering in 1980.
His boyhood dream of operating a successful financial business? It did eventually come true — and now Hanlon has given back to Stevens in spectacular fashion as thanks, through a significant gift to help establish the new Hanlon Financial Systems Lab. Scheduled to open in spring 2012, the lab will simulate an actual Wall Street trading room. And it will train and inspire finance-minded Stevens graduates to analyze and test solutions to financial questions for years to come.
“My engineering education caused me to want to dig deeper into solving investment problems for investors,” explains Hanlon, chairman, CEO and Chief Investment Officer of Hanlon Investment Management located in Egg Harbor Township, N.J., and a Stevens Board of Trustees member since December 2010. “I wanted to attempt to provide better investment outcomes. That set me on this path.”
Today, Hanlon continues to live at the Jersey Shore with his wife, Cathy, and their two children; sits at the head of a financial services company advising the management of over $3 billion worth of personal and corporate assets; writes about investment strategies for Forbes; and gives generously to Stevens and other philanthropic causes.
“We’ve done well,” Hanlon says about the proprietary investment models he developed and tested during the 1990s and continues to use today.
Engineering financial success
Hanlon didn’t jump into finance immediately upon graduating Stevens, but instead developed an interest in it during a two-year stint as a project engineer for the chemical firm Rohm and Haas.
“I knew I wanted to do something beyond being a project engineer, and fortunately, Merrill Lynch saw something in me,” he recalls.
Hanlon trained with Merrill at the famous One Liberty Plaza building adjacent to the World Trade Center. Upon completion, he was assigned to a sales position in the financial giant’s local office in Atlantic City — a fortuitous assignment for the kid from the Shore.
“I couldn’t believe my luck,” he chuckles. “I told them, ‘You’re going to let me begin a career in finance? On the Jersey Shore? Am I dreaming?’”
After 15 years in sales, Hanlon changed course again, deciding to open his own firm. He obtained a Certified Financial Planner (CFP) certificate in 1997 and opened Hanlon Investment Management two years later.
Assisted by a then-new research tool called “the Internet,” he began spending hours researching, creating and back-testing investment ideas and systems before eventually settling on a blend of modern portfolio theory — a strategy that spreads out risk by diversifying investments — and his own methods, which leap onto positive trends and ride them a few months before leaping back off as they show signs of turning south.
“I trust the math,” explains Hanlon. “I’m a numbers guy. We don’t worry about the future — what if the price of oil does this, or this guy gets elected, or talking heads start shouting about stock ideas on television. That’s just noise to us. As the prices move, we just want to be a part of those moves. We stay out of the business of being long-term forecasters; there are simply too many variables.”
Though he originally consulted face-to-face with individual clients, Hanlon quickly identified an alternate business model to deploy his new portfolio management methods: as a service to the rapidly growing industry of independent financial planners and advisors, who needed sound investment models and strategies to present to their clients.
Between 2001 and 2011, his company’s assets under management soared from $35 million to over $3 billion. The firm largely avoided the crash of 2008 by converting client holdings completely to cash in June of 2008 and waiting out the dramatic drops on Wall Street. When the trends began to tick up again in March of 2009, Hanlon was liquid and prepared to capitalize by making major investments.
“We essentially broke even in 2008, while the S&P 500 was down 35 percent and some emerging markets were down 50 percent or more," he says. "We did it by trusting the research.”
Giving the gift of financial training
In recent years, Hanlon has turned some of his time to philanthropy and corporate guidance. Beyond his work as chairman of the advisory board to the Stevens Financial Systems Center, he also serves on the advisory board for Pershing Advisor Solutions, a Bank of New York Mellon subsidiary broker dealer. He previously served on the advisory board of SunAmerica Securities; as chairman of the Linwood Education Foundation; and as chairman of the Seabrook House Foundation.
Hanlon also increasingly finds himself on the Stevens campus, where he enjoys reconnecting with the place he says shaped his thinking and prepared him for his eventual success.
“All my Stevens professors made an impression on me, and did a wonderful teaching job,” recalls Hanlon. "It has been especially refreshing to reacquaint myself with Dick Magee’63, my former fluid mechanics professor, who serves alongside me on the Board of Trustees. Dick has incredible passion for Stevens.”
In early 2012, Hanlon unveiled his largest donation yet: a significant gift to establish The Hanlon Financial Systems Lab, a classroom on the fourth floor of the Lawrence T. Babbio, Jr. Center for Technology Management and a keystone piece of Stevens’ new Financial Systems Center.
The lab will include the entire accouterments one would expect from a Wall Street trading room—terminals, tightly packed trading desks, tickers. Stevens students will learn quantitative financial methods first-hand, performing the same risk management operations that hedge-fund managers, advisors and planners perform daily. Courses for Stevens graduate programs in financial engineering, as well as Internet and network security, will also utilize and benefit from the lab.
“Financial services is the second-largest industry employing recent Stevens graduates,” pointed out Hanlon while visiting campus in January. “Think about that. Basic training in this field is not only important, but essential in this day and age. Stevens has always, and will continue to, understand the marketplace and the skill sets required for our undergraduates to become immediate, valuable contributors to industry.
“This combination of computer science, systems, engineering and investment and finance courses makes our students second to none in terms of education. The Hanlon Lab and the Financial Systems Center will help provide these key skills.”
And, he might have added, help inspire the next generation of Sean Hanlons to matriculate, learn at and graduate from Stevens.