George Gilder, Whose Musings Have
Made Others Millions, Mulls Starting
His Own Fund
By Scott Moritz
Staff Reporter
10/11/99 9:00 AM ET
George Gilder, the
right-wing-economist-cum-journalist/analyst, has long
been among the leading advocates of the coming
revolution in telecommunications.
Over 30,000 subscribers pony up $300 a year for his
monthly newsletter, The Gilder Technology Report. His
columns for Forbes ASAP hold must-read status among
tech devotees. And this early bandwidth cheerleader,
who hosts his own conference four times a year, now
commands a minimum of $20,000 for speaking
engagements.
Would anyone want more?
Gilder might. The 60-year-old is considering mixing his
role as aloof technology guru with the more active
position of tech fund manager by opening his own
money-management firm. The word among his followers
is that he's thinking about a $1 million ante for potential
investors.
"It's conceivable we will manage a fund," Gilder told
TheStreet.com, although he acknowledged that running
money could impact his role as a technology analyst.
As a tech pooh-bah, Gilder, who once wrote speeches
for Richard Nixon and studied under Henry Kissinger,
has a large and loyal following that relies on his
renowned mental bandwidth to pick "ascendant
technologies." These are fundamental sciences that are
at the core of 29 companies that he follows on the GTR
list. All of the companies are chosen for their long-term
investment potential, not for a quick hit.
"These companies are going to be big 10 years from
now, if I am right," Gilder said.
To those on the outside, it sounds like a no-brainer: All
but two of the companies on his list are posting
double-digit or better gains.
But investors, many of whom have made small fortunes
by tuning to the Gilder frequency amid all the noisy tech
hyperbole, are concerned the credibility of his analysis
would be compromised by the financial stakes his fund
had in a company.
"He'd end up selling his reputation by speaking his mind
about companies that he'd have positions in, in the
fund," said Ashby Foote, a 15-year Gilder devotee and
president of Vector Money Management, an
Atlanta-based investment firm.
Gilder's record is astonishingly good. Qualcomm
(QCOM:Nasdaq) has risen 837% since it made Gilder's
list in 1996; Lucent (LU:NYSE) is up 427% in the nearly
three years on the GTR list.
He has also tapped some lesser-known companies.
Chipmaker Applied Micro Circuits (AMCC:Nasdaq)
has risen fivefold in its 14 months on the list, while
optical network gear maker JDS Uniphase
(JDSU:Nasdaq) has surged 800% in the two years since
it made the list.
The exceptions are satellite company Loral Space &
Communications (LOR:NYSE), down 3% since it was
added to the list two months ago, and wireless
equipment maker P-COM (PCMS:Nasdaq), off 68%
during its two-year stint on the list.
His due diligence is legendary. A year ago, a closely
held San Diego company, SilkRoad, held a
presentation in New York for analysts, claiming it could
send significantly more information down a single
wavelength on a fiber by manipulating photons.
Afterwards, Gilder spent five hours questioning James
Palmer, the scientist who developed the technology.
His conclusion: SilkRoad believes, with a pure enough
laser, that it can somehow manipulate jitter, the
variations in phase, to bear information. "I hope they
succeed. But it is so beyond all the usual
electromagnetic laws that they have to climb a wall of
skepticism to demonstrate that they can do it," Gilder
said.
Still, Gilder is far more comfortable being an egghead
theorist than a stock picker.
"I try to keep out of the [stock-trading] process because
I haven't figured out exactly how I will deal with that
issue. I haven't bought in a long time," said Gilder, who
owns Qualcomm and Global Crossing (GBLX:Nasdaq).
"I have been phenomenally lucky. By various measures
we're up, since we started, some 300% or more," said
Gilder, halfway through his 16-ounce coffee near the end
of his last day of the three-day Telecosm '99
conference in Lake Tahoe, Calif.
More than 400 folks, most of them fund managers,
investment brokers and independent investors, forked
over $3,500 late last month to hear Gilder and his
handpicked collection of industry insiders tell how their
particular technology is positioned to help unleash the
exploding abundance of communications capacity.
It is this very audience, investors looking to Gilder for the
"truth" about a technology and a lead on a good
company, that would be alienated if Gilder's tech-picking
motives came into question.
"One reason I take a lot of stock in what he says is that
he doesn't have an investment banker ax to grind or a
investment adviser ax to grind," said Foote, the
Atlanta-based fund president. Foote, who attended the
Lake Tahoe conference, says his fund is up 29% in the
first nine months of this year, "largely because of
Gilder's influence on our portfolio."
Gerald Talansky, an Atlanta personal injury attorney
who has been following Gilder for the last three years,
says Gilder's guidance has been so good that he's
tempted to give up his day job. "Hey, I'm an overnight
millionaire, and I'm just doing this part-time. I want to
make it $3 million," he said.
"For me personally, I would prefer if he remained pure,"
Talansky said. "But I sure as heck don't blame him for
capitalizing on his success. That is the American way." |
