"All-in" Bet on the College Fund
September 21, 2010
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On the surface Michael Murphy's strategy with Arena Pharmaceuticals sounds creepy. When you think of it though, what better way to grab attention for your newsletter then to use your daughter's college fund as the headline grabber for frustrated investors to take aim at?
Most will think this is a bad bet, but is it really?
CHAPEL HILL, N.C. (MarketWatch) — Michael Murphy gives new meaning to the phrase “going for broke.”
Murphy, of course, is the editor of an investment advisory service called New World Investor. Among several portfolios that he sometimes reports on in his service, one is a college fund that he created for his seven-year old daughter. He typically allocates 100% of this portfolio at any given time to just one security.
That’s risky enough, needless to say.
But last Wednesday night, Murphy went even further out the “go the broke” spectrum: He invested his daughter’s entire college fund in just one option—the Jan. $10 calls on Arena Pharmaceuticals (ARNA 1.87, +0.01, +0.54%). Upon hearing the news of what Murphy had done in her college fund, she reportedly instructed him “to get brochures on Harvard and Stanford.”
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