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Friday, Mar 29, 2024

Rocky Startup Forces Mutual Fund Closure

Veteran financial manager Tom Kerr took a shot at going out on his own – and it didn’t work out. In the spring of 2012, Kerr invested about $100,000 of his own money to start a mutual fund under his Rocky Peak Capital Management based in his Calabasas home. The idea was simple. Get some investors to put their money into safe small-cap stocks that offered little downside risk but a potentially good upside. Think Scotts Miracle-Gro Co., the lawn product firm based in Marysville, Ohio. “It was smaller stocks, but not risky ones,” said Kerr, 50. “These were the blue chips of small caps.” But after about 18 months of soaring costs and slowing investment, Kerr decided to call it quits on the fund. “It’s a very expensive and highly regulated endeavor,” he said. “A startup fund really can’t compete against the big boys like Vanguard or Merrill.” Kerr managed to attract $4 million of his $10 million investment goal, but much of it was from family and friends, though about half came from financial advisors. He said the fund was making “positive returns” and he tried to keep costs down by working out of his house and employing a couple of interns. But Kerr estimated that between accounting, auditing, shareholder services, it would have cost well over $100,000 a year to keep his mutual fund going – too big a bite for the amount of investment he managed to attract. Kerr said he is considering launching the same product under a hedge fund structure, which would cost considerably less. But more than cost, Kerr would be able to do something regulations wouldn’t allow him to do with a mutual fund: seek capital in an official capacity prior to launching. “It’s just a lot easier to manage. It’s all accredited investors, has a lot lower cost and you can’t pre-sell a mutual fund,” he said. “I’m looking to maybe start that at the end of the year.” In the meantime, Kerr joined AGG Asset Management LLC in Westlake Village earlier this summer as an investment advisor and portfolio analyst. He said the job includes managing everything from IRAs to trust funds for high net-worth clients. The firm has more than $35 million under management and employees three financial advisors. Prior to starting Rocky Peak, Kerr spent 18 years at West Los Angeles investment advisor Reed, Connor & Birdwell, which got bought out in 2011 and eliminated the fund Kerr managed. Exchange Change Mission Valley Bancorp is hoping its new listing exchange will help get the small regional bank more respect and recognition. The Sun Valley parent of Mission Valley Bank began trading late last month on the OTCQX exchange, the top tier exchange operated by OTC Markets Group Inc. in New York. It had been listed on the OTC Bulletin Board, operated by the Financial Industry Regulatory Authority Inc. in Washington D.C. To qualify for the OTCQX, Mission Valley had to undergo a financial and management review. “We’re very strongly capitalized and our balance sheet spoke for itself. It was a fairly easy process,” said Tamara Gurney, chief executive of the bank. The bank reported a Tier 1 risked-based capital ratio of 18.5 percent for the second quarter, far above the 6 percent for a bank to be considered well-capitalized. The ratio measures whether a bank has enough capital for the risks posed by its loans and other assets. The OTCQX also will mandate Mission Valley meet more strict financial and reporting requirements. In addition, Mission Valley had to be sponsored by an accredited third-party investment bank or attorney adviser to ensure it follows U.S. securities laws and the most effective investor communications practices. Gurney brought in Crowell, Weedon & Co., an L.A.-based division of D.A. Davidson & Co. of Great Falls, Mont. Shares of Mission Valley Bancorp are extremely thinly traded, with its average volume at 188 over the last three months. Gurney said she hasn’t seen any change in volume or recognition yet, but that she hopes the new exchange will help the company get some recognition. “This is putting your toe in the water, having responsibilities to post financials on the site and it gives more transparency,” Gurney said. “Hopefully this will make people more aware of us.” Mission Valley Bank has branches in Sun Valley, Santa Clarita and Valencia. In its first earnings report since the shift, the bank reported second quarter net income of $610,000, compared with $947,000 in the same period last year. Shares closed Aug. 20 at $6.15. New Offerings Woodland Hills accounting firm Kellogg and Andelson has launched several new services. The company, which is celebrating its 75th anniversary, is now offering computer automated bookkeeping, business evaluation and consulting, accounts payable processing and more. “We are always looking for ways to help our clients and new prospects stay on top of the latest changes in tax code and financial planning techniques,” said Chief Executive Christian Payne, in a statement. Kellogg and Andelson has more than 100 accountants at its headquarters and satellite offices in Century City and San Diego. The company has about 10,000 clients nationwide and works with clients in myriad industries. Staff Reporter Elliot Golan can be reached at (818)316-3123 or [email protected].

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