Investment broker launches business index, includes top 40 companies

Long Island Business News, Jun 17, 2005 by David Reich-Hale

Detroit Tigers great Ty Cobb died a wealthy man.

The Georgia Peach, like most baseball players of his day, didn't have a multi-million dollar deal. But he did have Coca-Cola. An investment in the soda giant, headquartered in his home state, turned into a financial windfall that set him up for life.

It also gave a local investment broker, who had just read a biography of the ballplayer, an idea. Edward Mazoyer, a registered representative at Melville-based Vanderbilt Securities, said, I live on Long Island and I always wondered, 'Why can't we have a Coca- Cola.' The truth is we did and we do.Vanderbilt Securities, said, I live on Long Island and I always wondered, 'Why can't we have a Coca- Cola.' The truth is we did and we do.

Mazoyer points to Islandia-based Computer Associates International, which traded at $3 per share in the early 1980s. It's at the $25 to $27-per-share range now and has split five times. Another example is New York Community Bancorp, whose shares have jumped 19 fold since the start of the Clinton administration.

And any one of us could have invested in them and made out very well, Mazoyer said.

Alas, many investors from Riverhead to Rockville Centre missed that boat. That's why Mazoyer launched the Long Island Business Index on Feb. 22. The index only invests in Long Island headquartered companies, and for a minimum investment of $50,000, an investor can buy their way in. The index just pushed over the $1 million mark in investments.

You drive around Long Island and you see these buildings with company names on them and you know people who work there, Mazoyer said. So why not invest in these companies?

The index includes shares of the top 40 companies by market capitalization on Long Island as of Jan. 1. To keep it balanced, no company is allocated more than 5 percent of the overall portfolio pie.

Fourteen firms, including Computer Associates, Cablevision, North Fork Bancorp and OSI Pharmaceuticals, each take up 5 percent.

Other companies represented in the index include DHB Industries, 1-800-Flowers.com and Medical Action Industries - the 40th company in the index.

There's an initial 4 percent investment fee, which is divided between the financial advisor and Vanderbilt Securities. Other fees vary on the size of the account.

The portfolio is rebalanced at the start of each year to include the top 40 companies, said Mazoyer, a Huntington resident.

The early success of the portfolio has come principally because of sales by Mazoyer and Huntington-based Ten Haagen Financial Group, a boutique financial services group. Now Mazoyer's marketing the index through registered representatives of Vanderbilt Securities. The 70 or so Vanderbilt reps have started to present it to their clients.

Unlike many investment portfolios, where people have no idea what companies they're investing in, this gives Long Islanders an opportunity to invest in companies they actually know, said Steve Distante, chief executive of Vanderbilt. The investment strategy also makes sense, otherwise we wouldn't recommend it to anyone. Long Island provides a diverse economy. That wasn't the case many years ago, when it was defense oriented. Now is the time to do something like this.

Distante added that Vanderbilt is seeking other distribution agreements, adding that he has already spoken with other broker- dealers.

By year's end, we're hopeful that a deal or two will be in place, he said.

Distribution deals with some of the companies in the portfolio could also drive sales, said Jon L. Ten Haagen, president of Ten Haagen Financial Group. Ten Haagen, a certified financial planner who, along with operating his own firm sells investments through Vanderbilt, said, hopefully, in time, banks can sell this. There would be an incentive for North Fork or New York Community Bank, for instance, to offer the investment.

Added Mazoyer: North Fork has a great platform to market this. Think about all of their people and branches. Any bank in this portfolio, you can say that about.

Along with North Fork and NYCB, Astoria Federal Savings and Suffolk County National Bank are in the portfolio.

Suffolk County National Bank, at least, was cool to the idea. A spokeswoman said that the company had no interest in offering the product at this time. Astoria Federal and North Fork didn't return calls seeking comment.

One drawback to banks selling the product is that many high-net- worth investors don't usually stroll into branches, and a $50,000 investment could be too rich for many bank customers, said Michael White, president of investment consultant Michael White Associates of Radnor, Pa.

But Ten Haagen said that once the asset base reaches the $8 million to $10 million level, the product would probably be converted into a mutual fund structure. That would make the initial investment price more affordable.

If the Long Island index takes off, Mazoyer said other investment strategies that focus on companies in New England, the Atlanta area and the Carolinas could be launched.