Rick Sherlund Gets to Play With His Own Bulldozer;
Alaskan Family Vacations, By: ROBERT A. GUTH
November 13, 2007
 
CENTRAL, Alaska -- Like a lot of other professional investors, Rick Sherlund this year has loaded up on gold as the dollar dipped and stocks sank. Unlike his Wall Street peers, Mr. Sherlund gets his gold while sitting atop a 55-ton bulldozer with a pistol strapped to his side.
 
The pistol, a .50-caliber Smith & Wesson, is protection from grizzly bears. The bulldozer, a Caterpillar D9T with a 15-foot blade, is for moving the tons of rock and dirt separating Mr. Sherlund from the gold -- tiny flakes and bigger nuggets buried 10 feet below the surface at his own gold mine.
See hedge fund manager Rick Sherlund's family gold mine in Alaska, where he hangs out to live the prospector's life. WSJ's Robert Guth reports.
 
If you strike gold on Wall Street you can do pretty much whatever you want for fun, and fun for Mr. Sherlund is grubbing for gold deep in the Alaskan wilderness. With gold prices hitting record levels, it's a pursuit that eventually might be profitable for him. It isn't yet, but that isn't the point. "Some people have a passion for running big equipment and looking for gold," he explains.
 
In finance and technology circles, the 53-year-old Mr. Sherlund is known as the dean of Wall Street's Microsoft analysts, a market mover with the reports he wrote in two decades at Goldman Sachs Group. Early this year, he quit to become a managing director overseeing technology stocks at Galleon Group, a $7 billion hedge fund in New York.
 
Mr. Sherlund made millions at Goldman, and he stands to make more money if Galleon does well. But his career kept him chained to his desk on conference calls and staring at statistics.
 
Six years ago, he took a trip to Alaska, acting on an urge for something different and a longtime interest in gold mining. Soon, he says, "it sort of took on a life of its own."
 
Now every summer, Mr. Sherlund heads north, moves into a thin-walled bunkhouse, stops shaving and gathers a motley crew of relatives, friends and locals to work a mine tucked in the hills near the rustic town of Central.
 
It's an annual ritual that this year started in July when Mr. Sherlund packed his bags for Fairbanks. A few days later, after a three-hour drive on a gravel road into the wilderness, he turned right at a bullet-riddled sign that once read "Ketchem Creek." Soon Mr. Sherlund stood with gnats swirling around his head scanning his gold mine and an assortment of heavy equipment scraping and piling a vast field of dirt and rocks. His extended family -- including his father, stepmother, brother and nephews -- had joined, flying and driving in from around the country to dig for gold. His wife and two sons relaxed at the family's vacation home in Nantucket.
 
Mr. Sherlund wore a soiled Carhartt baseball cap, muddy jeans and a belt with inlaid Indian head nickels. The eight-acre mine -- which he works under an agreement with the mine's claim holder -- is surrounded by mountains of white birch and green shrubs. The land is grizzly-bear territory; he hedges that risk with the revolver holstered at his hip, but he has never had to shoot a bear.
 
Mr. Sherlund's brother Mick, up from Utah where he works at a diesel-engine maker, was in the cockpit of the bulldozer scraping earth into a pile. Nearby, Mr. Sherlund's nephew Shane manipulated the long arm of a Caterpillar excavator to feed the dirt from the pile into a trommel: a big rotating barrel with water flowing through it that spits out large rocks on one end and directs silt and small stones into a sluice, a long bed of metal louvers that trap the gold.
 
Later that day Mr. Sherlund found a bit of what he came looking for, washed out of the dirt: "There's a little nugget right there," he said, picking up a small piece of gold and displaying it in his palm.
 
Mr. Sherlund is following a well-worn path of prospectors who first came in the 1898 Klondike Gold Rush and then spread through Alaska. Some struck it rich, while most retreated or died empty-handed. These days high fuel costs, depleted stream beds and tougher regulations make it increasingly difficult for small-time mines like Mr. Sherlund's. "They go broke sooner or later," said Fred Wilkinson, a 71-year-old miner whom Mr. Sherlund calls his mentor. "Unless you've got Wall Street backing you," he jokes.
 
Mr. Sherlund's miner origins are rooted in gold-panning trips he took as a kid with his father in the foothills of Northern California, but it was a 1998 cruise with his own son that brought the analyst to Alaska. Intrigued by the size of the nuggets in Alaskan gift shops, Mr. Sherlund asked a nugget dealer for an introduction to a miner who later guided him to Ketchem Creek, about five miles from Central.
 
Mr. Sherlund and a friend panned the area, but the effort yielded little more than bug bites and back pain. He did find some gold and soon upgraded his equipment -- in 2005, buying the excavator, followed by the bulldozer last year and the front loader this year. He says he has sunk about $2 million altogether into the operation.
 
The equipment boosted his take -- he scraped up $50,000 in gold in 2005 and $60,000 last year. But since he digs just a few weeks a year, Mr. Sherlund realizes he'll likely be losing money for a while.
[Top: Mr. Sherlund's trommel plant separates rock and dirt from the gold; bottom: Sherlund's gold melted into bars stored in vials.]
Top: Mr. Sherlund's trommel plant separates rock and dirt from the gold; bottom: Sherlund's gold melted into bars stored in vials.
 
That's OK. This summer, Mr. Sherlund spent hours each day in the excavator's air-conditioned cab loading dirt into the plant as National Public Radio played in his ears. He would occasionally check on his crew at the final stage of separating the gold from sand and pebbles or take off into the woods with a pan and trowel to look for new spots to dig. Taking a break one day, he and his crew shot off a few rounds with pistols and rifles into a block of wood. Climbing a nearby peak on foot he looked out over the Alaska wilderness. "This is about as far away as you can get from Wall Street."
 
After nine days in Alaska, Mr. Sherlund headed home and prepared for his first day back at the office. Up at 5:00 a.m., he shaved his beard, put on a pressed shirt and brown Italian loafers. At the office, he couldn't at first access his computer system for checking stock quotes. It uses a fingerprint reader for security -- and Mr. Sherlund's hands were so chafed from mining that it didn't recognize him. A duffel bag on the floor held the fruits of his Alaska trip, a 10-pound brick, some loose flakes and nuggets in small glass vials.
 
The value of that gold has risen quickly as investors buy the precious metal as a haven from the turmoil hitting financial markets. Gold futures last week broke $830 an ounce, their highest level since the 1980s, while the stock market took a beating. The tech stocks Mr. Sherlund is paid to buy and sell haven't escaped the drubbing.
 
The lure of gold mining notwithstanding, "right now I'm keeping my day job," he says.