To get an investment edge, learn to recognize business stars
AVNER MANDELMAN Saturday, February 10, 2007
Last week I took my son to New York to see the L.A. Lakers play against the Knicks -- it was Dan's 16th birthday, and I had to be in New York anyway on business. So I got two good seats right behind the Knicks' bench through a friend of my buddy Bertie the gold trader, who recently began to trade uranium and enjoyed a good few months, and so was feeling charitable.
What's all that got to do with investments?
The game was the usual American three-ring circus. Madison Square Garden full to the rafters, Wall Streeters wearing baseball hats and chewing gum to show they are down-to-earth, people sporting the jerseys of their favourite players, teenage dancers flipping in the air, and celebs, celebs galore.
Donald Trump walked by, with his son, and his latest wife; Jon Stewart flashed a V sign on the large monitor; Spike Lee sat brooding over some stat sheets, and, of course, the entire teams of the Lakers and the Knicks, gods among men said my son (who knew the names of all, and their stats, and personal and game histories).
Only one player was missing: Kobe Bryant of the Lakers, who had been suspended. With him, the Lakers were bound to win. Without him, they were probably toast. Not crisp. But toast just the same.
And what does all this have to do with sleuthing investment research, you are asking? It just so happens that I have a good memory for faces, and so, as the game was progressing and the camera was flashing more celeb faces on the monitor (Kareem Abdul-Jabbar, and Cyndi Lauper, and a few more godlike folks), I suddenly noted a trio of young men sitting in the middle distance, talking chummily.
They were camouflaged in frayed jeans, non-descript T-shirts, and backward-pointing baseball caps, looking almost like hockey fans, but I recognized two of them as the president and chief financial officer of a Silicon Valley tech company which I'll call here SuperChip.
The company's stock was inexpensive, but its fortunes were in doubt because its marketing team was deficient in what is commonly called animal spirits -- of which, of course, there were lots around us, both on the court and off it. (But not as much as on the next night, when the New York Rangers lost to the Toronto Maple Leafs, a game to which I took my son also. But I digress.)
At any rate, when I noticed the third man in that trio, I sat up and paid attention: He was the vice-president of marketing of SuperChip's main competitor. His face might not have been known to you, nor to most of those who own SuperChip stock, but I had seen him twice before -- first in a conference, the second time when I looked up his company executives' photos on their website.
The fact he was here talking to the top two honchos of his main competitor could mean many things, but the most probable was that SuperChip was trying to recruit him. And if this business star jumped ship, his own company's stock would suffer, and SuperChip's would benefit.
Luckily I recognized the trio's faces, so when I came back to Toronto on Friday I placed some phone calls to Silicon Valley contacts, who soon called back with info I would never have bothered to seek, had I not recognized the business stars' faces. And so, finally, I get to the conclusion: There is more exclusive information in public than you may think -- and it is often related to people.
You see, most investors have been taught in academia (as I have) to analyze companies and stocks via numbers, thus taking people out of the equation. It's as if you tried to forecast whether the Lakers or the Knicks would win by looking only at the teams' and players' stats. (Not that this approach cannot contribute: This is what the Oakland Athletics baseball team did, and what J.P. Ricciardi, who had first helped manage the A's, later did with the Blue Jays.)
Yet often one or two star players, or star executives, can make a big difference: Not only Bill Gates, Steve Jobs, or Kobe Bryant, but also a long list of rising stars one rung below.
Now how can you be expected to recognize all these, you ask? Well. You could probably identify 50 movie and TV celebrities by sight -- just like the crowd in that basketball game could -- yet no celeb has ever made you a dime, and most have probably even cost you, via endorsements. My son surely can recognize most of the NBA players -- he's a sports fan.
Therefore, if you invest, see yourself as a business fan, and pay attention to individual business stars: Follow their careers, learn what they do and how they do it, what they succeed in and where they fail -- and try to remember what they look like. If you do that, you'll often have an edge over those who don't. Sure, you must know the numbers, too, and the industry. But if you can identify a young business-Kobe-Bryant joining -- or quitting -- a company, you may take the money of those who only see a press release. Star talent matters greatly, both in sports, and in business.
And by the way, the Lakers did indeed lose to the Knicks. By five points.
