Eugene Profit likes to win.
Whether it's playing professional football as a quarterback for the New England Patriots or managing money, performance is all that he strives for.
And though the $104 million he manages may be small compared with some investment firms, that attitude has helped the Profit Value Fund rank third of the 428 large-cap value funds tracked by research firm Lipper Inc. for three-year performance.
Profit is up more than 7.7 percent year to date, and that's attracting the attention of pension fund managers and investment advisers across the country.
Ignore the Momentum Plays
"He's using the same fortitude that drove him to the National Football League in his current career in battling more recognized money managers." said Brent Williams, who played football with Profit for the Patriots from 1986 to 1989.
Williams, now vice president of the private client group at Merrill Lynch, said money management was a topic of discussion even when both were rookie players — though it was a definite second to their love of their game.
Fast forward 12 years and Profit, 36, who also played one season with the Washington Redskins, is buying such diverse stocks such as corporate software maker Compuware Corp. up 104 percent this year, drug maker Merck & Co., down 12 percent in 2001, and asset management company Franklin Resources Inc., up 5 percent.
The wide range of companies in Profit's portfolio is indicative of his strategy to ignore the momentum plays and buy stocks that he believes will move higher because of their industry position and company management, colleagues said.
Profit looks at the usual fundamental analysis associated with value investing such as a stock's price to earnings growth ratio, return on equity and price to earnings multiple relative to the market.
Savvy and Visionary Management Is Key
But he also buys fast-growing tech companies because he believes you can't value those by traditional measures. Savvy and visionary management also is key, he says.
Profit's top five holdings are data storage maker EMC Corp., up 33 percent in the last year; media giant AOL Time Warner, down 17 percent; paper products company Kimberly-Clark Corp., down 3 percent; Compuware and investment holding company Berkshire Hathaway Class A.
"He's committed to what he believes in and the flavor of the week doesn't move him," said Larry Jennings, who has known Profit for 10 years, and is now executive officer of Carnegie Morgan, a holding company.
Profit's admirers include Richard Dixon, Maryland State Treasurer and chairman of the $30 billion state retirement system and Liz Knope, executive vice president of Northern Trust Global Advisors, a unit of Chicago-based Northern Trust Corp. Both have placed cash with Profit.
"He's had a very good record and that is the only thing that counts," Dixon said.
"His approach is value oriented but it's flexible, which enables his to take advantage of technology" stocks, Knope said. "That's what appealed to us."
To be sure though, Profit has worked hard to gain the respect of his peers.
A Hole in the Middle
After leaving the Redskins in 1990 due of injury, he owned a doughnut shop outside Washington, D.C. Though profitable, it was not challenging enough for the Yale graduate with a degree in economics who also achieved All-American honors as a track and field long jumper.
Leaving the food business, he joined regional broker and asset management firm Legg Mason Inc. as a financial consultant in 1994 to do his apprenticeship in the world of finance.
"Legg Mason is a great firm but I decided that I could do a better job by having a more personal relationship with my clients and managing the assets directly," Profit said.
He began the Profit Value Fund in November 1996, with $1 million — about half of which was his own firm's money.
Though he admits his fund took a hit in November because be underestimated the market's reaction to the slowdown in the economy, he is betting the downturn will not be as dramatic as investors anticipate and that stocks actually represent the best buying opportunity since the summer of 1998.
Twice married, Profit has three daughters, 11, 3 and 7 months old, and relaxes by rebuilding his home in Silver Spring, Md.
But does he ever miss the thrill of running out onto the field on a cold Sunday afternoon? Not much, Profit said.
"On occasion, I do miss some of the camaraderie," he said. "But athletes are competitive people, and there are a lot of people competing for" investors' dollars.
"We are all out to prove our analysis is the best."