Less than nine months after filing bankruptcy, former baseball star Lenny “Nails” Dykstra is back in the investment game.
The former Major League Baseball star is trying to get high-net-worth clients to back his stock-picking strategy. According to Mr. Dykstra's web site, he tries “to keep it simple and pick companies with good, solid fundamentals.” He said he targets companies with “solid historical and expected returns, good cash flow, and low debt levels. I also watch for the operators on Wall Street to make a mistake and undervalue stock.”
So what do financial advisers think of taking investment advice from Nails? Many said they're counting Mr. Dykstra's personal bankruptcy as two strikes against him and would be leery about letting their own clients take investment coaching calls from him.
“The bankruptcy is a red flag,” said Bert Whitehead, president of Cambridge Connection Inc., which manages $300 million in assets. “Just because he's good at baseball doesn't mean he's good at investments.”
Mr. Dykstra, a former Phillies and Mets star, auctioned off his 1986 World Series ring from the Mets to pay debts. He went through a home foreclosure and faced more than 20 lawsuits.
He states on his website that he is not a registered financial adviser or stock broker. But he is charging investors $999 annually for three weekly forecasts, weekly updates and e-mails, access to his library, articles, a monthly conference call with him and an official baseball signed by Mr. Dykstra.
Mr. Dykstra, owner of Nails Investments, says on his website his “proven track record has caught the attention of many including the professional investors.”
Still, Mr. Whitehead isn't sold. “I don't believe anyone who says they can be a stock picker in large cap,” Mr. Whitehead said. “Maybe in small caps or small caps international but I'd want to know who else is this guy working with? If he's working on his own, unsupervised, that'd be pretty scary.”
Clifford Favrot, a certified financial planner with Delta Financial Advisors Inc., whose firm manages $250 million in assets, is also dubious. He said if his clients were interested in Mr. Dykstra's approach, he wouldn't immediately say no, but he would pose many questions.
“His intentions may be the best, but it doesn't appear clear to me what training and experience he has,” Mr. Favrot said.
Mr. Favrot, who briefly looked at Mr. Dykstra's web site, said he likes Mr. Dykstra's pick of Transocean Ltd. (RIG), but that's not enough to convince him that Mr. Dykstra has a winning approach.
“He was a remarkable player but that doesn't translate into a remarkable investor,” he said. “His personal circumstances would suggest his investment expertise is less than what's been put forward.”
[Below: the Daily Show's John Stewart offers some thoughts on Mr. Dkystra's financial acumen.]