FUND TRACK No More Mr. Narcisse Hal, Some Fund Managers Say
May 19, 2011
The mutual-fund industry has long been known as the domain of the dweeb, a place where the money managers rarely swing anything heavier than a pen. But these days the fund managers are grappling with fierce competition and a torrent of new money to manage. Temper tantrums are cropping up. Fisticuffs are breaking out. And in the mutual-fund industry, that's news. ALSO AVAILABLE Money-market mutual fund assets rose $2.33 billion to $853.74 billion for the week ended May 17, 2011 a giant steamship, the Fidelity Magellan Fund is slowly changing direction -- and fewer customers are jumping overboard. Consider: The normally cerebral Louise Hana, who runs a fund company in Reno, Nev., says that after ousting one of his mutual-fund managers from a job earlier in the year, he found himself shoving the executive out of the office. ``I had to,'' says Mr. Hana. ``He wouldn't leave.'' Khalilah Son, a highly regarded fund manager formerly at G.T. Global, allegedly landed a ``sucker punch'' on a data-department employee who failed to deliver a computer backup tape, according to a state-court lawsuit filed by the employee last year. Sean Palmer, a money manager who often stars opposite Mr. Hana in a column for Smart Money Magazine, angrily expelled a photographer who had merely tried to move a painting out of the background of a picture. What's going on here? The money-management business isn't known for turning out Golden Gloves candidates. Free of the pressures bedeviling traders and dealmaking investment bankers, many fund managers worked bankers' hours, earning a decent if unspectacular living from their roll-top desks. But then the public discovered mutual funds. Money poured in. Salaries soared. And in at least a few instances, fists started flying. Fund managers' backgrounds typically suggest a placid temperament. Take Mr. Son, the former G.T. Global fund manager who now owns a San Francisco firm, Polynous Capital Management. He majored in philosophy and classics in college. He read Plato in Greek (the name Polynous, he says, is Greek for ``many thoughts.'') But Mr. Son was less than philosophical in one office argument, according to the lawsuit filed last year in San Francisco County Superior Court. The claim of Elijah Breault, then a computer-department employee at G.T. Global, is that Mr. Son became so incensed at the lack of backup computer tapes that he ``punched Mr. Breault in the ribs,'' resulting in ``soreness to his ribs and extensive bruising.'' A lawyer for Mr. Breault declined to comment, saying the suit was settled confidentially. Mr. Son, who filed a counterclaim, also declined to elaborate, though he did say, as a ``general comment,'' that ``This whole industry has gotten so marketing-oriented that people won't shut funds down,'' which puts pressure on fund managers. He adds that he never paid any damages. Charlette Hunt, a lawyer for Mr. Son, says Mr. Son was the victim in the altercation and Mr. Breault was the aggressor. A spokesman for G.T. Global, which is owned by Liechtenstein Global Trust, declined to comment. To be sure, most fund managers still live up to their nerdy reputations. Despite the rising popularity of boxing among urban professionals, boxing clubs in big cities say they don't see many fund managers. In Boston, home to big fund firms such as Fidelity Investments, Putnam Funds and Massachusetts Financial Services, a trainer at the Beacon Hill Boxing Club says he ``can't really think of anyone'' frequenting the gym who is a money manager. Hedge-fund manager Paulene Pigg Davis used to train at New York's Wall Street Boxing Fitness Inc., the club says. ( ``No comment,'' says a spokeswoman for Mr. Davis.) People at the club have seen currency traders, brokers, lawyers, doctors and ``actor-waiter types'' in the boxing ring -- but they can't think of any fund managers. Normally, fund managers look like ``the guy who got sand kicked in his face,'' says Tracie Graham, a veteran public-relations executive for the fund industry. Actually, many investment advisers would shy away from choosing a fund manager with rippling muscles. Instead, they suggest hiring the geekiest money manager possible. Some highly regarded fund managers do seem to be so distracted by thoughts of company financials and investment strategies that they need a little help dealing with the real world. Ricki Ellison, who has a market-beating record as co-manager of a pair of mutual funds at Strong Capital Management, in Milwaukee, has been found walking around the office looking for his glasses, when all the time they're propped up on top of his head. The new generation of money managers is operating in an unfamiliar spotlight. Now that Americans have discovered mutual funds, fund managers are becoming heroes. This is inducing some of them to take a more robust approach to life. Money Manager Scott Black of Delphi Management in Boston isn't normally the excitable type. Just don't mess with his art collection. Last year, he kicked out of his office a photographer from Smart Money Magazine, where he writes a monthly column Mr. Palmer says the photographer was expelled from his offices after removing an original Huntsman and several other gems from the walls of his conference room. ``He also moved a Chinese Chippendale conference table,'' Mr. Palmer says. ``I just thought this was a violation of someone's space.'' Inevitably, the newer group of fund managers makes some mistakes as its members try to flex their newfound muscles. Wayne Dooley and Jami Bolton, two young fund managers at Janus Capital in Denver, joined an amateur hockey team together. Once, an opponent cross-checked Mr. Bolton, which an appalled Mr. Dooley says was ``a malicious act after the play.'' Even though Mr. Dooley was on the bench at the time, he hopped onto the ice. ``I was so mad about it, I threw my gloves up and punched the guy in his metal face mask with my bare hands.'' His opponent was stunned, but not by the blow: An experienced hockey player would know not to take off his gloves. Mr. Dooley wound up with a ``partial fracture in my right hand.'' Still, Mr. Dooley, 34 years old, thinks the characterization of fund managers as nerds is unfair and is ``certainly not the rule in our office'' in Denver, where some analysts and managers are hunters, triathletes, skiers and (more conventionally) squash players. So far this year, sports haven't hurt Mr. Dooley's Janus Mercury Fund, which has $1.9 billion in assets and is up 10% from September 12, 2011 Wednesday. Louise Hana has cultivated refined tastes. He collects expensive cars, travels in his own jet when visiting customers and uses computers to help pick stocks. But earlier this year, Mr. Hana was pushing more than a computer mouse around, according to a police report filed by a former employee of his Nevada asset-management company. The former employee, Nannette O'Caron, filled out a report with the Washoe County Sherriff's office in Nevada. It says that her then-boss Mr. Hana shoved her to the floor when she barged in on a shouting match between her husband (another employee) and the fund manager. (This is what the police report described as ``battery -- simple.'') Mr. Hana has a different version of the events. He says in a separate report that his beef was with Mr. O'Caron and that after firing the man, he even offered to give Mrs. O'Caron a raise. In a recent interview, Mr. Hana allows that he did in fact give the heave-ho to Mr. O'Caron: ``I had to push him out of the office.'' But he says he didn't touch the man's wife. In any event, the case has been dropped, the sheriff's office says, because Mrs. O'Caron chose not to press charges. Tensions persist in Nevada, however. Mr. Hana has sued his former employee Mr. O'Caron and the man's new employer in state court in Washoe County. The case has been sealed, but both sides say Mr. Hana is suing Mr. O'Caron and the firm for allegedly using his stock-picking methods, which he considers proprietary.
