Monday, June 03, 2013

Garrett Van Wagoner

I'm looking through my shelf of old magazines and came across this article in the July 1996 SmartMoney entitled What Makes Garrett Van Wagoner So Hot?

"No mutual fund manager ever finished first among all equity funds two years running.  No one, that is, until Garrett VanWagoner did it.  Now, he has to prove it wasn't a fluke.

"His record is mind-boggling," says Morningstar's Don Phillips of Van Wagoner.  "I only wish I had put my money in at the beginning.

So I wonder how he's done since.  LMGTFY.

Here's a 2008 article from Time.

A 1999 headline in Money magazine asked:
He’s Baaack! Garrett Van Wagoner has been a genius, a dolt and a genius. So which is he?
Nine years later, Van Wagoner appears to have finally answered the question. From today’s WSJ:
Van Wagoner Emerging Growth has consistently disappointed investors, giving it a dubious distinction as the worst-performing U.S. actively managed stock fund over the past 10 years.
But at least one thing is changing at the woebegone fund: Longtime manager Garrett Van Wagoner is planning to step down, even though Mr. Van Wagoner, 52 years old, controls the company that sponsors the fund, Van Wagoner Capital Management.
When asked about his best stock pick of the past year, he says, “I don’t know if I have any best picks.”
Van Wagoner was one of the biggest stars of the 1990s tech stock boom. I think the evidence is pretty strong by now that, while an entertaining guy who picked a good time to get into the mutual fund business, he possesses no investing skill whatsoever. Which says something kind of interesting about the mutual fund business.


And here's a 2010 Wall Street Journal article.

Ten years ago, technology-fund managers were media celebrities, highly sought seers of the stock market with their fingers on the Internet's pulse and promise. The rallying cry of the tech-stock crowd—"It's different this time"—was at once bullish and bullying. Anyone who said otherwise about stock valuation—that sales and earnings still mattered—just didn't get it.

"The rules were different," said Russel Kinnel, director of mutual-fund research at Morningstar Inc. "A good two-year return was supposed to mean the fund manager was brilliant. In fact they were just taking more risk."

"Because everyone was getting rich, they were willing to put aside disbelief," he said.
Where are these tech-stock superstars now, 10 years after the boom turned for many to bust?

Garrett Van Wagoner

Van Wagoner Emerging Growth Fund
Van Wagoner Emerging Growth Fund gained 291% in 1999. Assets ballooned to almost $1.5 billion from $189 million a year earlier. An investment of $10,000 in Emerging Growth at the beginning of 1997, would have been more than $45,000 by March of 2000.

Those riches didn't come without risk. Garrett Van Wagoner was known for trading aggressively and successfully, and his hard-charging style suited the times. Mr. Van Wagoner had made his name managing Govett Smaller Companies Fund—the best-performing small-cap growth fund for all three years he ran it. By the time PBS featured the rising star on an episode of "Frontline" in January 1997, Mr. Van Wagoner was being compared to legendary investor Peter Lynch of Fidelity Magellan Fund.


Warren Buffett likes to say that you can't tell who is swimming naked until the tide goes out. Mr. Van Wagoner was on full display when the bear market hit tech stocks three years later.

Emerging Growth lost 21% in 2000, dropped almost 60% in 2001 and fell 65% in 2002, when assets slipped below $100 million. That $45,000 amassed by early 2000 would have dwindled to $3,300 by the end of September 2002.

Today, Emerging Growth is called Embarcadero Absolute Return Fund (trading symbol EFARX), and any loyal shareholder who invested $10,000 13 years ago would have about $1,900 to show for it.

Mr. Van Wagoner hasn't been involved with Emerging Growth since February 2008; he didn't return telephone calls seeking comment.

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