Tracking the Winners

Old Habits didn’t make his way into Melodie Knuchell’s investment portfolio in the usual manner. No slogging through the annual report, the prospectus, the press. Knuchell, 41, took one look at the gelding, which has a warm chestnut coat and white sock on his left hind leg, and decided to join nine other women to buy him for $18,500.

“He looked like a star,” said Knuchell of Los Alamitos. None of her stocks and mutual funds had struck her in the gut like that.

Her instincts paid off. The 3-year-old has won $555,000 and is a leading contender to top the race rankings as the world’s best quarter horse. His 10 co-owners, who say they are the first major all-female horse-buying syndicate, cheer him on in siren-red cowboy hats, boots and lipstick.

Through investments that include champion horses and female-friendly mutual funds, a growing number of women are making a statement with their money--and the financial world is taking notice. They are investing in record numbers and in different ways than men, sometimes looking for an emotional dividend alongside the cash one.

“I think women are absolutely the biggest force in the financial community,” said David Bach, a financial advisor and author of “Smart Women Finish Rich” (Broadway Books, 1999). “You’re going to see within five to 10 years that the majority of marketing dollars from the financial services industry will be targeted to women.

“What they first did was put women’s faces on the covers of their mutual funds [brochures], or they put on generic seminars and called them, ‘Women and Investing.’ Now they’re surveying women and trying to find out, ‘What do you really want from us?’ ”

This month, for instance, Working Woman magazine co-sponsored “Marketing Financial Services to Women,” a two-day conference in New York for financial professionals to discuss topics such as “the way women buy” and “what it takes to make women feel more confident and in control of their money.”

The payoff for the industry is unmistakable.

Consider U.S. stock investors: 47% are women, up from 37% in 1990. The figure rises to 50% among both new and potential investors, according to a 1997 study by the Nasdaq Stock Market. And by at least one measure, women are getting better returns.

In the last three years, female-only investment clubs have reported an 18% to 20% return, compared with 10% to 15% for all-male clubs, according to the National Assn. of Investors Corp. in Michigan. Of the association’s 36,633 investment clubs nationwide, 54% are women only.

The Web site, https://www.womenswire.com/money, one of several that target female investors, posts what it says is the first stock index that tracks publicly traded companies run by women.

For her part, Cathy Caballero, 51, puts stock in how companies treat women. The Malibu resident invests her money, including her 13-year-old son’s college funds, with the Women’s Equity Mutual Fund in San Francisco.

The $11.4-million fund invests primarily in companies that support the social and economic equality of women in the workplace. Fund managers screen companies using criteria such as whether they promote women to top executive positions or use female-owned companies as vendors. The fund, which began in 1993 with $52,000, has delivered a 14% annualized return since its inception, and 90% of the fund’s investors are women.

“It’s based on consciousness-investing,” said Caballero, a real estate accounts manager. “Instead of just investing in companies where you’re thinking about returns, this fund also thinks about the future, influencing the future and creating the future.”

The lesson she wants to leave her son: “The rate of return isn’t the only way to measure success. He knows about it, and little by little, things like investing in your future and investing your conscience start to make sense.”

In the last few years, men and women have turned socially responsible investing into a large market. Some female investors are asking how they can use their money to promote stockholder activism, perhaps buying in blocs to try to influence a small company’s policies, said Alissa Hauser, executive director of Resourceful Women, an investment education group in San Francisco. The group’s average member has investable assets totaling $3 million to $5 million.

“We work with socially progressive, wealthy women, teaching them about using their money in service of a better world,” Hauser said.

Personal Approach to Investing

According to one survey, women look for individual attention from financial advisors and value personal relationships when they make investment decisions. Sixty percent would make an investment decision if a trusted friend recommended it, concluded a 1998 Deloitte & Touche’s report on affluent women and finances.

Often, women turn to other women with similar investment goals.

