Chapter 11: You're a Very Wise Woman

June 15, 1984, Los Angeles, California

Violet and I arrived at the offices of Ford, Jackson, and Finch about ten minutes before our scheduled appointment and were greeted by a gorgeous blonde receptionist with a perfect tan. The nameplate on the reception desk read 'Melissa'.

"Good morning!" she said with a dazzling smile. "How may I help you?"

I handed her my business card and said, "Jonathan Kane from Spurgeon Capital. This is my assistant, Ms. Clemmons."

"Mr. Finch is expecting you," she said. "I'll call for his assistant to walk you to the conference room."

"Thank you."

She dialed the phone and made the request, and a moment later, a dark-haired girl who had more than a passing resemblance to Phoebe Cates came into the lobby.

"Good morning, Mr. Kane! I'm Leslie, Mr. Ford's assistant. Would you and Ms. Clemmons follow me, please?"

She led us to a conference room where she offered us coffee, water, or tea. Violet and I both asked for water, which she poured from a pitcher. We thanked her and sat down, and about five minutes later, a distinguished man in a tailored suit similar to mine came in. Violet and I both stood up.

"I'm Ben Jackson," he said. "I'm on my way to an offsite meeting, and I wanted to meet you."

We shook hands, and he immediately excused himself. As he left, two other men in perfectly tailored suits came in, nodding to Ben.

"Good morning, Mr. Kane. I'm David Finch, and this is Jonathan Ford, our founding partner."

"Good morning," I said, shaking both their hands. "With me is Ms. Violet Clemmons, my assistant."

They both greeted Violet, and, a moment later, Leslie escorted two men into the room, who David Finch introduced as Morris Stoller from the William Morris Agency and C. Robert Manby from RKO Pictures. The final person to enter the room was another pretty girl, who was introduced as Kathy, a paralegal. Leslie ensured everyone had something to drink, then brought in a tray of doughnuts and bagels. Once she'd put the tray on the table, she left.

"If you're ready, Jonathan, you can begin your presentation."

"Thank you," I replied. "And yes, I'm ready."

Violet handed out copies of the prospectus for the Cincinnatus fund, and I began my usual spiel, which I'd been fine-tuning since the first one with the union in Overland Park. One important difference was that I now had some names to throw around, including Marvin McCafferty and a number of professional athletes. The attorneys allowed me to complete my presentation without any questions.

"An excellent presentation," Mr. Finch observed. "And very clear."

"Thank you. As I said, I'm happy to answer any questions."

"Is there any room to negotiate the fee structure?" Mr. Stoller asked.

"Limited," I replied. "In order to discuss specifics, I'd need to know the level of investment, and if there was accommodation, it would lengthen the lockup period."

"That's a year, right?" he asked.

"Yes. A redemption request can be submitted at any point after that, though Spurgeon has ninety days to return your funds to allow us to manage tax or other matters that might affect other investors in the fund."

"You listed your total assets," David Finch said. "How much has been redeemed?"

"None," I replied. "There are outflows for pension payments and charitable giving by the unions, but those are structured payouts of a portion of their gains, not redemptions."

"You haven't lost a single client?" Jonathan Ford asked.

"Not one," I replied.

Well, there was Marcia, but in my mind, anyone in my 'friends and family' plan wasn't a client, at least not the way Mr. Ford meant the question. It was also the case that, given how those 'unsophisticated' investors were governed, it wasn't a violation of SEC regs to not include them in any statements about the fund.

"What happens in a down year for the market?" C. Robert Manby asked.

"We have proprietary strategies to deal with that. In the most recent down year, Spurgeon showed positive returns higher than fixed-income investments. As you can see from the returns from the last ten years, the Spurgeon Select Fund has beaten the market every year and showed positive returns even in down years for the Dow and S&P."

"Your fund only has one full audited year," David Finch observed.

"That's true," I replied. "Last year, using my own strategies, I basically matched the Spurgeon Select Fund, and year-to-date, I'm actually beating it, though only by a fraction of a percentage point."

"How often do you change your investment strategy?" Jonathan Ford inquired.

"I haven't changed the strategy, only the asset mix. The changes I've made were made to accommodate the pension funds — I needed to hold more cash or cash equivalents, along with more fixed-income products. With current interest rates and the rates predicted for the next few years, that is not a drag on my gains."

"Do you have any holdings in South Africa?" Morris Stoller asked.

"No. Would that be a problem?"

