From time to time, mutual fund managers who own stock in a failing company lobby for the company to run leaner by cutting jobs. Now, some
Chase Manhattan Bank
fund managers have seen the other side of downsizing.
Over the past three months, Chase has beat a trail of tears between its Houston and New York offices. In August, it moved 32 equity management jobs and almost half its stock fund assets from New York to its Houston offices. On Monday, it moved 15 fixed-income management jobs and half its bond fund assets from Houston to New York. Here's the catch: The 47 jobs moved, but most, if not all, of the people who held them didn't make the trip. (Yesterday, Chase Manhattan announced that it will also move 1,600 operational jobs to Dallas from New York by the end of 2001.)
Chase spokeswoman Amy Sudol says the restructuring is necessary to consolidate asset management jobs following Chase's merger with
, even though that was three years ago. She adds that most, if not all, of the affected employees will lose their jobs. For those who cannot remain with the company, Sudol says the firm offers assistance in finding other work. Ironically, some of the fixed-income analysts and managers in Houston may wind up with a few of the equity jobs that moved from New York, she says.
The moves come in the wake of Henry Lartigue's recent appointment as chief investment officer of the bank's asset management arm. Sudol says the restructuring started earlier and is not his idea. "It's just an evolution of our attempts to consolidate duplicated positions," she says.
-- Ian McDonald
All Short, All the Time
Would the market please just crash already?
That seems to be the sentiment behind a new, short-only mutual fund.
fund, to be launched at the end of this month by
Skye Investment Advisers
of Los Gatos, Calif., bills itself as the first all-stock, all-short mutual fund.
When investors sell a stock short, they try to profit off of a decline in stock prices. To sell short, an investor borrows shares of a stock from a broker and immediately sells them. The idea is to buy the shares back later -- hopefully at a lower price -- to pay back the shares owed to the broker.
You don't have to be a brain surgeon to understand the concept of short sales. But this fund might answer the question of whether it helps to be a rocket scientist. The fund's manager is Paul McEntire, a
engineering Ph.D. who worked on the
program. (Beware that Ivory Tower credentials don't always translate into positive returns on Wall Street. Just look at the faltering
Barr-Rosenberg Market Neutral fund.)
Russ Kinnel, an analyst with Chicago fund-tracker
, says few firms have succeeded with short funds, especially in the 1990s bull market.
"It's a very risky bet with bad odds," he says. "It reminds me of betting on the long-shot at the track."
Because stocks can rise indefinitely, short-sellers are exposed to the risk of infinite loss. On the other hand, investors who are long stocks can only lose as much money as they invest in the stock because prices can't fall below zero.
If the fund's objective doesn't scare you, its annual expense ratio, an astronomical 4.47%, probably will. Skye, however, has promised to cap that expense at 2.75% until Oct. 31, 2000.
A spokesman for BearGuard did not return a phone call for comment.
While companies such as
offer so-called short funds, they are mostly index-like products that are quantitatively managed. BearGuard will be actively managed.
David Tice, the manager of the
Prudent Bear fund, which buys stocks long and short, has had a hard time making money in this decade's bull market. The fund's annualized three-year return is negative 17.9%. But it has performed well when markets have declined. For instance, during the third-quarter market slumps of both 1998 and 1999, the fund was up 21.9% and 16.5%, respectively.
-- Joe Bousquin
Portfolio Managers Say the Darndest Things
Just as the world makes a bit less sense when your
-educated friend is in his third year temping at a toy company in Providence, R.I., it's easy to be floored when a fund manager can't name his top holdings.
This week, a panel of tenured and trusted portfolio managers presented their stock ideas and pitched their funds to a sparse sprinkling of reporters at a press briefing in New York. They had many insightful, creative thoughts on today's market. They also made some gaffes that might make some of their shareholders lose sleep.
Ron Muhlenkamp, manager of the
Muhlenkamp fund, presented compelling statistics on where he thinks the market is going. (He's bullish on value stocks, among other things, in 2000.) After his exhaustive, but high-level argument, a reporter asked which stocks are his top holdings.
After a pregnant pause he admitted that he couldn't name any.
Another articulate and respected manager,
Westcore Midco Growth's Todger Anderson, outlined technology themes and names he's betting investors' money on. He rightfully stressed the importance of sorting out the truly valuable innovations from the weak "me-too" losers.
Then he called on a colleague to give him a hand when
application crashed. I've seen many managers in the same boat, but none in such an ironic situation. Then he said: "One of my favorite tech names is
streaming media. Not that I can explain what that is." So much for
"know what you own" mantra.
This doesn't mean these people can't manage money. It just means they're not the superheroes their firms often make them out to be.
-- Ian McDonald
Remember how the
European Central Bank's
limit on gold sales was going to drive prices back up into the $375 to $400 range per ounce? Don't bet on it. As
reported a few weeks ago, the sales limit wasn't as big a deal as some folks made it out to be.
On Friday morning, gold was taking a nice morning scuba dive, snorkeling at around $301, down from a high of $338 on Oct. 5.
Three of the bottom five mutual funds this week based on return are gold funds:
Van Eck International Investors Gold, down 6.5%, and
Lexington Goldfund and
USAA Gold, both down 6.6% for the week ending Thursday, according to
-- Joe Bousquin