Friday, October 17, 2008

All Hail Bonds!

No, not Barry: government-backed:

The U.S. stock market is so rough that even Major League Baseball players are scared — and stockpiling government-guaranteed bonds.

Frank Beck manages money for professional baseball players and other heavy hitters as chief investment manager at Capital Financial Group and affiliate Pro-Player Investing in Austin, Texas. During the summer, Mr. Beck reduced stock weightings for his sports clients to about 25%, positioning about 50% in cash, with 6% in gold bullion and the remainder in bonds. Recently, he started buying his clients agency mortgage bonds, the securities sold by Fannie Mae and Freddie Mac that are now guaranteed by the government . . .

. . . Of course, sports guys are often risk-takers, and some clients are tempted by the high yields on the very mortgage-backed securities that capsized Bear Stearns Cos. and Lehman Brothers Holdings Inc. For the most part, Mr. Beck and junior partner
Justin Simmons direct these clients to agency mortgage bonds because of the explicit government guarantees. Those agency bonds can yield as much as 7% to 7.5%, Mr. Beck said.
There's also some background about how these guys got into advising ballplayers in the first place:

In 2006, Mr. Beck befriended Mr. Simmons, who pitched the winning game for the University of Texas in the 2002 College World Series before joining the Los Angeles Dodgers system. Mr. Beck and Mr. Simmons, who has a degree in finance, got to talking about the niche for managing the money of sports pros.

“I always believed the niche was there; how to approach it was the tough part,” said Beck, an avid sports fan. “As we got to know each other and talk more about it, we decided it was something that would make our jobs enjoyable.”

In May 2006, Simmons joined the firm, tapping his contacts in the game to launch Pro-Player Investing. Out of $1.1 billion in assets under management at Capital Financial Group, about $150 million is in pro-player accounts. Beck said they were particularly strong in baseball.
Based on this page, Simmons' teammates on the UT team who made the majors included Huston Street, Omar Quintanilla, and Curtis Thigpen. I suppose we should assume that they are entrusting their massive investment portfolios to him.

In any event, thank God I found this article. I was about to entrust my 401K to Lenny Dykstra and Kevin Maas!

Oh crap. I just realized that my 401K is with Schwab, and so is Maas, so I suppose I am entrusting him with my retirement after all. I should have known that, though. Like Maas, my account started out amazingly strong and then just piddled away to nothing as time went on.


Dre said...

Maas, Craig! Maas!

Interesting niche for those guys though, gotta be fun and have some perks involved.

Craig Calcaterra said...

D'oh! Thanks, Dre.

ODB72 said...

Maybe they could invest in Stadium Financing, Miami could use them right about now.