FundWatch 1
Oct 11, 1999
George Gilder, Whose Musings Have Made Others Millions, Mulls Starting His Own Fund
By Scott Moritz
Staff Reporter
thestreet.com
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 (Nasdaq:QCOM - news) has risen 837% since it made Gilder's list in 1996; Lucent (NYSE:LU - news) is up 427% in the nearly three years on the GTR list.
He has also tapped some lesser-known companies. Chipmaker Applied Micro Circuits (Nasdaq:AMCC - news) has risen fivefold in its 14 months on the list, while optical network gear maker JDS Uniphase
(Nasdaq:JDSU - news) has surged 800% in the two years since it made the list.
The exceptions are satellite company Loral Space Communications (NYSE:LOR - news) , down 3% since it was added to the list 14 months ago, and wireless equipment maker P-COM (Nasdaq:PCMS - news) , 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
(Nasdaq:GBLX - news) .
"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." |
