Taking A Leap Of Faith

After pooling $100,000 to invest, the People of Faith investment group is surviving a turbulent market

The People of Faith L.L.C. in Atlanta began as an initiative of the St. Philip African Methodist Episcopal Church. At a men’s retreat in 2000, several members of the congregation came up with the idea of forming an investment group. In July of that year, 18 men combined financial resources in excess of $100,000 to form the partnership. The idea was to create a group of seasoned investors with a significant amount of disposable income, allowing them to purchase larger blocks of stocks quickly in the hope of reaping higher returns. Unfortunately, the group jumped in too quickly, and the bear market that began in March 2001 ruined its plans.

Each member of the People of Faith L.L.C. had contributed a lump sum investment of $5,000 (a couple of members contributed as much as $10,000). “That was part of our screening process,” says club secretary Charles L. Coney. “We sought members who didn’t need the $5,000, men who weren’t using their mortgage money to invest.” Typically, clubs ask members to contribute $100 up front, with monthly dues of about $25.

Most of the members of People of Faith are 40 to 50 year olds who already have individual portfolios. The group decided to create a portfolio of stocks based on technical analysis from a computer software program developed by an engineer and fellow church member. It chose about 10 company holdings in sectors such as biotechnology, technology, medical supplies, pharmaceuticals, retail, and transportation.

“Unfortunately, the market has not been good to us,” says Coney. After two years in operation, People of Faith has lost about 62% of the club’s original portfolio, bringing it to about $38,000 in January 2002.

The experience taught the group not to rely solely on a computer program, and now it is looking to rebuild it’s battered portfolio. “We will be following the more traditional route of meeting quarterly to pick and invest in stocks on a regular basis,” says Coney. “For the past year, we have just been managing our funds. We haven’t been adding to them.”

The members voted in favor of splitting up into two investment teams: stock review and stock management. The stock review team meets regularly and selects stocks for the group based on fundamental and technical analysis (i.e. earnings reports, profit ration, etc.). The stock management group monitors existing stocks and analyzes recommendations to purchase new stocks. Then the stock review team will make its own recommendations as to whether the stock management team should buy more shares, sell, or hold.

Coney says that during its incubation stage, People of Faith wanted to do things on its own. This year, however, the group will be following more closely the guidelines of the National Association of Investors Corp., the Madison Heights, Michigan trade group. “We are stronger now because we spent that first year getting to know each other better,” Coney says.

To date, People of Faith hasn’t lost a member, nor has it solicited new ones. The club’s president, Baron Brown, says the group’s bylaws allow

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