Seattle attorney Susan Preston got fed up with the way that start-up companies often focused on male investors, as if women didn’t have the means or smarts to be what’s known as an angel--a well-off investor who provides seed money to entrepreneurs. So early this year, she put together Seraph Capital Forum, a group of 125 women who pay $300 a year to hear presentations from fledgling companies run by both women and men. Members make their own investment decisions.

In other investment circles, women sometimes don’t ask questions because they notice that men don’t, Preston said.

“Women socialize differently than men do. Women invest differently than men do. . . . Our members seem to be really enthusiastic

about the ability to interact with each other and ask questions.” Preston gets calls from women across the country every day, asking for help in starting female-only angel networks.

In other groups, such as investment clubs, women pool their money and make joint portfolio decisions.

In Torrance, Evalyn Kragh has belonged to an all-female investment club for 28 years. When she speaks to other investment groups, the gender differences jump out at her.

“If it’s a mixed club, the women don’t talk as much,” said Kragh, 69. “If I go to them, and they’re just women, they’re much more vocal. Men have a tendency to make quick decisions. Women have a tendency to look before they jump in.”

Recent studies seem to confirm Kragh’s observation. In 1998, a UC Davis study, “Boys Will Be Boys,” concluded that men are more likely than women to be overconfident in their investments--and to reap less. The study also showed that men tend to trade more frequently. For instance, single men trade 67% more than single women do, the study found.

Also, the Nasdaq study on stockholders found that women make up 57% of small investors and only 35% of large investors, and are half as likely as men to have taken a big financial risk.

But Julie Stav, a financial planner who leads financial workshops for women, disagrees somewhat.

“We tend to be more cautious,” said Stav, owner of Retirement Benefit Systems, a financial planning firm in Calabasas. “But give us a little information, and we go wild.”

Women, for instance, are likely to go with a gut feeling, she said. One client decided to investigate, and ultimately buy, the stock of Zany Brainy because every time she drove by the educational toy company’s local store, the parking lot was jammed.

“She didn’t know anything about it, other than she couldn’t park there,” Stav said. “Those can be the Microsofts of tomorrow.”

Old Habits’ investors weren’t looking for a Microsoft. Most of their husbands had been involved with horse racing and the women talked one another into buying a horse for kicks. They would keep his picture in their wallets, alongside their children’s, read his horoscope and eat lunch with him occasionally at his stables in Bonsall, near Oceanside.

A Piece of a Horse More Fun Than Funds

Glori Ekker, 43, didn’t know much about horse racing and worried about the cost of veterinary bills, race fees and trainers’ salaries. But she was willing to take the risk to learn something and to hang out with girlfriends. And owning a piece of a horse would be more fun than her mutual funds.

“I thought I had thrown my money away,” said Ekker, a physician in Hanksville, Utah. But Old Habits’ success has caught the eye of women nationwide, who are asking how to start their own syndicates.

Knuchell, a racing coordinator at Los Alamitos Race Course, had dreamed of owning a competitive horse since she was a kid but had resigned herself to the sidelines.

“I just knew it was out of my reach,” said Knuchell, who now plants a big red-lipstick kiss on Old Habits’ nose before each race. “It never dawned on me that it was possible to be involved in such a deal.”

On a recent night, before Old Habits cinched another qualifying trial victory at Los Alamitos, several men and women stopped to acknowledge his red-clad co-owners.

“I bow to the red team,” said a racing administrator, with a sweeping bend from his waist, as the women laughed.

No other investment pumps up the adrenaline like Old Habits, Knuchell said. Most of Old Habits’ co-owners are using their earnings to buy other horses, together or with new partners.

“You get a little bit excited when you click on mutual funds [by computer] every day and see you won a little or lost a little,” she said. “It’s not even 1% of the thrill compared with having something alive who knows who you are and nickers when he sees you. It’s a warm, fuzzy girl thing.”

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Renee Tawa can be reached at renee.tawa@latimes.com.