Where Buffett Wannabes Trade Tips
Last year, hedge fund manager James Altucher got a seemingly irresistible offer. A much larger fund would give him more than $100 million to invest, leveraging the strategies that Altucher had perfected. The catch: The enthusiastic multitasker would have to give up everything else on his plate--appearances on CNBC, columns in the Financial Times and TheStreet.com (TSCM ), and writing books, such as Trade Like a Hedge Fund--to concentrate on the new fund.
It was an offer Altucher, 39, could refuse, and did. Instead, he and his fund partner, Dan Kelly, 32, decided to take their investing strategy to the masses. The result is the Web site Stockpickr.com, where investors can view the portfolios and latest publicly available moves of hundreds of successful pros, including Warren Buffett, hedge fund great George Soros, or mutual fund manager and Yale professor Martin Whitman. Several million people have visited the site so far this year, and traffic has quadrupled since January. In April, Altucher sold his controlling stake to TheStreet.com in a deal that valued the venture at about $10 million.
The Internet has allowed investors to tap into a world of data about companies and markets with the click of a mouse. But the flood of information can be overwhelming and difficult for ordinary investors to harness. Now a new set of Web sites is springing up, like Stockpickr and GuruFocus.com, to help investors tame this information glut and use it to make smarter investing decisions. Altucher adds his own perspective on Stockpickr, focusing on the footsteps of value managers, those who buy deeply undervalued and out-of-favor companies. The site's visitors also form a virtual community whose members interact with each other, answering one another's questions and sharing knowledge about various strategies.
Stockpickr's front page features annotated updates of the latest pro portfolios posted by Altucher and Kelly along with new ideas they've tested using historical stock data. Recently, Stockpickr was featuring the latest portfolios from Harvard's endowment, mutual fund star John Osterweis, and stocks whose characteristics are similar to those Buffett has invested in. The site is free; it makes money from advertising.
Following the moves of successful managers just from Securities & Exchange Commission filings can be extremely complicated for a layperson, says Tong Yao, a finance professor at the University of Arizona whose research helped uncover the advantages of piggyback investing. "Web sites like Stockpickr that can process the information and provide ready-made investment signals that are proven to work will be good news for investors," he says.
Stockpickr isn't the answer for someone who wants an automated investing plan. It doesn't produce a single preferred portfolio or replace the need to sort through many potential stock plays; it's more of an idea factory. One of the site's most popular features is a function to compare ordinary investors' picks with those of the pros. More than 100,000 people have posted their own portfolios. Their performances are tracked for all to see. The site spits back an Amazon.com (AMZN )-like suggestion list of stocks owned by professional money managers whose holdings are similar.
Users who post their picks and commentary give Stockpickr considerably more vitality than other sites, says Roger Ehrenberg, president of the research firm Monitor110: "It's not like a message board. It's more like a collaborative community."
By Aaron Pressman