A new study circulating through hedge funds and university campuses points to the powerful role that old-school ties play in the world of investing.

Mutual fund managers invest more money in companies that are run by people with whom they went to college or graduate school than in companies where they have no such connections, the study found. The investments involving school ties, on average, also do significantly better than other investments.

The authors of the study offer two possible explanations — one benign and one decidedly not. Fund managers may simply know more about their old classmates, including which ones are likely to make good executives. The alternate explanation is that those executives may be passing along inside information to the fund managers.

The researchers do not take a position about which explanation is more likely.

“Everything we have is consistent with both explanations,” said Andrea Frazzini, an assistant professor at the University of Chicago and one of the study’s three authors. But he added, “We have no evidence of wrongdoing by any of these fund managers.”

Officials from the Securities and Exchange Commission have asked the authors to present their findings next month at one of the regular seminars held within the commission’s Office of Economic Analysis.

The paper is the latest example of an approach that might be called investigative economics, in which researchers dig through enormous amounts of data to look for patterns. In 2005, this kind of research helped uncover the widespread backdating of stock options, a scandal that has resulted in criminal complaints against some company executives and the resignations of a number of others. Other research led Eliot Spitzer , then New York’s attorney general, to crack down on illegal after-hours trading by mutual funds.

It remains unclear whether the latest paper will have any similar impact or whether it has pointed to improper trading. But some other economists who have read the paper said they believed that it probably had, even if the extent of such trading might be relatively small.

“It’s a very good paper,” said Michael S. Weisbach, a finance professor at the University of Illinois . “It suggests that there is illegal activity going on, but it doesn’t provide the S.E.C. a road map. You certainly can’t prosecute someone for having a good return on a company by somebody they went to college with.”

The study is being distributed by the National Bureau of Economic Research, a nonprofit group in Cambridge, Mass., that helps finance work by many of the country’s top economists. The authors have submitted the paper to The Journal of Political Economy, where it is being reviewed.

The authors have also been presenting it at academic seminars, as well as to the hedge fund arm of Goldman Sachs and to AQR Capital Management, another hedge fund. Regardless of their cause, the patterns are of potential interest to other investors, who could track the investments of mutual fund managers and mimic those strategies that seemed to work especially well.

“Something about these social networks is allowing portfolio managers to better predict the future returns of companies within the network,” said Lauren Cohen of Yale , another author.

The study looked only at mutual funds, which are required to report their holdings and performance regularly. It did not examine hedge funds, which are investment pools for wealthy individuals and institutions; hedge funds do not have to disclose their holdings publicly.

Mr. Cohen, Mr. Frazzini and the third researcher, Christopher Malloy of London Business School, are all in their late 20s or early 30s. They were inspired to do the study partly by how often they noticed people talking about their alma maters when they were introduced to each other in the business world, Mr. Cohen said. The economists wondered whether these social networks affected investment choices.

Their study, titled “The Small World of Investing ,” examined 85 percent of the total assets under management from 1990 to 2006 and looked at different levels of university connections.

In the weakest kind of connection, a fund manager and one of a company’s top three executives shared nothing more than an alma mater. They could have attended different schools within the university and have been on the campus decades apart.

In the strongest connection, a fund manager and one of the top three executives attended the same school at the same university, and their time on campus overlapped. The most common shared school in the study, by far, was Harvard Business School.

On average, investments in companies where there was no connection returned 11.7 percent a year before fees, according to the economists’ estimates. Investments in companies with the closest level of connection — when a fund manager attended school with an executive — returned 20.1 percent a year.

As might be expected, investments with weaker connections had returns that fell somewhere in between, with returns of more than 11.7 percent and less than 20.1 percent.

The most benign explanation for the pattern is simply that fund managers who attended school with executives have an easier time learning about the companies where those executives work. They are more likely to travel in similar social circles and may even remember their old classmate’s strengths and weaknesses.

“The results are much more consistent with the story that you went to college with Person X and know they’re really smart,” said Steven N. Kaplan, a finance professor at the University of Chicago. “My guess is that the whispering is going on, too, but the question is the relative amounts.”

