Why A Star Fund Manager Is Starting Over

Irene Hoover was No.1. So why did she bow out?

In the breakneck performance derby ruling the mutual-fund business, stranger things have surely happened. But when the Jurika & Voyles Mini-Cap Fund finished the most recent quarter with the best three-year record among general stock funds--a feat that ordinarily sends fund marketers into paroxysms of joy--no ads were bought featuring the fund and its manager. Instead, the fund had to switch managers.

For Irene G. Hoover, who guided the $160 million portfolio through its first three years, the message was clear: In marketing mutual funds these days, pure performance is no longer enough. Jurika & Voyles, an Oakland (Calif.) unit of $121 billion New England Investment Cos., manages $7.4 billion, mostly in pension and private accounts. It also offers three mutual funds, of which Hoover's was the largest and best performing (table). So why is it now in the hands of new managers while Hoover leaves to start her own fund?

In a word: style. Hoover acted as a lone wolf, researching and tracking most of her own picks, rather than relying on ideas coming out of Jurika & Voyles's research department. Her eclectic style, which amounted to a fast-trading, hard-to-categorize search for small growth stocks at low-risk prices, no longer fit in with the slower, consensus approach common at Jurika & Voyles. "We have to have a sensible product strategy, no different from Procter & Gamble," explains Karl O. Mills, Jurika & Voyles executive vice-president. Clients, he says, "got confused by what was happening at the Mini-Cap Fund--vs. the other $7 billion we were running by the team approach."

"GREAT STOCK-PICKER." Hoover confirms that this long-brewing conflict spurred her resignation. "They wanted me to run it more like their other funds," she says, including holding fewer stocks in the portfolio, something she says was too risky for her taste, given the inherent volatility and illiquidity of smaller stocks.

Hoover mixes research acumen with trading talent. "She's a great stock-picker," observes San Francisco investor Curtis Brown, one of Hoover's former bosses. "She'll buy certain groups that are out of favor and watch as the market recognizes them." Case in point: Last year, she piled into real estate investment trusts just before their steep ascent in the second half.

Bullish on U.S. stocks in spite of the recent turmoil, Hoover sees a Dow Jones industrial average of 10,000 by 2000. She thinks that despite small caps' steep run of late, good buys remain, such as Cost Plus Inc., a retailer, and Granite Construction, which generates lots of cash--a hallmark of her picks.

NO TROUBLE. The fund manager leaves Jurika & Voyles with a valuable asset: her record and the five stars pinned on it by Morningstar Inc. She is starting a partnership for big money ($500,000 minimum), plus a mutual fund for small investors, which won't open until 1998.

This isn't the first time Hoover has gone her own way. A 56-year-old single mother of three, she stands out amid the mostly younger, largely male ranks of fund managers. She grew up in Chicago talking shop with her banker dad. At Stanford University, she studied history, then went to Northwestern University for a master's before teaching high school. "Nurse, teacher, librarian--those were the roles open to most of the women of my generation," she says. By 1967, however, she was working as an oil analyst in San Francisco. She has since been at several other boutiques and took 10 years out to raise her kids. Hoover returned to work full-time in 1985 and joined Jurika & Voyles in 1991 as research director.

Friends think Hoover will have no trouble operating Hoover Asset Management. Says John K. Skeen, research director of NationsBanc Montgomery Securities Inc.: "She's a performer and always has been." Others wonder about the risks of running your own shop. "Things consume you, and you take your eye off the ball. All of a sudden, you go from a top performer to a bottom performer," says Hugo W. Quakenbush, a senior vice-president at Charles Schwab & Co.

Hoover is undaunted. "I've always wanted my own firm," she notes. Says Mills: "This was really her love and her passion, to focus on these small companies." Now, she has the freedom to run her own fund, in her own way.

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