By DAVID MOON, Moon Capital Management
February 12, 2006
I hope you don't mind my using this public forum to make a personal
announcement: we're changing the name of Moon Capital Management to Greenspan
Alan Greenspan was
arguably the most successful Federal Reserve Board chairman. He might be one of
the most highly revered economic thinkers of all time. I can think of no more
respected or impressive name with which our firm could be associated.
Of course, Alan
Greenspan doesn't have anything to do with Moon Capital Management, but that's a
minor detail. Our office is located almost adjacent to the Gay Street Bridge,
which, in case you haven't noticed, is a green span, across the Tennessee River.
If potential clients choose to draw some other inference, we won't go out of our
way to stop them.
Of course, I'm kidding.
The whole idea sounds ludicrous, doesn't it? Actually, that depends on whom you
Believe it or not, the
Wall Street Journal reports that Merrill Lynch Investment Managers is changing
its name to Princeton Portfolio Research and Management. Robert Doll, head of
the to-be renamed entity, is quoted: 'Princeton has positive connotations given
the prestige of the university. It's a very logical brand to have on our
However, the Merrill
Lynch unit has no affiliation with the 260-year-old Ivy League institution. The
investment firm merely happens to be located in Princeton, New Jersey.
Based on Mr. Doll's
comments, however, I don't think Merrill Lynch will be disappointed if an
unsuspecting prospective client incorrectly assumes there is a connection
between the investment firm and Princeton University.
Merrill Lynch Investment
Managers, or whatever it's called, didn't return my calls asking for comment
about the issue. Cass Cliatt, the media relations manager for Princeton
University, told me it was a matter of concern for the school. Ms. Cliatt says
the university feels strongly about defending its reputation, was not consulted
about Merrill Lynch's intention to trade on that reputation and has issued a
cease and desist letter to the brokerage firm.
I suspect Alan Greenspan
might react the same way.
In fairness, we probably
shouldn't single out Merrill Lynch; upward naming is a common practice. In 2002,
Kemmerer and Co., a Wyomissing, Pa., insurance sales and financial planning
firm, changed its name to Berkshire Advisors and began offering the Berkshire
Advisors Select Equity Fund.
Neither the firm nor the
fund have any affiliation with Warren Buffett's Berkshire Hathaway. The firm's
founder, however, does hail from Berks County, so I guess that's as good my Gay
Street Bridge reasoning.
As you've surmised, this
is all about marketing. How can a firm position its products to maximize sales?
Too often, a name has little or nothing to do with accurately describing the
product or service.
For example, most folks
think growth and value funds would offer some diversification of investment
styles, particularly if offered by the same investment manager. But the Fidelity
Advisor Growth Opportunities and Equity Values funds recently held similar
stocks and sported similar portfolio statistics.
So why the different
names? Because some people want to own value funds and others want to own growth
funds. Similarly, why except for marketing reasons would Fidelity offer both an
S&P 500 index fund and the popular and profitable Magellan fund ' a virtual
index fund with a different wrapper and higher fees.
The investment industry
doesn't make it easy on clients, and I'm afraid that most of the time that's
For perfect competition
to exist, there must be many buyers and sellers of relatively homogeneous
products. So far, so good. But those buyers and sellers must also have complete
access to perfect information.
Buyers hardly have that. And it's not an accident.
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).