Maybe Fund Manager’s ‘Value-Investing Approach to Rare Coins’ Should Have Been a Tip-Off

Say we were to offer you a value-investing approach to rare coins—a little fundamental analysis of the 1933 gold double eagle, say, or some exegesis on why the 1913 buffalo nickel is still trading under tangible book. Is that something you’d be interested in?

Because if it is, we have a guy you should meet.

A press release from the SEC occasioned a trip on the Wayback Machine yesterday, to see if anything turned up on one Arnett L. Waters, president and CEO of A.L. Waters Capital, a Braintree, Mass. firm that allegedly solicited investments in an array of funds, then used the assets to pay for the manager’s personal expenses.

Indeed, we found an interesting nugget. After sketching out his career in sales at a string of brokerages, including Merrill Lynch, Shearson Lehman and DLJ—details that appear to be borne out by a FINRA broker check—Mr. Waters’ claims to have made the observation that launched his career running money:

“The dramatic increase in rare coins in the 1970s and 1980s convinced Mr. Waters that a value-investing approach existed in the growing marketplace. Therefore, in 1990, he founded Windsor Park Ltd., an international purveyor of high mint state United States gold and silver coins.”

Maybe there’s something we’re missing, but we always thought of value investing as the search for assets whose underlying value exceeds the market price, like if gold coins were selling for less than their weight in gold. Which might be just the insight that landed on Mr. Waters from on high, but if so, sounds like the kind of too-good-to-be-true investment opportunity best left in your junk mailbox.

Well, you can laugh, and perhaps you will, but there were victims here, including a Boston-area church that appears to have given Waters a serious chunk of change.

Some highlights from the SEC complaint:

  • A.L. Waters Capital and CEO Mr. Waters marketed fictitious funds that purported to invest in securities related to gold, oil, uranium and rare earth metals;
  • Told investors, falsely, that the firm’s Port Huron Partners Fund had $180 million in assets under management;
  • Later deposited a check from a Boston-area church for $500,000 into a Port Huron Partners bank account that had previously contained $205.79;
  • And used investor funds to pay for personal expenses such as property taxes, utility bills and a horse farm.

A quick review of Waters’ FINRA records, meanwhile, indicate that he had his Series 7 license suspended for two years after it was alleged that Waters forged a bank officer’s signature on a personal loan he took from the bank.

Mr. Waters didn’t respond to an e-mail seeking comment, but an investor named Arnett Waters is still tweeting from the below profile:



  Maybe Fund Manager’s ‘Value-Investing Approach to Rare Coins’ Should Have Been a Tip-Off