Supporting Mr. Kaplan’s view, the paper does not offer clear evidence that the investments by the fund managers did unusually well in the weeks and months immediately after a stock was purchased.

On the other hand, investing based on school ties seems to have become less popular recently, which could suggest that financial regulations passed after the demise of Enron cut down on the exchange of inside information.

Last year, 7.1 percent of fund managers invested in at least one company that had a top executive with whom they had gone to school, down from 15 percent in 2002. The average during the 1990s was 11 percent.

The paper did highlight one specific example — to the displeasure of the company involved. Toward the beginning, the paper describes a mutual fund run by a graduate of Harvard Business School that did well by investing in Cummins Engine in the late 1990s. Two large purchases of Cummins stock happened in the months before it jumped in price, and the sale of those shares came in the months before it dropped.

(Mutual funds are required to disclose their holdings every quarter, meaning that the economists could not examine shorter time periods.)

A number of top officials at Cummins also attended Harvard Business School, though not at the same time as the fund manager.

The research paper does not identify the mutual fund, but public records make it clear that it is one run by Fidelity Investments.

Scott Beyerl, a Fidelity spokesman, said yesterday that he did not want to comment directly on the study. “Our equity portfolio managers continue to select stocks for their funds the way they always have — using a bottom-up approach focused on the relative attractiveness of company fundamentals and stock valuations,” Mr. Beyerl added.

Jean Blackwell, the chief financial officer at Cummins, said she was unhappy that the paper had singled out the company. “The linkages were weak,” she said. “It impugned our integrity without establishing that anything happened, and I take that really seriously.”

WATCH your cholesterol and triglycerides. Your boss and fellow workers are counting on it. As the nation’s employers aim to get their money’s worth from ever more expensive medical insurance, many are playing a bigger role in managing and monitoring their workers’ health.

Employers not only want a healthy group, they want to keep a lid on health costs — and insurance premiums.

Take Intuit, the Silicon Valley software company known for its Quicken and TurboTax financial software. Intuit pays employees $100 each for voluntarily filling out an online medical questionnaire that is intended to flag problems and suggest remedies.

“For instance, we see you smoke; are you willing to change that?” said Sarah Wilkins, a senior benefit analyst at Intuit, explaining how the questionnaire might steer employees toward a stop-smoking program run by a contractor.

The BB&T Corporation , a bank holding company with a big presence in the Southeast, allows workers to save 20 percent on their premiums by filling out an annual health questionnaire, allowing blood to be drawn for a medical work-up and taking a fitness test on a stationary bike.

“We have a lot of sedentary employees,” said Steve Reeder, BB&T’s benefits manager, who said more than 90 percent of the 24,000 workers with health coverage participate in the program.

If the health test finds that a BB&T employee does not meet the medical norms for his or her age and sex, the worker is assigned to a nurse who helps the person set healthy living targets and then meets with the employee periodically to see how things are going.

“If the nurse feels they are not making sufficient progress, they do have the ability to drop them from the program,” Mr. Reeder said, in which case the employee would lose the insurance discount.

With its testing, BB&T says it has beat its competitors on medical expenses. The $193 million that BB&T and its workers expect to spend on health care this year works out to about $8,042 an employee. The company calculates that to be about $1,100 less per person than what comparable banking companies and their workers will typically spend.

Textron , a multinational conglomerate that insures more than 30,000 employees in the United States, tries to head off major medical expenses by using a contractor to sift through employees’ insurance claims. If the process detects a condition that may warrant closer monitoring, the employee will receive a call from a “health coach” to offer guidance for questions to ask a doctor.

“Some employees say, ‘No, thanks,’ ” said George E. Metzger, vice president for human resources and benefits.

A recent national survey found many similar examples of such medical supervision by corporate America. “Employers are realizing that a good health care strategy includes health benefits and programs that incentivize employees to manage their own health,” Larry Boress, chief executive of the Midwest Business Group on Health, the nonprofit group that conducted the survey, said in a news release.

