Fund gambles on 20-year-old stock picker
Monday December 1, 3:28 pm ET
By Peter Henderson
LOS ANGELES, Dec 1 (Reuters) - The company that runs one of the worst-performing mutual funds in the United States has taken a huge gamble by hiring the youngest mutual fund manager ever, a 20-year-old stock picker who has not graduated college.
Frontier Equity Fund (Nasdaq:FEFPX - News), run by Freedom Investors Corp., hired Chris Lahiji after his fantasy mutual fund -- a stock portfolio that was tracked on the Internet but had no real money at risk -- racked up a 170 percent return in about a year.
The assets of Frontier Equity Fund, based in a suburb of Milwaukee, have jumped tenfold in the last half-year, most of it since Lahiji became co-manager in September, as investors, including his parents, poured in hundreds of thousands of dollars.
"I'm pleasingly shocked how well he has been doing," said the man who hired Lahiji, Frontier co-manager Joel Blumenschein.
"He seems to be ahead of the curve and understands where the market wants to go, at least in technology."
But Frontier had a lot of room for improvement. "This offering is a strong contender for worst mutual fund around. Gluttons for punishment -- step right up!" wrote Morningstar mutual fund analyst Jeffrey Ptak.
He predicts the hiring of Lahiji will end in disaster.
"It is not a good idea at all that he is running money," said Ptak, who is wary of Lahiji's lack of experience and financial training.
"I just turned 20, but that doesn't mean I'm stupid," Lahiji retorted recently by phone.
Lahiji -- who lives with his parents in a Santa Monica, California, house filled with annual reports from companies he has researched -- has been interested in stocks since he was 11. His Iranian immigrant parents, who owned a few shares of retailer Home Depot Corp. (NYSE:HD - News), took him to one of its stores and told him, "We own the company."
He decided to take off his junior year at a local college to concentrate on his new job.
"Wall Street has yet to give me a chance," he said, bemoaning the lack of respect he is so far receiving.
But the Internet has given him plenty of opportunity.
Lahiji gained an online following by ferreting out small and tiny companies, or "microcaps," with big futures.
Lahiji says his "Tiny" fund launched in November 2002 had a 170 percent annual return on its collection of investments in small companies, a volatile fund category. The return does not count transaction and other real-world costs. The Frontier fund, also a microcap, is up about 12 percent in November.
Lahiji exudes self-confidence despite his lack of a long-term track record, but even he cautions that 2004 will not look as good as 2003. The microcap rally that boosted established funds by high double-digit percentages this year means there are fewer bargains to be found, he says.
BOUGHT AT ESTATE SALE
Blumenschein got into the fund advisory business almost by accident last year, when he bought brokerage Freedom Investors Corp., the advisor to the Frontier fund, at the estate sale of an acquaintance who had died.
"I wanted the brokerage firm and I got the advisory," he said. He considered shutting down the fund, which has been declining for years. It fell 54 percent last year, when its expense ratio was a whopping 42.36 percent of its assets.
Blumenschein said he and a financial partner decided to save the fund for the sake of investors who had hung in through bad times, and they sought out an experienced manager.
They did not get far with established professionals, but Lahiji called in June and would not take no for an answer.
"His honesty, his forthrightness was impressive in an industry right now that is wracked by scandal," said Blumenschein.
Morningstar's Ptak sees the arrangement differently. "This really seems to be a marriage of convenience for both parties -- Chris Lahiji and Joel Blumenschein," Ptak said. Lahiji wanted to become the youngest mutual fund manager ever -- and did -- while Frontier needed new investors that Lahiji's Internet image could bring, Ptak said.
Other reviewers are also scathingly skeptical of Lahiji, but the number of investors has grown to about 160 from around 100, according to Blumenschein. He said assets under management are up to $540,000 -- including about $100,000 from Lahiji and his parents, as well as a contribution from Blumenschein -- from a low near $50,000 six months ago.
Expenses are down to about 6.5 percent to 7.5 percent, says Blumenschein, who along with Lahiji is waiving compensation for now. The fund does not even have a Web site -- just a phone number, (800) 759-6598, which Blumenschein answers himself.
With the normal 8 percent load fee also waived, Frontier has found at least some investors ready to take a chance on Lahiji. The young stock picker says he wants to make Frontier the best-performing fund around, and to inspire other small investors.
"A lot of people are going to be thinking differently -- hey, if this kid did it, so can I," he says.
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Green03-12-2003, 19:42
der junge hat eine geniale homepage
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Trüffelschwein04-12-2003, 11:03
Coole Site! Und Pöng!