"We have talent who adhere to the Sullivan Principles."

That actually didn't surprise me, as Hollywood tended to veer left of the rest of California, which was mostly conservative or libertarian, with pockets of the far left in places like Berkeley, though San Francisco tended left-of-center. I expected Reagan to easily carry California in November, and all our models showed him taking at least 55% of the vote. Given I had no investments in South Africa, it wasn't a big deal for me to make a commitment.

"I object to the government of South Africa," I said, "but I base my investments on profit, not the political leanings of governments. That said, I have no intention of holding any South African securities or currency in my fund. I only trade precious metals via exchange-traded options, and have no intention of ever taking physical delivery. I'm willing to put that in writing, if necessary."

"That would eliminate most concerns," Mr. Stoller replied. "Mind if I ask your politics?"

I wasn't entirely comfortable with the question, but I felt I had a relatively safe answer. That said, I was an outlier at Spurgeon, as nearly everyone there was somewhere to the right of Reagan, though Noel Spurgeon agreed with me on the need for regulation, which I was sure would surprise people both inside and outside the industry.

"Generally speaking, I'm a centrist, or what some people call a 'Reagan Democrat'. That said, my investments do not follow any specific political leanings, though they do take politics into account, as actions by governments, right or left, affect the financial markets. From my perspective, so long as everyone is playing by the same rules, I'm OK with it, and I can make money. Cheaters are bad for business, both from the perspective of the consumer and the investor."

"And the firm?"

"Noel Spurgeon agrees with that last statement. He's OK with going right up to the line, but crossing it will incur his wrath long before the government gets wind of it. The two instances of which I'm aware resulted in the trader being fired before the regulators knew there was a violation. In both cases, Noel Spurgeon personally reported what was discovered to the SEC."

"Some of our talent will not want their names made public," Mr. Stoller said.

"There are a pair of lawyers in the room who I believe can structure trusts or other vehicles to protect their privacy. I have several investors who have done that, including a law firm and, of course, MTB Sports Management. The key thing to remember is that whatever name is on the account will appear in reports to the SEC, CFTC, exchanges, and other entities, and in many cases, those reports are public. All trades occur under the Spurgeon Capital account, so the 'ticker' would not show even the names of the legal entities that invested."

"That's something we can easily structure for you, Morris," David Finch said.

There were about thirty seconds of silence, so I spoke up.

"Are there any other questions I can answer at the moment?"

Everyone shook their heads.

"I think that's it," David Finch said. "Thank you for coming out to see us. We'll review the information, both as a group and individually. I'll call you in a week to ten days to discuss."

"Thank you very much," I replied. "I appreciate your time, and if you have questions in the interim, do not hesitate to call my office. Either Ms. Clemmons or I will answer any questions you have."

"Is there anything else?" David Finch asked.

"I know this is a bit out of line, but I'm wondering if you have a Polaroid camera."

"We do. May I ask why?"

"I'd like to play a practical joke on one of my staff, if your assistant Leslie is willing."

"Because she resembles Phoebe Cates?" Mr. Stoller interjected.

"Yes," I replied, and all four men laughed.

"He asked me to get him a date with Phoebe Cates," I continued. "I figure a Polaroid of Leslie and me standing next to each other would make him jealous as hell!"

"Let me see if she's willing," David Finch offered.

He left the conference room and returned a moment later.

"She's game," he said. "Why don't you come to my office, and you can use the view of LA as a backdrop?"

"Thanks!"

I shook hands with the other three men, then Violet and I followed Mr. Finch to his office, where Leslie was waiting with a Polaroid camera.

"I hear you want to make a friend jealous," she said.

"I do! Thanks for playing along!"

Leslie handed Violet the camera, then led me to stand in front of the large window that had the best vista. Leslie slipped her arm around my waist, so I put mine around her shoulders.

"Say 'cheese'!" Violet commanded.

She snapped the picture, and I dropped my arm, though Leslie didn't.

"Wanna really make him jealous?" she asked.

"What did you have in mind?"

"A kiss!" she said with a soft laugh. "Well, so long as it wouldn't break a commitment to anyone."

"I'm single," I replied.

We turned to face each other, and Leslie pressed her body against mine. She was slightly shorter, so she turned her head up slightly for the kiss. When our lips touched, she parted hers, and despite the surprise, I pressed my tongue forward to find hers, and we engaged in a searing French kiss as Violet snapped two more photos. Leslie broke the kiss and moved her head next to my ear.