This approach represents a shift in thinking about how to get employees to be more responsible for their health care. A few years ago, the vogue term in employee-benefits circles was “consumer-directed health care.” At its most generous, the phrase means that employers help pay for employee health savings accounts, where the money can grow in anticipation of medical needs. The typical trade-off is that the employee agrees to accept cheaper, barer-bones insurance with higher out-of-pocket annual deductibles.

When applied in Dickensian fashion, though, “consumer-directed health care” tends to translate as “You, dear consumer, can direct more of your own financial burden,” while the company may not add much to the health savings accounts.

In giving workers monetary incentives to pay closer attention to their health, the trade-off is that workers must agree to let the employer play a more active role in their medical care.

Carlson Companies, a Minneapolis holding company whose businesses include the Radisson hotel chain, plans to begin such a program in July, offering some employees the chance to win cash or merchandise for participating.

“We’re going to give them a report card that has five optimal measures,” said Charles F. Montreuil, Carlson’s human resources vice president.

The system will initially focus on employees with chronic illnesses, with the first report card geared to people who have Type 2 diabetes . The evaluation will consider whether the employee has refrained from smoking; is maintaining a blood pressure lower than 130/80; keeps L.D.L., or “bad” cholesterol, below 100; takes a daily aspirin if the employee is 40 years or older; and keeps a blood-sugar count of lower than 7 by a test known as the A1c.

The A1c, which screens for Type 2 diabetes, is especially important to Carlson. A Type 2 diabetic “costs us about $13,000 a year on average in medical costs and time off work,” Mr. Montreuil says.

Every six months, employees who participate in Carlson’s program and show improvement in at least three of the five measures will be able to choose between cash or merchandise worth in the range of $100.

Such detailed medical monitoring by employers raises privacy concerns.

Ms. Wilkins of Intuit said that when her company introduced its health questionnaire last year, she fielded many questions about who would see the data. She said that she reassured workers that no one at Intuit would have access to the questionnaires, which are overseen by Optum, a unit of the insurer United HealthCare. She also reminded them that the survey was voluntary.

Typically, such programs are meant to comply with the federal privacy and nondiscrimination provisions of the Health Insurance Portability and Accountability Act (HIPAA) and Americans With Disabilities Act, or A.D.A. Under these laws, with few exceptions, an employer is not allowed to see specific medical data about individual employees. Medical records are supposed to be accessible only to third-party health-plan administrators or other outside vendors the employee has authorized.

Carlson Companies’ report-card system, for example, will be managed by Fiserv , a health-plan administrator. The employees’ progress in the program will be supervised by health coaches from a separate vendor, CareAllies. Privacy rules do get broken. (Just ask Hewlett-Packard ’s board of directors.) But many legal experts say that HIPAA and A.D.A. are probably adequate for keeping ethical bosses from using medical data when deciding which employees deserve raises or promotions and which should be put on probation or fired.

“While anything is possible, there are already a fair number of protections in these laws to try to protect employees,” said Andrea I. O’Brien, who leads the employee benefits practice at the Washington law firm Venable.

At BB&T, Mr. Reeder said that privacy and discrimination laws were more than enough to keep bosses from learning — or even wanting to learn — about a worker’s medical details. The same goes for trying to find out how things are going between employees and their nurse advisers.

“There’s nothing helpful for us in knowing it,” Mr. Reeder said. “We certainly don’t want managers to know that information and making bad decisions based on that information.”

Yet he says the corporate emphasis on healthy living does motivate workers to compare medical notes about their cholesterol and triglycerides and such.

“Obviously, employees talk among themselves,” Mr. Reeder said. “Wellness is really a part of our culture.”

Sara D. Davis for The New York Times

WORK-UP Leesa Neal of Peak Health works with Greg Anderson, a banker in Winston-Salem, N.C., in a program to encourage healthy employees.

Sara D. Davis for The New York Times

With its testing, BB&T says it has beat its competitors on medical expenses.

 

For years, Johnny Five lived not on the streets but below them, in the dark underworld beneath an abandoned train station in the Bronx.

