Ex-NFL Quarterback Makes Mark as Money Manager

Jan. 25, 2001 -- Eugene Profit likes to win.

Whether it's playing professional football as a quarterback forthe New England Patriots or managing money, performance is allthat he strives for.

And though the $104 million he manages may be smallcompared with some investment firms, that attitude has helpedthe Profit Value Fund rank third of the 428 large-cap valuefunds tracked by research firm Lipper Inc. for three-yearperformance.

Profit is up more than 7.7 percent year to date,and that's attracting the attention of pension fund managersand investment advisers across the country.

Ignore the Momentum Plays

"He's using the same fortitude that drove him to theNational Football League in his current career in battling morerecognized money managers." said Brent Williams, who playedfootball with Profit for the Patriots from 1986 to 1989.

Williams, now vice president of the private client group atMerrill Lynch, said money management was a topic of discussioneven when both were rookie players — though it was a definitesecond to their love of their game.

Fast forward 12 years and Profit, 36, who also played oneseason with the Washington Redskins, is buying such diversestocks such as corporate software maker Compuware Corp. up 104 percent this year, drug maker Merck & Co., down 12 percent in 2001, and asset management companyFranklin Resources Inc., up 5 percent.

The wide range of companies in Profit's portfolio isindicative of his strategy to ignore the momentum plays and buystocks that he believes will move higher because of theirindustry position and company management, colleagues said.

Profit looks at the usual fundamental analysis associatedwith value investing such as a stock's price to earnings growthratio, return on equity and price to earnings multiple relativeto the market.

Savvy and Visionary Management Is Key

But he also buys fast-growing tech companies because hebelieves you can't value those by traditional measures. Savvyand 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 17percent; paper products company Kimberly-Clark Corp., down 3 percent; Compuware and investment holding companyBerkshire Hathaway Class A.

"He's committed to what he believes in and the flavor ofthe week doesn't move him," said Larry Jennings, who has knownProfit for 10 years, and is now executive officer of CarnegieMorgan, a holding company.

Profit's admirers include Richard Dixon, Maryland StateTreasurer and chairman of the $30 billion state retirementsystem and Liz Knope, executive vice president of NorthernTrust Global Advisors, a unit of Chicago-based Northern TrustCorp. Both have placed cash with Profit.

"He's had a very good record and that is the only thingthat counts," Dixon said.

"His approach is value oriented but it's flexible, whichenables his to take advantage of technology" stocks, Knopesaid. "That's what appealed to us."

To be sure though, Profit has worked hard to gain therespect of his peers.

A Hole in the Middle

After leaving the Redskins in 1990 due of injury, he owneda doughnut shop outside Washington, D.C. Though profitable, itwas not challenging enough for the Yale graduate with adegree in economics who also achievedAll-American honors as a track and field long jumper.

Leaving the food business, he joined regional broker andasset management firm Legg Mason Inc. as a financial consultantin 1994 to do his apprenticeship in the world of finance.

"Legg Mason is a great firm but I decided that I could do abetter job by having a more personal relationship with myclients and managing the assets directly," Profit said.

He began the Profit Value Fund in November 1996, with $1million — about half of which was his own firm's money.

Though he admits his fund took a hit in November because beunderestimated the market's reaction to the slowdown in theeconomy, he is betting the downturn will not be as dramatic asinvestors anticipate and that stocks actually represent thebest buying opportunity since the summer of 1998.

Twice married, Profit has three daughters, 11, 3 and 7months old, and relaxes by rebuilding his home in SilverSpring, Md.

But does he ever miss the thrill of running out onto thefield 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 ofpeople competing for" investors' dollars.

"We are all out to prove our analysis is the best."