September 24, 1999
Message-Board Participant Is Tapped to Manage Fund
By CARRIE LEE
THE WALL STREET JOURNAL INTERACTIVE EDITION
(Hi Andrew. Thought of you when I saw this story in WSJ - Peter.)
Two months ago, Rex Dwyer's only connections to Wall Street were the
postings he would make on Internet message boards. An electrical
engineer and amateur investor, he researched companies in his spare time
and shared his findings with other investors he met on the Net.
Those online connections have paid off, and
Mr. Dwyer is about to begin a new career.
His stock research caught the eye of Kevin
Landis, a founder of highflying Firsthand
Funds, and next week the San Jose, Calif., mutual-fund company will
launch a new communications-stock fund co-managed by Mr. Dwyer. Mr.
Landis will be the lead portfolio manager, as he is for three of the firm's
four funds now.
Mr. Landis says he was impressed with Mr. Dwyer's knowledge of
technology and the way he approached his research, looking for emerging
trends in communications and other industries and then ferreting out the
companies that stand to benefit. The two men had similar backgrounds and
graduated from the same college, the University of California at Berkeley.
Closely held Firsthand managed a combined $684.6 million in assets as of
last month, according to Lipper Inc., though one of its funds, Medical
Specialists Fund, with $10.3 million in assets, will break away this month.
Ken Kam, another Firsthand founder, will take the fund with him as he
leaves to open a new firm. Firsthand got more attention recently when its
Technology Value Fund, launched in 1994, ranked as the top performing
fund over the five years ending in June, gaining 50.6% annually.
The fact that Mr. Dwyer, a 34-year-old
unschooled in financial analysis, would be
hired by Firsthand Funds isn't completely
out of character for the company. Mr.
Landis himself was an electrical engineer
before breaking into investing, and the fund
company says its name refers to Mr.
Landis's and others' first-hand knowledge
of the technology industry.
But this isn't what Mr. Dwyer had in mind
when he began posting messages on Web
sites, such as Silicon Investor
(www.techstocks.com), in 1996. He, like
others on the boards, was simply interested in chatting about stocks with
other individual investors. Thousands of people swap investing information
on Internet message boards. Some of the postings are useful, others are no
more than cheerleading and promotion.
There have been instances when message-board amateurs have taken jobs
in the investing world. For instance, George Nichols, an Atlanta
accountant, recently was hired as a stock analyst by Morningstar, a
Chicago mutual-fund research firm, after he posted messages and wrote an
article for Morningstar's own Web site (www.morningstar.com). Motley
Fool (www.fool.com), based in Alexandria, Va., has hired writers and
customer-service employees from the ranks of its message-board users.
But Mr. Dwyer's move goes beyond these earlier crossovers. He will be
partially responsible for picking stocks for Firsthand Funds -- managing
money on a far larger scale than the individual investors who frequent
investing message boards.
"I'm flattered that I get to do this. ... I'm not on the formal
portfolio-manager track. A month ago I was looking at circuits and figuring
out how products should be made," says Mr. Dwyer, who had worked for
Magellan Corp., a privately held company in Santa Clara, Calif., that
makes satellite-based navigation systems. But even then, his mind was
wondering toward Wall Street. "I was making more money in stocks than I
was at my job. It was hard to concentrate on work."
Messrs. Landis and Dwyer met two years ago through a mutual
acquaintance who had read Mr. Dwyer's work. In addition to his Silicon
Investor postings, Mr. Dwyer had prepared reports on technology
companies, which he would distribute for free via electronic mail to anyone
who asked. Eventually his reports were going to 250 people, he says,
including 45 investment professionals he met online or in person.
At one point, Mr. Landis offered Mr. Dwyer advice on how to start a
mutual fund as Mr. Landis, who is 38, had done in 1993. But later he
came upon the idea that Mr. Dwyer would make a good addition to his
own team of 16 people. "Rex is the prototype for the person we're looking
for. We think that experience in the industry is key," he says.
Although Mr. Dwyer acknowledges that some
people may be skeptical of his abilities
because he doesn't have formal investment
experience, he says he doesn't feel hindered.
"MBA types are a lot more interested in the
capital structure" of a company, he says.
"They are asking a lot more financial questions. They seldom ever ask the
nitty gritty on why the customer is going to buy the product. That's where I
step in."
Mr. Dwyer says that his track record speaks for itself. While he says he
generally doesn't tout stock picks in online discussions, he did recommend
that investors buy shares of Sandisk, a Sunnyvale, Ca., data-storage firm,
in October 1998, when its shares were trading at 5 7/8. The stock closed
at 65 Thursday on the Nasdaq Stock Market. He picked RF Micro
Devices, a Greensboro, N.C., wireless-communications firm, in July 1998,
when the stock was at a split adjusted 2 3/4. It closed at 47 31/32 on
Nasdaq Thursday.
Mr. Landis says that Mr. Dwyer will follow a formula that applies to the
fund group overall: Look for major trends in a sector, determine what are
the strongest companies in that area and then crunch the numbers to find
individual stocks that are at attractive prices. "We believe our experience
and contacts allow us to identify the best trends. When we crunch the
numbers, we can get in early," he says.
Write to Carrie Lee at carrie.lee@wsj.com
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