It's Greek to them.
Back in 1992, a group of Alpha Phi Alpha fraternity brothers from various colleges found themselves in graduate school in Pittsburgh. "We would hang around, having a few beers, spending a total of perhaps $25 every week," recalls Thomas Brooks, who is now a marketing director at Lucent Technologies in Atlanta. "Someone said that we'd be better off investing this money rather than spending it, so we formed the Seven Jewels Legacy Investment Club."
Seven years later, the eight club members are scattered in five cities across the country, with four in Atlanta, yet they keep investing together. "We communicate regularly by e-mail and hold most of our meetings over the phone," says Derek Walker, who is now a senior member of the technical staff at Bell-South, Atlanta. "Every February, we hold a face-to-face meeting that everyone tries to attend."
Such post-education studies in investing are not unique. In suburban Maryland, outside of Washington, D.C., alumna members of Alpha Kappa Alpha have started not one but two investment clubs in the past three years. "One of our sorority's goals is to promote economic development," says Laura Wilkinson, an attorney with Clifford, Chance, Rogers & Wells in Washington. "Our investment clubs fit in nicely with this objective."
About 175 members of the sorority belong to the Alpha Kappa Alpha Montgomery County Chapter, says Wilkinson, and more than 20 signed up for the original investment club, with members' ages ranging from 25 to 75. "At that number of members it became unwieldy, [and it was] difficult to discuss investment ideas. Therefore, when more members wanted to join, we started another club. Each club meets once a month and requires a minimum investment of $25 per month, although members can invest more."
The sorority-based clubs have helped foster a close bond between members, says Wilkinson. "Not only do these clubs help us keep up with the market, they foster camaraderie, which is important to a sorority devoted to providing social and community serviced," she says.
Ann W. Williams, a retired school administrator who lives in Silver Spring, Maryland, and teaches part-time at nearby Bowie State College, is now the presiding partner of the original Alpha Kappa Alpha investment club. "We've done reasonably well," she says, "although our stocks are down from their peaks early in 1999. We've learned how to analyze stocks and to support our recommendations." The club's top holdings include Merck (NYSE: MRK), Oracle (Nasdaq: ORCL) and AFLAC (NYSE: AFL).
The Seven Jewels Legacy Investment Club, which has been around longer, has generated an average annual return of more than 30% for the last three years, according to Walker. "We had some early failures, but our recent performance has been very encouraging," he adds.
At first, unsure of their investment acumen, the club members emphasized mutual funds and relied upon a full-service broker for advice. Eventually, the club members became more confident in their ability to pick stocks, so they switched to a discount broker, and from mutual funds to individual stocks, says Walker.
The club's philosophy is like that of former Fidelity Magellan fund manager Peter Lynch: own what you know. Each member is therefore expected to recommend companies in his own industry or profession. Brooks notes the club doesn't own any oil stocks because none of the members works in the industry. Instead, Seven Jewels invests in technology, health care, manufacturing, financial services and retailing.
Brooks, who has an M.B.A., helped to develop six financial ratios--winnowed down from 18 originally--the club uses to analyze companies, helping the club structure a template with which to standardize its stock-picking research efforts.
"Each member now invests $90 per month," says Walker, "up from $30 when we first formed the club." Altogether, the Seven Jewels portfolio is valued at about $36,000. Top holdings include Cisco Systems (Nasdaq: CSCO), MindSpring Enterprises (Nasdaq: MSPG) and Verisign (Nasdaq: VRSN).
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|Title Annotation:||investment clubs of people from the same fraternity and sorority continue for many years|
|Author:||Korn, Donald Jay|
|Article Type:||Brief Article|
|Date:||Feb 1, 2000|
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