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A
AM Communications (AMCM.ob)
Artificial Life (ALIF.ob)
Amerigon (ARGN)
Allen Telecom (BOUGHT OUT by ANDREW CORP)
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B
Ballistic Recovery Systems (BRSI.ob)
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Bravo! Foods (BRVO.ob)
Biomerica (BMRA.ob)
C
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Clean Systems Technology Group (CSTM.ob)
Cellpoint (BANKRUPT)
Collector's Universe (CLCT)
Candies (CAND)
Covalent Group (CVGR)
D
Digital Broadband Networks (DBBD.ob)
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Delta Financial (DFC)
DPAC Technologies (DPAC)
Decorize (DCZ)
Digital Lightwave (DIGL)
E
ePHONE (EPHO.ob)
Electric Fuel (Changed Name to Arotech)
eResource Capital Group (RCG)
EFJ Incorporatedm (EFJI.ob)
ENGlobal (ENG)
Entrust Financial Services (ENFN.ob)
F
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Featherlite (FTHR)
Female Health Company (FHCO.ob)
Fuel Tech N.V.(FTEK)
Fonix (FNIX.ob)
Franklin Electronic (FEP)
G
GRIC Communications (GRIC)
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Galaxy Nutritional (GXY)
Good Times Restaurants (GTIM)
Global Med (GLOB.ob)
H
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Harvey Electronics (HRVE)
Hansen Natural (HANS)
Hoover's Inc (BOUGHT OUT by D&B)
Hytek Microsystems (HTEK)
Heska Corporation (HSKA)
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Interlott Tech (BOUGHT OUT by GTECH)
Isonics (ISON)
Innovative Companies (GORX)
I O Magic (IOMG.ob)
Internet Pictures Corp (IPIX)
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Janel World Trade (JLWT.ob)
JLM Couture (JLMC)
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Jones Soda (JSDA.ob)
JMAR Technologies (JMAR)
Jinpan International (JST)
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Kolorfusion (KOLR.ob)
Kahala (WENT PRIVATE)
KNOT Incorporated (KNOT.ob)
Kinark (Changed name to North American Galvanizing)
L
Lifestream Technology (KFL)
Lark Technologies (LDNA.ob)
LANVISION (LANV)
Liveperson (LPSN.ob)
Lowrance Electronics (LEIX)
LAM Pharmaceuticals (LAMP.ob)
M
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Metretek (MTEK.ob)
Metropolitan Health Networks (MDPA.ob)
Microtek Medical (MTMD)
Mediabay (MBAY)
Micronetics (NOIZ)
Mad Catz (MCZ)
Montana Mills (BOUGHT OUT by KRISPY KREME)
Mobility Electronics (MOBE)
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MDI Entertainment (BOUGHT OUT by SCIENTIFIC GAMES)
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Nyer Medical Group (NYER)
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O
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PHC Incorporated (PIHC.ob)
Private Media Group (PRVT)
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Procyte (PRCY)
Paving Stone Corporation (PVNG.ob)
PLC Systems (PLC)
Pyramid Breweries (PMID)
Princeton Review (REVU)
Phoenix Footwear (PXG)
Q
Qiao Xing Universal Telephone (XING)
QXL Ricardo (BANKRUPT)
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QSound (QSND)
Questcor Pharmaceutical (QSC)
Quigley Corporation (QGLY)
R
Rediff.com (REDF)
Rica Foods (RCF)
Rimage Corporation (RIMG)
Ratexchange (MEM) Changed Name to MCF Corp
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Sonic Jet (SJET.ob)
Senetek (SNTK)
Simula (SMU)
SciQuest (SQST)
Spatializer Audio Laboratories (SPAZ.ob)
Spectrum Signal Processing (SSPI)
T
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U
USA Technologies (USTT.ob)
Udate.com (BOUGHT OUT BY USA INTERACTIVE)
Urecoats Industries (URT)
UQM Technologies (UQM)
USSEARCH.com (MERGED with FIRST AMERICAN)
United Leisure (UTDL.pk)
United Financial Mortgage (UFM)
U.S. Wireless Data (USWE.ob)
V
Varsity Brands (BOUGHT OUT by Leonard Green & Partners)
Versar (VSR)
Varsity Group (VSTY.ob)
Virgin Express Holdings (VIRGY.ob)
Sight Resource (VISN)
Vixel (VIXL)
W
Warrantech (WTEC.ob)
Windswept Environmental (WEGI.ob)
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Whitman Educational Group (BOUGHT OUT BY CAREER EDUCATION)
World Transport Authority (WTAI.ob)
X
Xybernaut (XYBR)
Y
YOUBET.com (UBET)
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Z
ZAP! (ZAPZ.ob)
lahiji.com |
