Finance Whiz Moves into Internet Markets
Issue   |   Mon, 11/12/2012 - 21:53

Tom Wyman is the founder of Internet Capital Management — the first Internet and social media hedge fund. Always an innovator, Wyman has seized upon technology as the future, predicting that it will open up many new possibilities in the global economy. However, his interest in technology and finance may never have occurred without his time at the College, and the interesting path that brought him there.

Bleeding Purple and White

Eight consecutive generations of the Wyman family have attended Amherst College since its founding in 1821. Tom Wyman traces direct lineage to the College’s founding, with his father, grandfather, great-grandfather, etc., all having attended the College. Tom Wyman’s father, Thomas H. Wyman ’51, was a longtime trustee and was commemorated for his exemplary service and philanthropy by the Thomas H. Wyman 1951 Memorial Endowment Fund, which annually awards a medal to exceptional members of the senior class. Nonetheless, Tom Wyman came within an eyelash of not attending the Singing College.

Born in 1961 in Lausanne, Switzerland on the north shore of Lake Geneva in 1961, Wyman moved across the Atlantic to western Massachusetts at the age of six. When he was 12, he moved to Minneapolis, Minn. before returning again to Massachusetts to attend Deerfield Academy, an elite four-year college-preparatory school.

“Almost everyone from Deerfield wanted to go to Dartmouth,” Wyman said.

By his senior year, Wyman had an application filled out and was ready to be sent to Dartmouth College. The last minute, on a whim, Wyman decided to attend a presentation by the Dean of Admissions from Amherst. He left with an enlightened perspective.

“[I left thinking] Amherst is going to be an incredibly stimulating, academically rigorous experience, and I will get a lot more from going to Amherst than going to Dartmouth, where I will probably wind up in the basement of a fraternity for most of my years there,” Wyman said.

As fate would have it, like seven generations before him, Wyman enrolled at Amherst College in 1980.

In the Class and on the Court

While we may never know if Wyman truly would have spent most of his time in a fraternity basement had he gone to Dartmouth, his predictions and expectations of Amherst were duly fulfilled. At Amherst, Wyman found an “intellectual hotbed” with intimate classes and one on one interaction with professors. Among his professors, Wyman lists Austin Sarat, who was as much the academic heavyweight then as he is now, and Barry O’Connell as just a few of his most inspirational mentors. Wyman has fond memories of his time in the classroom at the College.

“You sit down with 14 kids and the professor’s sitting four feet from you … you’re going to have a lot of opportunity to interact with everyone at the table, including the professor. That’s an incredible learning opportunity,” Wyman said.

It was an opportunity that Wyman would not squander. Intent on going on to graduate school, Wyman buckled down and focused on academics. As an American Studies major, Wyman graduated cum laude and wrote a thesis on alcohol use at Amherst. While not entirely appreciated by his thesis professor, Wyman’s thesis was published in the graduation issue of The Student. Wyman exemplified the student-athlete ideal. As captain of the Amherst tennis team, he led Amherst to multiple undefeated seasons.

Running the HP-12C
After graduation, Wyman began his career on Wall Street at Morgan Stanley. The College had given Wyman the ability to think critically and a broad breadth of cultural understanding, but not the specific tools and knowledge for finance.

“I remember vividly sitting in the back of the limo when I arrived at Morgan Stanley as a financial analyst. The partner, who was sitting with me in the back of the limo, said to me, ‘You really don’t know how to run an HP-12C, do you?’…[I realized then] I really needed to go on to graduate school and get specific training for my field,” Wyman said.

In 1986, Wyman matriculated at Harvard Business School. The environment there contrasted sharply to Amherst.

“When I went to Harvard Business School, I was suddenly thrown for every single class into an amphitheater with a hundred kids,” Wyman said.

There were fewer opportunities for personal interaction with professors, and Wyman was faced with the new and daunting task of speaking to a large — relative to the intimate classes at Amherst — group of people. Nonetheless, Harvard Business School gave Wyman a crash course in the professional tools he needed to succeed, including being able to run an HP-12C in his sleep.

