Fund manager runs business, but Dad runs him to meetings
NEW YORK – Brandon Conley opens his weekly Wednesday 7:30 a.m. conference call with a briefing of news items affecting the portfolio of his fund, Mariner Investment Advisers.
Japan’s economy has signs of slowing. IBM is increasing its presence in China. Halliburton is considering a stock listing in Dubai. Listening in on the call are his investment analysts, 17-year-old David White-Goode and 13-year-old Jeremy Hitotsubashi. Conley himself is 14. David, who covers the defense and aeronautics industry, gives an update on Northrop Grumman, emphasizing its strong position as a shipbuilder. His recommendation: A buy.
“What price are we looking at?” Conley asks. “Eighty-five dollars? Or are we looking higher, around the trading range for Boeing or Lockheed?”
“Eighty-five a share,” David responds.
Conley and his crew are hardly the first teenage market junkies to come along, but their story suggests that some child investors are now hitting a new level of sophistication, and, sometimes, obsession. Conley has taken on many of the conventions of a professional investment fund. He and his staff are raising money from outside investors, developing relationships with companies, and even speaking up at shareholder meetings. He even shorted some stocks right before a February stock-market decline.
Conley got the idea to start the fund in November when he took a financial-literacy course. As part of the program, he and other students had to develop their own business plans. One student wanted to open a skateboard shop. Conley, who became interested in markets with a virtual-reality game called Neopets and was setting up mock stock portfolios by the age of 12, wanted to start his own investment fund. “It blew me away,” says Jay Ellis, a regional manager of Washington Mutual in Manhattan and the course instructor.
In six months, Conley says he has increased the value of his fund – which consists of money he earned fixing neighbors’ computers and contributions from his uncles – by some 30 percent, to about $5,000.
Because he is being home schooled, Conley can adjust his schedule to attend investor meetings, as he did recently, hopping on a subway with his father to hear London-based billionaire Lakshmi Mittal, chief executive of Mittal Steel, at the Pierre Hotel in Manhattan. Mittal was meeting with some analysts and about 100 investors.
Conley subscribes to a dozen financial publications and Web sites, often requesting gift subscriptions from parents or relatives for birthdays and holidays. He watches financial news on TV nearly all day and idolizes CNBC personalities Maria Bartiromo and Jim Cramer of “Mad Money.” He made his parents and two younger siblings join him for a subway trip to Rockefeller Center recently for a book signing with Cramer.
“This is my first business,” says Conley. “I’m really excited about it.”
His room is covered in papers and corporate reports. A series of clocks on his walls show the time in New York, Moscow, London and Tokyo so he can keep track of when foreign markets open. His younger siblings, Christopher, 6, and sister Joralyssa, 9, speak in ticker symbols at times, referring to McDonald’s as “MCD.” They’ve picked up the abbreviations from hearing Conley talk and from being exposed to the constant chatter on CNBC.
Conley recently decided to put the fund on hold for a few months while he is in math camp in Colorado. (He moved the fund’s assets into a money-market account.) At the end of the summer, he plans to relaunch the Mariner fund with the $5,000 plus another $30,000 he is trying to raise with help from a lawyer. His mother and father are custodians of the brokerage account where he does his trading.
His mother, Judith, a computer programmer who home schools Conley, doesn’t mind his running an investment company out of their home. But she worries about him investing so much money, and about his frustration at things that don’t normally frustrate a teenager, such as his inability to take a six-hour Series 7 exam for would-be securities traders. (You have to be working at an NASD member firm to take the test.)
After finding him following Asian markets on financial TV networks at 4 a.m., she told him to get some sleep.
“I’m terrified, I have to say, as a mom,” she says.
Part of Conley’s home-school curriculum involves finding unusual classes and learning opportunities on the Internet and in New York City, including volunteering and training at the Brooklyn Public Library, online math classes through Ivy League schools, chess clubs and Lord of the Rings reading societies. The unorthodox schedule allows Conley to spend as much as eight hours a day researching companies and investments and making trades.
He often wears a tie, suit or dress shirt in the middle-class neighborhood where he lives, partly so people will take him seriously but also to avoid being suspected of violating truancy laws because he is not at a traditional school.
Along with semiweekly conference calls, Conley holds weekly meetings, often at Starbucks after chess class on Fridays, to discuss investing strategy with his three employees. None of them has been paid yet, but Conley plans on paying each of them a percentage of profits, plus bonuses based on their research. He also plans on adding staff.
“I will probably take a couple more employees to specifically handle trading and an IT manager,” says Conley. “Right now, I do all the trading.”
Conley makes trades just about every weekday. He has stock quotes delivered to his mother’s cell phone – which he often borrows – and says he knows many of the broker’s phone representatives by name because he calls for quotes so often when he is out of the house and unable to turn on the TV or computer.
At the end of the call on a recent Wednesday, Conley summarizes the fund’s cash position and notes only two losses, the short position XM Satellite Radio Holdings and the long position on Wal-Mart Stores, and says the losses were offset by gains. “Everything else has been on a beat to high numbers.”