He had to crawl in the dirt at the edge of a concrete platform to get in and out. He bathed with rubbing alcohol, but still his skin was covered with insect bites and infections. He said God talked to him there, sometimes through a portable radio, yet he considered his cave a kind of hell: overheated in the summer, frigid in the winter, a sunless place hard on the body but worse on the soul.

It was Christmas Eve when he first heard the news: Someone was offering him a way out. After reading an article about Johnny in The New York Times, Peter D. Beitchman, the executive director of the Bridge Inc., a nonprofit group that provides housing and services to mentally ill homeless people and others, immediately arranged for him to move into an apartment.

Days later, Johnny celebrated with the one person who had looked after him, Sister Lauria Fitzgerald, a Roman Catholic nun who helps the homeless in the Bronx. They ate dinner with another nun at an Italian restaurant in the Arthur Avenue section, three miles from the cave and around the corner from Johnny’s new home. He feasted on a plate of eggplant parmigiana and enjoyed his first taste of tiramisù.

But he didn’t want to touch the white linen napkin on the table. It was too clean.

“I thought I wasn’t worthy to use it,” said Johnny, 45, who said he suffers from schizophrenia and whose real name is John Carbonell. “I used the one that was in the basket where the bread was.”

For the next several months, Johnny would drift between his old life underground and his new one above it, struggling the way a man freed from prison must readjust to society. It is easy in a sense to take the city’s homeless people off the streets, but it is harder, as Johnny’s odyssey illustrates, to take homelessness out of them.

Even after Johnny moved into the apartment the first week of January, he returned to the wooded area around the cave to feed Meow Meow and the other stray cats he had named. His first several days in the apartment — a light-drenched one-bedroom unit with hardwood floors and a large kitchen in a five-story building — he did not bother locking the door. “There’s no doors in the cave,” he explained.

He had bold ambitions of starting over: He talked about getting a sewing machine, so he could design clothes, and he refused to move his belongings from the cave to the apartment because he worried about bringing in bugs. He wanted to put up “No Smoking” signs, vowing not to indulge his old addictions in his new environment. Johnny, an ex-convict who served time in the early 1990s for a drug-related offense, has been smoking cocaine since he was a teenager.

One Sunday in January, Johnny slept on the bed, on top of the covers, wearing a leather jacket and muddy boots. He resembled not the sole occupant of Apartment 3B, but a visitor. He said he spent the night in the apartment, then went back to the cave at 6 a.m., then returned later that morning to the apartment. The flashlight he used in the cave still shone inside his jacket pocket.

He woke up and sat outside on the back fire escape, smoking a cigarette. Behind him, he could hear the water running in the bathtub, his bathtub. On the streets, he used to wash up at an open fire hydrant.

Johnny survives on a monthly check from the federal Supplemental Security Income program. As part of his arrangement with the Bridge, the nonprofit group that provided the apartment, his rent would be $168 a month, about 30 percent of his government check. Sister Lauria and two case managers, one from the Bridge and one from the Visiting Nurse Service of New York, planned to help him make the transition.

The bed and the furniture had been supplied by the Bridge. Yet furnishings were not new to Johnny. In the cave, he had created a makeshift home: Sleeping on a quilt-covered mattress atop milk crates, keeping a bottle of cologne near the bed, cooking with cans of Sterno, using a car battery to power a DVD player. He was not awed by 3B, but somewhat suspicious of it.

“Sometimes the one living in that cardboard box is happier than the one living at the penthouse,” he said.

Johnny had been living in the cave off and on since 1986, and for the last nine years or so he had settled in permanently. The abandoned train station sits in a fenced-off area thick with weeds and trash not far from Yankee Stadium.

Sister Lauria tried for years to persuade Johnny to get out of the cave, but it was not until last year that he told her he wanted to leave. “I realized I would have been better off doing 10 years in prison than nine years in that cave, crawling in and out, getting scabs, bugs,” he said.

Johnny’s homelessness was not about a lack of housing. It was more complicated, a result of a variety of spiritual, psychological and emotional causes. “Everything just bothering my conscience,” he said of the reasons he was homeless. “How can I ask God for forgiveness when I don’t forgive myself? So I’ll torture myself and go to the cave.”