Wyman would go on to work for a myriad of investment firms, gradually developing a strong focus on technology and the Internet. As a Senior Publishing Equity Research Analyst at JP Morgan, he wrote an investment thesis about brand building and the Internet. While a Managing Director of the Private Shares Group at Wedbush Securities, he produced research on Social Media companies such as Facebook and Twitter. In the last decade, Wyman invested in numerous Internet companies while working for Husic Capital Management, San Francisco Capital Management and Lamoreaux Capital Management, where he served as a Portfolio Manager. Wyman developed an impressive track record with returns averaging 105 percent over four years. Moreover, throughout his endeavors, Wyman has consistently been, as John Bernabei — a client and friend — said, “trustworthy,” “loyal” and “willing to go out his way to help a colleague or friend.”

The Next Megatrend

In March 2012, Wyman founded Internet Capital Management, the first investment firm to focus exclusively on companies leading new sectors of the mobile Internet industry. Wyman describes the evolution of computing as a series of significant technology shifts, each of which tends to be twenty years in duration.

“There are three megatrends in technology. The first megatrend was the mainframe computer from 1970 to 1990. The second megatrend was the client server from 1990 to 2010. Now, from 2010 onwards, the next megatrend is cloud computing … as internet usage migrates from the personal computer and the enterprise to smartphones, tablets and the cloud,” Wyman said.

Internet growth is reaccelerating.

“The number of Internet users will double in the next three years,” Wyman said.

Much of this growth will be driven by the global economy, as developing countries bypass installing traditional telephones and put in 3G and 4G phones, which are both Internet enabled. Moreover, in contrast to the monolithic dot-com bubble of the 1990s, mobile Internet is multi-faceted and encompasses many potential areas of growth and innovation, including mobile devices, cloud infrastructure and software, mobile applications and mobile payments. Each of these various categories are growing anywhere from 20 to 50 percent a year. To put in perspective, this is three to four times faster than any sector of the global economy.

Despite the tremendous potential of mobile Internet, there are few reliable products for retail or institutional investors.

“There are no Internet hedge funds and only two actively managed Internet mutual funds in existence today,” Wyman said.

The two mutual funds each possess less than $125 million in assets and in the past have been extremely volatile. They have both performed poorly in down markets and went down 30 to 40 percent, not once but twice, in the last two recessions.

The centerpiece of Internet Capital Management, the Global Internet Fund, offers a unique and attractive alternative for investors hoping to capitalize on growth in the mobile Internet industry. The Global Internet Fund is a long/short equity hedge fund and completely unprecedented in the asset management industry, as it focuses exclusively on the mobile Internet industry and invests both long and short. Unlike the two pre-existing mutual funds, which are both long only, the Global Internet Fund invests in public companies that are leading new sectors with proven ability to grow and shorts securities where valuations are high relative to challenging fundamentals. The portfolio will generally consist of 20 to 40 long positions as well as 10 to 30 short positions, with a net exposure of 30 to 50 percent at all times. Fundamentally, the Global Internet Fund will accomplish what similar investment funds have failed to do: reduce volatility, protect capital in down markets and produce gains regardless of market conditions.

The Global Internet Fund fills what is essentially a vast vacuum. Eventually, Wyman hopes to add a private equity fund, but for now, there is significant investing to be done in public companies. Currently, there are 225 publicly traded companies in the mobile Internet sector, and an increasing number of mobile Internet companies will become public. For example, Workday Inc., one of the first cloud-based software providers to go public, launched its initial public offering in October 2012 and has since seen its share value increase by 80 percent. It is, as Wyman states, “the top of the second inning,” and there is immense potential to expand and grow. With prudence, foresight and efficiency, Wyman envisions creating a hedge fund several billion dollars in size.

Nine Generations

Today, Wyman lives in San Francisco, California with his wife of 20 years and two sons. He maintains his passion for tennis, as club champion of the local tennis club, although he still reminisces about the clay courts at Amherst. His wife, once a manager at KPMG, now hosts a weekly food show on the XM satellite food network. For his two sons, who are 14 and 15 years old, college is a distant and remote future. Nonetheless, Wyman hopes that someday one of his boys may attend Amherst College and continue a tremendous tradition and lasting legacy.

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