Coconutjoe and Spike, Your Money Managers
By Danny Hakim, SmartMoney
MEET YOUR new fund manager. His name is Coconutjoe. Coco Joe's on a hot streak. He picked
Net2Phone (NTOP) in July at 26 17/32. Since then, the e-commerce company has shot up 222%. On
July 21, Coco, ever the dice-roller, took a chance and shorted Audible (ADBL), an Internet provider of
audio books and music. Where's Audible today? Down 14%.
Nicely done, Coco Joe.
Welcome to StockJungle.com. The upstart California investment company aims to launch the first
mutual fund to use message-board surfers as its stock-picking crew. This is no joke, though
StockJungle's recent filing probably has regulators at the Securities and Exchange Commission
scratching their heads. The Culver City, Calif., company, which was incorporated in February, is the
brainchild of Michael Witz, 28. Witz used to be an analyst at a mini-investment bank called Financial
Resource Group, also of Culver City, which is a partner in StockJungle.
The company has filed to launch four mutual funds. Besides the StockJungle Community Intelligence
Fund, there will be an Internet fund and a growth fund, but the lure will be StockJungle's free S&P 500
index fund. Free? StockJungle Free S&P 500 Index Fund, as drawn up in the registration statement,
has no fees, the first free mutual fund we've ever heard of. Think of it as a loss-leader. The other funds
will be no load and charge a 1% expense ratio, the annual fee deducted in daily increments by all
mutual funds to cover marketing and management costs. (Well, all funds until now.)
So why start a message-board fund? We asked Witz.
"There are a lot of intelligent people online who have the ability to provide great investment ideas," he
says. "I'm trying to create an environment that allows that to be measured. When someone is going on
a Yahoo! board, you don't have any idea what their record is."
The message-board picks -- which any visitor can post -- will be parsed by StockJungle's investment
team, which will choose which posted picks to invest in, and how much to buy of each one. So who
will do the selecting? Senior portfolio manager Gordon Gustafson, 29, for one. His last stop was as a
production manager at a Hollywood video-production company. Witz also recently hired Michael
Petrino, 53, a founder of a defunct Connecticut investment firm called Calport Asset Management,
which managed $239 million in institutional money using a "quantitative" style, in which large numbers
of stocks are bought and sold using complex computer modeling.
"I think it's a fascinating idea," says Petrino. "It's a participatory investment process. Over time, we'll
have a better idea of how smart our community is."
Witz has already set up StockJungle's snazzy-looking Web site, which has a slick, late-'90s,
art-school feel to it, all done up in lime and lima-bean green. The stock-picking -- which is in dry run
right now before the fund's expected fall launch -- takes place on a Community section. A section
called Give Your Feedback lets participants rant and rave about each others picks. This has some
appeal. Haven't you always wanted to chew out your fund manager? Now you can. Or pat him on the
back. Take this from Spike, to Coconutjoe: "Nice Pick CoconotJoe [sic], how much longer are you
gonna hold this thing? You are the man!"
And who's Spike? He bills himself a value investor -- a practically Jurassic-era, moth-eaten breed as
far as chat-room speculators are concerned. Spike boldly promises "infinite returns and no risk." His
one pick, GTE (GTE), is up 3.17% since he bought Monday. So why'd he buy it? Click on the pick,
and you get a link to Spike's analysis. Here's Spike's analysis: "Because I like to spend time talking
on the phone."
Anyone who posts an investment idea on StockJungle will be awarded a rating of 1 to 100, based on
returns. There's also a more subjective star system, in which StockJungle participants rate one
another. On StockJungle's scale, Coconutjoe tops out at 100. That number is so hot that it merits a
little ball of fire next to it on StockJungle's home page. Yes, Coco Joe is on fire. And Spike? He's a tad
Buffett-esque for StockJungle -- rating a mere 80. Sorry Spike. No ball of fire for you.
Perhaps it's apt that the arrival of the StockJungle Community Intelligence Fund will roughly coincide
with the forced retirement of John Bogle from the board of Vanguard. It was Bogle, after all, who
invented the S&P 500 index fund. And it is Bogle who has decried the increasingly speculative nature
of mutual fund investing and the boom in online trading. Message-board fund managers? Hey, why the
heck not? It's a millennium thing.
We conclude with that 21st century fund manager, Coconutjoe. If his hot streak keeps up, he's the
guy who'll be doing plenty of StockJungle's stock picking. So who is Coco Joe? Our only glimpse
comes from his description, as posted on StockJungle's "Analyst Profile" section. Here's Coconutjoe
on Coconutjoe: "New to stocks, new to Daytrading, I live on a T1 access and surf all day...." New to
stocks and a 222% return? Coconutjoe...you rule! :-) |