Avner Mandelman is president and chief investment officer of Giraffe Capital Corp., a Toronto-based money management firm.
amandelman@giraffecapital.com
Last week I took my son to New York to see the L.A. Lakers play against the Knicks -- it was Dan's 16th birthday, and I had to be in New York anyway on business. So I got two good seats right behind the Knicks' bench through a friend of my buddy Bertie the gold trader, who recently began to trade uranium and enjoyed a good few months, and so was feeling charitable.
What's all that got to do with investments?
The game was the usual American three-ring circus. Madison Square Garden full to the rafters, Wall Streeters wearing baseball hats and chewing gum to show they are down-to-earth, people sporting the jerseys of their favourite players, teenage dancers flipping in the air, and celebs, celebs galore.
Donald Trump walked by, with his son, and his latest wife; Jon Stewart flashed a V sign on the large monitor; Spike Lee sat brooding over some stat sheets, and, of course, the entire teams of the Lakers and the Knicks, gods among men said my son (who knew the names of all, and their stats, and personal and game histories).
Only one player was missing: Kobe Bryant of the Lakers, who had been suspended. With him, the Lakers were bound to win. Without him, they were probably toast. Not crisp. But toast just the same.
And what does all this have to do with sleuthing investment research, you are asking? It just so happens that I have a good memory for faces, and so, as the game was progressing and the camera was flashing more celeb faces on the monitor (Kareem Abdul-Jabbar, and Cyndi Lauper, and a few more godlike folks), I suddenly noted a trio of young men sitting in the middle distance, talking chummily.
They were camouflaged in frayed jeans, non-descript T-shirts, and backward-pointing baseball caps, looking almost like hockey fans, but I recognized two of them as the president and chief financial officer of a Silicon Valley tech company which I'll call here SuperChip.
The company's stock was inexpensive, but its fortunes were in doubt because its marketing team was deficient in what is commonly called animal spirits -- of which, of course, there were lots around us, both on the court and off it. (But not as much as on the next night, when the New York Rangers lost to the Toronto Maple Leafs, a game to which I took my son also. But I digress.)
At any rate, when I noticed the third man in that trio, I sat up and paid attention: He was the vice-president of marketing of SuperChip's main competitor. His face might not have been known to you, nor to most of those who own SuperChip stock, but I had seen him twice before -- first in a conference, the second time when I looked up his company executives' photos on their website.
The fact he was here talking to the top two honchos of his main competitor could mean many things, but the most probable was that SuperChip was trying to recruit him. And if this business star jumped ship, his own company's stock would suffer, and SuperChip's would benefit.
Luckily I recognized the trio's faces, so when I came back to Toronto on Friday I placed some phone calls to Silicon Valley contacts, who soon called back with info I would never have bothered to seek, had I not recognized the business stars' faces. And so, finally, I get to the conclusion: There is more exclusive information in public than you may think -- and it is often related to people.
You see, most investors have been taught in academia (as I have) to analyze companies and stocks via numbers, thus taking people out of the equation. It's as if you tried to forecast whether the Lakers or the Knicks would win by looking only at the teams' and players' stats. (Not that this approach cannot contribute: This is what the Oakland Athletics baseball team did, and what J.P. Ricciardi, who had first helped manage the A's, later did with the Blue Jays.)
Yet often one or two star players, or star executives, can make a big difference: Not only Bill Gates, Steve Jobs, or Kobe Bryant, but also a long list of rising stars one rung below.
Now how can you be expected to recognize all these, you ask? Well. You could probably identify 50 movie and TV celebrities by sight -- just like the crowd in that basketball game could -- yet no celeb has ever made you a dime, and most have probably even cost you, via endorsements. My son surely can recognize most of the NBA players -- he's a sports fan.
Therefore, if you invest, see yourself as a business fan, and pay attention to individual business stars: Follow their careers, learn what they do and how they do it, what they succeed in and where they fail -- and try to remember what they look like. If you do that, you'll often have an edge over those who don't. Sure, you must know the numbers, too, and the industry. But if you can identify a young business-Kobe-Bryant joining -- or quitting -- a company, you may take the money of those who only see a press release. Star talent matters greatly, both in sports, and in business.
And by the way, the Lakers did indeed lose to the Knicks. By five points.
Avner Mandelman is president and chief investment officer of Giraffe Capital Corp., a Toronto-based money management firm.
amandelman@giraffecapital.com
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4/22/2007 12:56:00 AM
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