BY DEB and TIM SMITH
In addition to the story in this issue on which we collaborated with our (step)son Skyler, we also wanted to contribute this more comprehensive overview of the history of the Carosa Stanton Asset Management, LLC. After perusing some of the firm’s archives we extracted the following bullet points as being the most significant. Building the Bullfinch Fund . . . here’s the history.
- Carosa Stanton started in 1996. Chris Carosa and Gordon Stanton were classmates at Yale.
- In 1987, while Mr. Carosa worked at Manning & Napier and Mr. Stanton worked selling government bonds, they and several classmates started a private investment partnership called “The CTO Fund”.
- During his career at Manning & Napier, Mr. Carosa served as Manager of the Information System, Managing Director of Operation, and Vice President and Senior Trust Officer of the firm’s affiliate Exeter Trust Company. He helped start their mutual funds, created its custody division, and developed and launched its trust company.
- After 14 years, he left Manning & Napier to write a book that eventually became Due Diligence: The Individual Trustee’s Guide to Selecting and Monitoring a Professional Investment Adviser.
- Prior to publishing this book, Carosa and Stanton decided to create Carosa Stanton Asset Management, LLC.
- Carosa Stanton’s tag-line is “The Next Generation in Investment Management” and combined the close attention of a traditional bank trust officer with the (then) leading age techniques derived from research in behavioral finance (this was at a time when most professionals ignored and many academics shunned behavioral economics, the basis of behavioral finance).
- In 1997, The CTO Fund was converted into the Bullfinch Fund Unrestricted Series, with Carosa as President and Chief Executive Officer, Stanton as Vice President and the other classmate/partners serving as directors of the fund.
- The original name of the Bullfinch Fund was “Bulldog” Fund, because it was “bullish on dog stocks.” This simple tag-line got the new fund national attention. It also led to this problem…
- At the time, there was an off-shore hedge fund partnership run by other (and older) Yale graduates also called The Bulldog Fund. They saw the press coverage on the recently registered Bulldog Fund and threatened to sue unless the name was changed. Despite the fact that: a) The off-shore fund wasn’t registered in the United States, and; b) The off-shore fund wasn’t even a mutual fund, the Board decided to change the name.
- Despite the fact that “Cheers” was a popular TV show at the time, they did not choose the name “Bullfinch” after the “Bull and Finch Pub,” the Boston Bar that inspired “Cheers.” The Directors simply liked starting the name with “Bull” and they looked up all the animals that began with “Bull.” “Bullfrog” was quickly dismissed.
- Regardless of the true etymology of the Bullfinch name, there is an official “Bull and Finch Pub” employee sportshirt given to them by a former bartender at the famous pub that is framed and hanging in their conference room.
- Although they were saddened on the loss of the ability to say they are “bullish on dog stocks,” further research did uncover this amazing coincidence: In Japanese mythology, the Bullfinch is a bird that changes bad things into good.
- The Greater Western New York Series was started to promote the Greater Western New York region.
- The idea of starting a mutual fund that only invested in Greater Western New York companies was so odd that both Forbes and the New York Times fought to be the first to publish the story behind it. The New York Times won.
- The original name of the Greater Western New York Series was initially the “Western New York Series.” The Securities and Exchange Commission (which regulates all mutual funds) insisted they change the name to “Greater Western New York Series” a few years after they started it. They didn’t quite understand why, but who in their right mind would argue when the SEC wants you to add the word “Greater” to your name.
- In addition to its performance, the most notable accomplishment of the Greater Western New York Series was its inspiration behind the creation of the Western New York Investors Conference. This once annual event helped promote local publicly traded companies to professional investors all across the nation. Carosa, who co-founded the event with Brian Lipke, Chairman and (then) CEO of Gibraltar Steel, says of this conference, “It was an opportunity to invite some of my biggest competitors to steal some of my best ideas.” That’s how important the promotion of the Greater Western New York region is.
