he boom in the financial services industry is making it tough and expensive to find good experienced analysts and portfolio managers. The boom in technology is making it tough to find good experienced engineers. Now try to find someone good at both.
That is the problem being faced by FirstHand Funds as it grows up. Still run by the the team of Kevin Landis and Ken Kam (the company started in Landis' house about five years ago) and two additional partners (a marketer and a CFO) the company now manages four funds and have $255 million under management.
Landis sees burgeoning growth in technology that FirstHand Funds is positioned to take advantage of. One way the company wants to do this is by expanding the number of offerings in its family. Funds that the company is considering, Steven Witt, partner and the head of marketing told the MutualFundWire.com., include: an Internet fund, a telecomm/wireless fund, and a biotech fund.
The new funds tie into the issue of finding people who are good at both technology and investing to act as analysts and portfolio managers for the new products. FirstHand Funds is different than most other fund companies in that it believes in investing in areas in which it is an expert on the technology as well as the business (thus, the name). Sticking close to its expertise is the key differentiator for the company, Landis claims.
The company's logo -- a picture of two street signs -- one says "Silicon Valley", the other says "Wall Street" -- captures this philosophy. Unfortunately, Wall Street and Silicon Valley do not usually mix.
The typical candidates brought by headhunters are stock pickers, but they do not usually know the technology first hand, says Witt. If forced to choose, Landis would rather take someone with the knowledge of technology and only a passion for, but no professional experience in, investing.
There are "enough brilliant, left brain on steroids, people out there" that Landis is willing to make this trade-off, he explained. He adds that someone "who doesn't know the technology isn't eligible" for the job.
Once the people are found -- and Witt says that they are looking for four to six analysts -- Landis believes that they will find a market for the funds.
In the past, FirstHand has been one of the leaders in using the media's new fascination with all things mutual funds to market itself and spread its story. Even today Landis put in an appearance on CNBC. The company also keeps a WebPage
detailing which media outlets have covered its story.
The attention means that the company is now being watched by major brokers, says Witt. The company's oldest fund -- Technology Value -- is also coming up on its fifth birthday, an anniversary that Witt expects to open new doors on the marketing end as he will be able to disseminate some "blistering" return numbers.
Currently, all four funds in the family are pure no-load and offer one share class. Yet, Landis says that FirstHand is not wedded to the no-load model and is open to innovations to find ways to compensate broker and advisory channels to distribute its funds.
"We are no-load, but we don't want to say no," Landis admits.
Witt points to the fact that both Dean & DeLuca and Safeway are successful selling the same commodity: food.
No doubt they will find a way. Witt shared a story of the difficulty FirstHand had in getting onto the shelves of the Schwab OneSource supermarket. Even then, the fund had a blistering track record. But its small asset base (at the time it was $10 million in assets) gave Schwab doubts about letting it in the club.
"We had contracts signed, and everything," Witt told the MutualFundWire.com. Then at the last minute Schwab backed down with what must be a unique explanation: the fund was fine but the managers didn't have a five year track record in the business, so sorry, no go.
Today, FirstHand's funds are in Schwab, bet on them to find
an innovative way into the broader institutional channel.
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