Some college students spend their time studying.
Some college students spend their time partying.
Elliot Carol spends his college time trying to make money.
Carol, 21, a senior at UNC Wilmington from Charlotte, started a hedge fund a year ago with a couple of buddies.
Carols average 16-hour workday is crammed with analyzing stock market trends and gauging the risk of investment. He jets around the world to attract investors to his hedge fund company, Lumina Investments LLC.
In early November, in between class and studying for exams, Carol bought 4.5 million pounds of wheat and tracked the location of oil tankers at sea. He operates Lumina with his partners, Marcus Varsano, the director of investor relations and a UNCW senior; Zachary Cefaratti of California, director of research and investments; and Ryan Mahoney, chief investment officer and an East Carolina University senior.
It all started as a 12-year-old, when Carol started trading in various mutual funds. By the time he was 14, he dealt in equities. He enjoyed handling market index funds the most, he said.
A passion turned into an obsession, Carol said.
After he graduated from Providence High School, Carol built a company plan while living in Europe. A year later, he explored the financial industry further in New York City as an intern for Bloomberg. Then Carol approached his parents in March 2011, a day before his 20th birthday, to tell them he had contacted several investors and wanted to start a hedge fund.
It would be a risk, he told his parents, but one that could offer rewards well into millions of dollars. Hed be managing a portfolio of investments.
His dads response? Can I get a martini?
I have the product, Elliot Carol told his parents, David Carol and Karen Franklin. (Now) all it takes is drive and capital.
A bit of faith
Carols Lumina Investments is an independent, privately owned hedge fund management company headquartered in Wilmington. The company serves a range of high net-worth individuals around the world, primarily in the U.S. and Europe, he said.
With a bit of faith, David Carol invested part of his retirement savings.
I told him if he fails, Ill be living on his couch, which is a good incentive to succeed, David Carol said.
So Elliot Carol jumped into the highly regulated industry. He came up with a company name, met with mentors across the nation, reviewed Securities and Exchange Commission regulations, went on a search for a lawyer, and started hunting for investors.
Lumina Investments greatest challenge is convincing investors that the age of its partners does not coincide with their abilities to generate high returns. Carol had immediate trouble finding a lawyer.
He set out across the country, interviewing about 15 law firms to represent his company. A New York meeting that didnt go so well left him bruised, but he finally chose a law firm in Atlanta that understood his vision.
Were young. Thats the first thing anyone is going to notice about us. This a hedge fund, usually run by some guys with some gray hair, is being run by very young men, Cefaratti said. Not very many people just go for it. ... Or take the risk to put ourselves out there and do what were doing.
New York Magazine writer Kevin Roose caught wind of the company and offered critiques about the young businessmen in two articles, published in September and October.
Its been a rough year for hedge funds. Even the best ones have been trying and mostly failing to keep up with the stock market, Roose wrote. But a trio of North Carolina college students arent letting a down year defer their dreams. The undergrad whippersnappers are opening Lumina Investments, a fund that will capitalize on the growing influence of macro events on the behavior of global financial markets and, presumably, give them something to impress the ladies with at Sig Ep keggers.
In response to Rooses criticism, Varsano said, We wouldnt be here if that bothered us. Were confident enough in what were doing.
Tom Looney, former aide to Apple Computers Steve Jobs, is among Carols mentors and said he understands there can be push-back from the public.
Looney now serves as a co-managing partner in Stellagen Capital, and is on two entrepreneurship-related boards at UNCWs Cameron School of Business.
For all those amazing entrepreneurs like Steve Jobs, Larry Ellison, and Bill Gates, Looney said, they needed scores of young people to step-up into leadership. ... I was one of those people, and so I discount the need for certain arbitrary age or years of experience thresholds to exist before someone can be a big impact player in business.
While Looney said one does not necessarily need years of experience to make a significant impact, it is important for young entrepreneurs to have a mentor.
Larry Clark, dean of the Cameron School of Business, said Carol is the first student he has seen start a hedge fund company. Hes certainly in the big leagues, Clark said. Hes an amazing entrepreneurial student.
Luminas partners said they are spending so much time working its hard to have a typical college students social life.
Its tough to balance school, Varsano said. But UNCW has been incredibly supportive. There are a lot of people behind us and we see this as part of the next 50 years of our lives.
And the company is growing. It started with two investors in August 2011, and now has five, Carol said.
Carol said he cant discuss finances or earnings until March, after the company is audited. That audit will be sent to the SEC. He wont talk about that deal for wheat back in November, but the price of wheat in the U.S. averaged $8.42 per 60-pound bushel, so Carols purchase was in the ballpark of $631,500.
Its safe to say they are making money well over six figures, Carol said, leaning back in his chair and adjusting his suit jacket.