Sister Lauria often coaxed him out of the cave with the promise of odd jobs and a good laugh. He became one of her regular assistants, accompanying her on holidays to feed the homeless. Last year, a deliveryman who works in the neighborhood needed a place to stay, so Johnny gave him his room in the cave and moved to the opposite wall.

“I try to imitate her,” Johnny said of Sister Lauria, a member of the Sisters of St. Dominic of Blauvelt, N.Y. “She imitates Christ. I try to imitate her.”

She was thrilled for Johnny when he moved into the apartment. “I felt like I was a mother sending my son away to college,” said Sister Lauria, who helps the homeless as an outreach worker for the Highbridge Community Life Center and as a manager of a thrift shop run by Siena House, a women’s shelter.

But she was worried about how he would cope. She had seen other homeless people struggle to adapt to life indoors.

Johnny struggled, too. Weeks after moving in, he kept returning to the cave. He missed his cats, whom he called his soldiers. He missed his old neighborhood around Ogden Avenue. He went back out of concern for his former roommate, the deliveryman, and he went back to feed his addictions. He hates and loves his crack cocaine habit, just as he hates and loves his cave. “When you pick up drugs,” he said, “you’re saying goodbye to all your dreams, all your goals and all you can be.”

He figured he stayed in the cave the first three weeks he had the apartment. By March, he had taken the doors off a closet and used them as partitions to create a small darkened hideout, like a room in the cave. By April, Sister Lauria had not seen him for about two weeks, so she paid him a visit. She found he had put up plastic tablecloths and plastic bags all over the apartment, on the walls and on the ceiling. He told her he thought his neighbors were spying on him.

He took down the plastic, but moved out soon after. He lived there for four months, from early January to late April.

He said he had become uncomfortable there. “Even though I had paid the rent, I never really slept there,” he said. “There was no life in the apartment. I will compare it to a spring break, with all the utilities and this and that and whatever. But no, it’s not for me.”

The Bridge had offered him another apartment and tried to have him undergo a psychiatric evaluation, but Johnny missed those appointments. “We hope that Johnny will come back,” said Mr. Beitchman, the executive director of the Bridge. “We do hope. Our experience in all these years is that folks are at different points of readiness at different times.”

Johnny returned to Ogden Avenue and began running errands again for Sister Lauria. She helped get him a job at a substance abuse treatment program. Johnny did janitorial work for several days. Then he quit. He was overpaid by mistake, and he returned the money because he felt it was the right thing to do.

In the end, he left the apartment for reasons that made sense only to him. Because of his paranoia and schizophrenia, because of crack, because he felt isolated from those who knew him best, because of the cats, because the bathroom was too small, because he didn’t want to live there without a spouse.

Some in his old neighborhood were upset with Johnny, but Sister Lauria told them not to judge him. Whenever Johnny became fed up once again with life on the streets, she was ready to help him find another apartment.

“Even though housing seemed like a baby step in light of everything else going on in his life, it was too much of a big step,” she said.

Johnny said he was now sleeping in a plywood hut he had built near the cave. He was a jumble of emotions, a paradox of hope and despair. He said he worried that he might be infected with H.I.V. He said that he had never been happier and that the best thing God ever made was tomorrow.

One recent afternoon, Johnny was back in the cave. Candles lighted a back room in a far corner, at the end of a maze of garbage bags and concrete walls. He talked about fixing it up again. He smoked some crack through a thin glass tube the size of a cigarette. Then he crawled out, worried about Sister Lauria.

His life swayed in this way, between the world above and the one below. On Friday, he said he was ready to work with the Bridge again and to give an apartment another try. He had thrown the tube that he uses as a crack pipe against a wall in the cave. It had been nearly two days since he last got high. “I had to tell Satan, ‘You don’t own me,’ ” he said.

He went to a store across the street from the thrift shop. He bought a bottle of nonalcoholic sparkling apple cider, to celebrate.

Brent McDonald contributed reporting.

	Nicole Bengiveno/The New York Times Johnny uses two pieces of plywood as the door to the place he has called home for 21 years.