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Investing by Instinct. Jeff Friedberg Friedberg Investment Management. The Evolution of FIM. 1964 Jeff buys first stock. 20 shares of Varian Associates. 1965 Jeff often stops by Merrill Lynch office before attending graduate school classes.
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Investing by Instinct Jeff Friedberg Friedberg Investment Management
The Evolution of FIM • 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.
1978 Jeff meets with the SEC. • 1979 Jeff gets registered and licensed. First client gives Jeff $7,431.50 to manage • 1990Jeff moves from home office to regular office • 2014FIM now consists of a team of 9 persons managing nearly $300 million for more than 350 individuals or families.
Who We Are • 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.
Today’s Blue Chips are good companies …but tomorrow’s Blue Chips are today’s best investments.
We View Companies as organisms which…. • Are managed by people • Have personalities • Reflect the DNA of their managers • Evolve and adapt • Can be complacent, reactive, proactive, aggressive
Observations Over 33 Years of Investing • 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.
Over the years, FIM has chosen to focus on a handful of specific sectors where: • Above-average growth is achievable. • Competitive advantages are sustainable. • Smaller companies can be successful. • Examples include Energy, Industrials, Aerospace, Technology (non-semiconductor), and Healthcare.
FIM generally avoids investing in areas where institutional investors are strong: • Banks & Brokers • Insurance Companies • National Retailers • Semiconductors • Commodity-Oriented or Cyclical Companies • Large Companies • International Companies
Finding Companies for Investment • Investment Conferences • Road Shows • Companies visit our office • Interaction with other investors
Getting Acquainted with Companies • 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
Assessing CEOs and Managements • Clarity • Teamwork • Longevity • Newness • Treating employees as assets, not expenses. • “Jack of all Trades” • Responsiveness to questions
Is Stock-Picking Dead? We don’t think so
Instinctive Decision Examples Database company – 1980’s Zapata – 1981 Compaq – 1986 McDermott – 2004 Sprint -- 2007 SXCI (CTRX) -- 2008 Digital River -- 2011
Compaq Bought in 1985 at $43 Bought more in 1986 at $72 Sold in April, 1987, at $127
SXC Health Solutions, Corp. (SXCI) Partial Sale
SXC Health Solutions, Corp. (SXCI) Partial Sale
Annual Report Excerpt In 2011, we intend to capitalize on this market momentum while continuing to grow our enterprise commerce business in software, consumer electronics and games, and expand into the education and payments markets. The common denominator that continues to successfully drive these growth strategies is our value proposition – delivering the online expertise, technologies and revenue strategies companies need to succeed in today’s online marketplace. At the heart of Digital River is the drive to succeed – nowhere was this more evident than in 2010, when we delivered on our aggressive commitment to accelerate our revenue and convert our pipeline of prospects into signed clients. Our ability to execute against this plan was backed by the people at Digital River – a team of e-commerce experts unparalleled in the industry.
