Jeff Friedberg Friedberg Investment Management Investing by InstinctInvesting by Instinct.
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Transcript of Jeff Friedberg Friedberg Investment Management Investing by InstinctInvesting by Instinct.
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Jeff FriedbergFriedberg Investment Management
Investing by Instinct
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• 1964 Jeff buys first stock. 20 shares of Varian Associates.
• 1965 Jeff often stops by Merrill Lynch office before attending graduate school classes.
• 1968 Jeff is first employed as a geophysicist and manages his own portfolio.
• 1975 Brokerage industry is deregulated. Fixed commissions disappear. Discount brokers arise.
The Evolution of FIM
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• 1978 Jeff meets with the SEC.• 1979 Jeff gets registered and licensed. First client
gives Jeff $7,431.50 to manage• 1990 Jeff moves from home office to regular office• 2014 FIM now consists of a team of 9 persons
managing nearly $300 million for more than 350 individuals or families.
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• FIM is an independent, fee based, money management firm.
• We manage customized investment portfolios to meet each client’s objective in a continually changing economic environment.
• We do this by investing exclusively in publicly traded securities.
• We believe the key to successful investing is to make long term investments in successful companies.
Who We Are
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Today’s Blue Chips are good companies
…but tomorrow’s Blue Chips are today’s best investments.
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Bloomberg
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FIM Performance History (Growth)
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$1,000,000 Change in Value of $10,000 Investment
FIM Growth Composite
S&P 500
Russell 2000
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Finding Companies for Investment
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• Are managed by people• Have personalities• Reflect the DNA of their managers• Evolve and adapt• Can be complacent, reactive, proactive,
aggressive
We View Companies as organisms which….
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Institutional Analysts FIM
Data Input Keyboard Eyes and Ears
Analysis Digital Conceptual
Data Output Earnings Model Company DNA
Time Frame Next Quarter 2-5 Years
Approach to Investment Analysis
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• Large companies are usually fairly priced.• Silicon Valley companies are typically overpriced.• New York companies are well known on Wall Street.• Companies with little debt don’t go bankrupt.• The closer a stock is to zero, the more likely it is to
get there.• There is greater risk in international stocks than
domestic ones.
Observations Over 33 Years of Investing
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• Above-average growth is achievable.• Competitive advantages are sustainable.• Smaller companies can be successful.• Examples include Energy, Industrials,
Aerospace, Technology (non-semiconductor), and Healthcare.
Over the years, FIM has chosen to focus on a handful of specific sectors where:
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• Banks & Brokers• Insurance Companies• National Retailers• Semiconductors• Commodity-Oriented or Cyclical Companies• Large Companies• International Companies
FIM generally avoids investing in areas where institutional investors are strong:
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• Investment Conferences
• Road Shows
• Companies visit our office
• Interaction with other investors
Finding Companies for Investment
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• Reading company press releases• Watching archived presentations from investment
conferences (200+/yr)• Listening to company earnings conference calls
(600+/yr)• Calling company executives or visiting them (100+/yr)• Reading investment analyst reports
Getting Acquainted with Companies
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• Clarity• Teamwork• Longevity• Newness• Treating employees as assets, not expenses.• “Jack of all Trades”• Responsiveness to questions
Assessing CEOs and Managements
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We don’t think so
Is Stock-Picking Dead?
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Schlumberger -- SLB
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Core Labs (CLB) vs. SLB
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Apache -- APA
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EOG vs. APA
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Kinder Morgan LP (KMP)
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Plains (PAA) vs. KMP
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Magellan (MMP) vs. KMP
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Allergan -- AGN
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Valeant (VRX) vs. AGN
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Illinois Tool Works -- ITW
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Middleby (MIDD) vs. ITW
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Database company – 1980’sZapata – 1981Compaq – 1986McDermott – 2004Sprint -- 2007SXCI (CTRX) -- 2008Digital River -- 2011
Instinctive Decision Examples
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Bought in 1985 at $43Bought more in 1986 at $72Sold in April, 1987, at $127
Compaq
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McDermott International Inc. (MDR)
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McDermott International Inc. (MDR)
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McDermott
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SXC Health Solutions, Corp. (SXCI)
PartialSale
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SXC Health Solutions, Corp. (SXCI)
PartialSale
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Catamaran
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Digital River Inc. (DRIV)
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Digital River earnings revenue
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In 2011, we intend to capitalize on this market momentumwhile continuing to grow our enterprise commerce business insoftware, consumer electronics and games, and expand intothe education and payments markets. The common denominatorthat continues to successfully drive these growth strategies is ourvalue proposition – delivering the online expertise, technologiesand revenue strategies companies need to succeed in today’sonline marketplace.
At the heart of Digital River is the drive to succeed – nowherewas this more evident than in 2010, when we delivered on ouraggressive commitment to accelerate our revenue and convertour pipeline of prospects into signed clients. Our ability toexecute against this plan was backed by the people at DigitalRiver – a team of e-commerce experts unparalleled in the industry.
Annual Report Excerpt
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Digital River Inc. (DRIV)
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Digital River
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Some Energy Companies with Excellent Management
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Plains All American – PAA/PAGP
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Magellan Midstream LP -- MMP
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EOG Resources -- EOG
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Noble Energy -- NBL
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Core Labs -- CLB
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Oceaneering Intl -- OII
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Matador Resources -- MTDR
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Some of Our Favorites
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Wabtec -- WAB
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LKQ Corp -- LKQ
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Oceaneering Intl -- OII
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XPO Logistics -- XPO
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Polaris -- PII
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Matador Resources -- MTDR
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EPL Oil & Gas -- EPL
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Bonanza Creek -- BCEI
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Questions?
Thank You
https://twitter.com/dowjeff
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Stock Picks for 2013Ansys ANSS +30% Liquidity Svcs LQDT -45% Bonanza Creek BCEI +56% Middleby MIDD +87%Cardtronics CATM +83% Magellan MMP +47% Campus Crest CCG -23% Oceaneering OII +47%Core Labs CLB +74% Plains LP PAA +14%Clean Harbors CLH +9% Shuffle Ent SHFL acquiredCatamaran CTRX +6% STAG Industrial STAG +13%Digital Globe DGI +68% Titan Machinery TITN -28%HMS Holdings HMSY -24% Monotype TYPE +94%ITC Holdings ITC +25% Valeant Pharma VRX +85% Total +36%
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Stock Picks for 2014American Electric AETI -32% Noble Energy NBL +2%Ansys ANSS -4% Oceaneering OII -10%Ardmore Shipping ASCP -13% Plains GP PAGP +4%Black Diamond BDI.TO -1% Polaris PII -5%Catamaran CTRX -7% Power Integ POWI +14%EPL Oil & Gas EPL +6% ResMed RMD -6%Genesee & Wyo RR GWR +4% STAG Industrial STAG +14%ITC Holdings ITC +9% Wabtec WAB +10%LKQ Corp LKQ -15% Westlake WLK +12%National Inst NATI -8% XPO Logistics XPO +23% Total -1%