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Website Plays Role of Fund Industry Scourge


Each evening, at 6 p.m., Roy Weitz arrives home from work as a financial advisor for a family foundation, to his quiet, Tarzana, Calif. neighborhood. He reads the L.A. Times and popular investing magazines, eats dinner with his wife and then, at 9 p.m., ascends to a tiny, upstairs office where he quietly wages his war on the mutual fund industry.

For nearly five years, Weitz, now 49, has made a hobby of being the editor, publisher and only reporter at FundAlarm.com, a website he founded and devoted to providing investors with information about mutual funds. But unlike many other fund industry websites, the commentary on FundAlarm is often spiked with cynicism, rumor and punchy criticism of advisers and their products. And so, Weitz has developed a reputation in the industry for causing trouble.

His salvos sometimes prompt executives to fire off angry messages to him via email or the site's message board, he said. But Weitz, a soft-spoken man with a dry wit, takes the verbal beatings in stride.

He says his brand of what he calls tell-it-like-it-is commentary is necessary in a business fraught with misinformation. And journalists, bound by their own standards and corporate ties, "just can't or won't go after that," he says. During a recent interview, he described a few of the tiffs in which he has engaged. A public relations executive at a major fund company, for example, accused him of calling one of the firm's portfolio managers a liar.

"I really wasn't," Weitz deadpans. "I was just suggesting that he has a history of not telling the truth."

And, when a fund company announced that it would use a new mutual fund as a "training ground" for new portfolio managers, Weitz said he wrote that, since the firm was not taking the product seriously anyway, it might as well waive its management fees, make t-shirts for investors and host pizza parties.

"It's sort of the gossip sheet of the mutual fund industry," Weitz said of his website. "People have criticized me for being too negative. They say, Don't you have anything good to say?'"

"I do, but not here," he said.

The site is intended for the average investor but it has developed a surprisingly large industry readership, he said. Nearly 100,000 people visit FundAlarm each month, although many are repeat users, he said. Executives from major fund companies, such as the Vanguard Group of Malvern, Pa., and Strong Funds of Milwaukee, often visit the site, he said. And Weitz, evidently proudly, points out that reporters from The Wall Street Journal and other major financial publications log on regularly to mine story ideas. Those reporters frequently call to get in touch with people who post messages on the site, he said.

Weitz got the idea for the site while he was walking his dog during the summer of 1996. An investor in mutual funds for more than 15 years at the time, he could not stop thinking about a fund he owned that was performing poorly. "Is it a management change?" he recalls wondering. "A style change? What went wrong?"

He decided to get to the bottom of the problem, then published, on a website he created, everything that he learned.

Today, Weitz, who has earned a bachelor's degree in English from Queens College in New York, and a law degree and an M.B.A. from UCLA, updates FundAlarm at the beginning of each month. He spends roughly 60 hours each month on the site, working weeknights until about midnight and on weekends, he said.

Weitz makes an average of $300 a month on FundAlarm thanks to a partnership program with the online retailer Amazon.com, of Seattle, he said. He gets a percentage of every book sale by Amazon to customers who reach the Amazon site through his site, he said.

His sources are people who work throughout the industry. Weitz said he verifies the news tips he receives. But, his standards of verification would not hold up in traditional news rooms. For example, if someone tells him a person has left a company, he will simply check to see if that person is still in a company's telephone directory.

He spends his days working as a financial manager to a private family foundation. The foundation has asked him not to name it in association with his website partly because of the controversy surrounding the site.

"Everybody I know scans Roy's stuff when it comes out, mostly to find out whether they've been lampooned," said Dave Nadig, co-founder of MetaMarkets.com, of San Francisco. "He's a real truth teller. That's a rare thing in the mutual fund industry."

Robert Loest is not so confident in Weitz's judgement. The senior portfolio manager at IPS Advisory, of Knoxville, Tenn., says Weitz can be rash and irresponsible.