George Gilder, Whose Musings Have Made Others Millions, Mulls Starting His Own Fund
From TheStreet.com
thestreet.com
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 14 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." |
