A Cindarella Story from WSJ-I: -g-
About this guy:
Member 730210
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Message-Board Participant
Is Tapped to Manage Fund
By CARRIE LEE
THE WALL STREET JOURNAL INTERACTIVE EDITION
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.
Rex Dwyer
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.
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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.
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