BusinessWeek Investor: Hers
"Chicks Laying Nest Eggs" Hatch a Site
Karin Housley wanted to learn more about investing, but she didn't want to do it alone. So she pulled together nine far-flung female friends and relatives and launched an online-investing group with a catchy name, Chicks Laying Nest Eggs Investment Club. Two years later, these Chicks have proven they're no financial birdbrains. Their ten-stock portfolio, which includes Cisco Systems, Nokia, and General Electric, has returned 47.5% from its inception through Sept. 15, vs. 17.7% for the Standard & Poor's 500-stock index. "We've had so much fun and learned so much that we want to get the word out to other investors that they don't have to do it alone," says Housley, a writer and former TV producer who has four children and is married to hockey player Phil Housley of the Calgary Flames.
The Chicks have begun to get the word out through their Web site, www.chickslayingnesteggs.com, which they launched on Sept. 5. Right now, the site just reveals their portfolio, investment strategy, and member communications. But it's gearing up to provide services for other investment clubs, including message boards and portfolio-tracking tools.
The foundation of the club's success is a 12-step investment plan (table). Based on strategies from super-investors Peter Lynch, Warren Buffett, and the founders of the Motley Fool Web site, the guidelines took the Chicks nearly two years to develop. The first rule is Lynch's "buy what you know." For example, the club voted recently to acquire Internet portal Yahoo! instead of biotechnology company Amgen, which one member had been lobbying the club to buy for more than a year. "The rest of us still don't feel comfortable with the biotech industry," Housley says.
Any stock the Chicks pick must also meet their stringent performance criteria. They want to see gross profit margins of at least 50% and net margins starting at 8%. The Gap met those requirements when they bought it in June, 1999, for about $44 a share. But since then, the retailer's margins have fallen, and the stock price is off by nearly 50%. The members are now deciding whether to unload their 34.5 shares.
Watching a stock's price plummet doesn't always mean the club will consider selling it. "While [Coca-Cola] hasn't done well, the financials are beautiful, and it still meets all our 12-step criteria," says Housley. Their 30 Coke shares are off nearly 21% from the October, 1998, purchase price of $64.
While some of the investment rules are complex, the club's organization is simple. The group meets twice a year in person in different places but conducts most of its business online the first Sunday of every month. Members live in 10 cities from Los Angeles to Portland, Me. They range in age from 29 to 63 and count a computer-software manager and a sports-marketing executive among them. Each member kicks in $50 a month, but the group buys stocks only once every three months. At any given time, each member is researching a potential pick and keeping track of a company already in the portfolio.
The Chicks are part of a growing trend of women joining investment clubs. Nearly 70% of the 650,000 National Association of Investors Corp. members are women, up from 40% of 125,000 members in 1990. In general, women's clubs have an impressive track record. In 1999, they had a lifetime annual compounded return of 32%, vs. 23% for men-only clubs, according to the NAIC (www.better-investing.com). Women trade less often than men, so their transaction costs are lower and their returns higher.
Speaking of the Chicks's success, Housley says: "The members don't want the club to be just about beating the market." But achieving that result has sure made the club a lot more fun.For more on investment clubs, or to join a discussion in our forum, see hers.online at www.businessweek.com/investor/Questions? Comments? E-mail firstname.lastname@example.org or fax (212) 512-2538By Toddi GutnerReturn to top