Welcome!
This is the first of what I hope will be many posts. While future issues of this newsletter will focus on breaking down the business news of the day, generating investment ideas and themes, and diving into individual stocks… before getting to all that, I thought it made sense to introduce myself and what I hope to accomplish with this newsletter.
I’m a veteran professional buyside analyst and portfolio manager who spent more than 20 years on Wall Street in a variety of money management environments. While most of my time was spent at long/short fundamentally driven hedge funds, I also did my time at a big long only institutional investor, invested the assets of a major global reinsurer, and put in tours of duty at a couple of family offices.
In 2020, during the early days of the pandemic, I – like so many other people – took stock of my life and what I had been doing, and decided it was time for a change. After years spent investing other people’s money – very rich people’s money – I pivoted to offering investment analysis and investing education, with the price of admission just an email address (kind of like here!).
I’m a big believer that anyone can invest.
I think I’m lucky that the first investing book that I ever read was One Up on Wall Street, by famed money manager Peter Lynch. He served as portfolio manager of the storied Magellan Fund at Fidelity Investments from 1977 to 1990, and racked up a mind-blowing 29% return over his 13-year tenure.
Lynch was the inventor of the investing mantra “invest in what you know.” He believed in investing in companies where you could understand the product or service and its value proposition. If he had a good experience as a customer, he would dig into the financials of the company and its stock’s valuation to vet if it could be a good investment.
While matching Lynch’s legendary track record would be a tall order, embracing his investment philosophy to use what you already know is something that is readily available to us as investors.
It’s important to understand that the stock market is not just a market of stocks… it’s a market of companies. While it’s hard to predict what any given stock will do in the short-term, if you understand what makes a company tick, you have a pretty good shot at accurately predicting how it will do financially over time. And while in the short-term stock performance can diverge from company financial performance for a number of reasons… in the longer-term, companies that perform well financially – see revenues grow at profitable margins – will also see their stocks perform well. As you long as you buy them at the right price.
Ideas can come from anywhere. Whether you are using a new game-changing software at work, are being hounded by your kids to buy them the latest fashion trend, or you tried the most delicious new food or restaurant… these are all experiences that could lead to your next great investment.
Here’s one anecdote to illustrate this concept….
Back in 2011, I read a random article in the now-defunct Entertainment Weekly magazine about the casting of a promising young actress in the adaptation of a popular Young Adult novel. I had seen the actress in a small indie film and thought she was a huge up and coming talent. Then something in me clicked, and I realized I had been seeing tons of teens in my neighborhood carry the book upon which the movie would be based. So I picked up a copy of the book to check it out… and I consumed it in one weekend! While I was a Comparative Literature major in college, I am a woefully slow fiction reader and am terrible at getting through fiction books these days – all my literary friends will attest to this. The fact that I tore through a whole book in a weekend means it was really a page turner!
It turned out the film was being produced by a movie studio that I had owned stock in earlier in my hedge fund career – I have been following the media sector since the 90s. It didn’t take me long to run though the financials and determine that if the movie did even $150 million at the domestic box office, the company’s stock would at least double. That was the financial analysis piece… most good analysts could have figured that out, if they took the time to assess it.
But the key insight was the qualitative one. That the story was a winner, and the casting of the heroine was spot-on. I believed strongly that based on these two things alone, the movie would be a hit. That’s qualitative analysis – and it’s art rather than science. Because of the element of conjecture or gut feel in it, many investment pros eschew it as an input. But I think that’s a mistake – because qualitative judgment is the special sauce that makes us unique as investors.
The actress was Jennifer Lawrence, and the movie was The Hunger Games, which went on to make $408 million at the domestic box office and spawn three profitable sequels (as well as a prequel that is coming out this fall). The studio was Lionsgate Entertainment (LGF/A) and its shares went on to quintuple in the three years after I read that magazine article.
There are a lot of times when people who trained as engineers or medical doctors are going to have the edge in picking a stock. But this time, the advantage was with the Comp Lit major and theater minor, and the stepmom of teens.
I’m here to demystify investing so you can seize the opportunity in those moments where your unique personal history puts you at an advantage for having your mind click about a potential investment the same way mine did with Lionsgate and the Hunger Games franchise.
And it’s never been a better time to get into investing….
When I started in the business, commissions were high and internet brokers didn’t exist. The barriers to getting into the market were substantial. Now you can trade for free at several reputable online brokerages and apps. And with the advent of buying fractional shares, you can build a diversified portfolio with as little as $1000.
At my last employer, I reached hundreds of thousands of people with my free investing newsletter. That audience had an extremely diverse range of investing experience. On one end of the spectrum, I had many subscribers who were professional investors who knew me from my hedge fund days. I even had a few billionaires and celebrities tuning in – I know because on occasion I would get emails from them.
On the other end of the spectrum, I had people who had never invested before trying to learn how they could make their modest savings grow. I loved getting emails from these people – college students, single moms, artists, retirees. I also heard from people who had been very successful as doctors, lawyers, and businesspeople in areas far from finance… these people had a nice nest egg, but weren’t sure what to do with it and had limited time available to figure it out.
In this career pivot, I was surprised to learn that I had a skill that I had never really recognized before: the ability to breakdown what are seemingly complex issues, and make them understandable to nearly anyone. And I enjoyed taking this skill and using it to help people who are busy and don’t know where to start learn to invest, so they can use their money to make more money.
I hope to offer insights that can be useful for everyone from my friends who are professional investors to busy corporate executives who have the money but not the time to figure it out on their own to the novices who are just getting started.
The common thread to almost everything I do is understanding where consumers are and where they are going. Understanding how people want to spend their time and money has been key to my best investments, which often are in traditional consumer industries like retail, media, and CPG, but at other times can come from the worlds of consumer finance, healthcare, or industrials.
I believe truly novel insights that will make you money occur when you blend traditional financial analysis (corporate financial statements and stock valuations) with qualitative analysis (how the collective zeitgeist will influence long-term demand for a company's products and its competitive position).
If you don’t already know how the financial analysis and valuation works, I’ll be here to give you the basics. The qualitative analysis comes from living life and keeping your eyes open to the world around you – something we all have equal access to.
I’m here to demystify investing and democratize finance - but not in the crypto way of democratizing finance! You won’t find any crypto here… just companies and old-fashioned financial analysis!
I am a value investor by training, but the passage of years has made me a bit more a more flexible when assessing potential investments. While I always keep valuation in mind, I also traffic now in growth stocks and special situations, as well as the value stocks which are my bread and butter. I think of myself now as an opportunistic “make money” investor.
So welcome to my new platform, which I hope can add value to everyone from hardened market veterans to newbies. I want this to be the home of equally opportunistic investing.
I hope to write once a week, and if something really excites me, maybe more. In the coming weeks, I plan on adding videos to my social media channels, which I will share, as I know there are lot of people who take in information better that way.
In case you are wondering what qualifies me to write about investing, I present my check the box credentials, roughly in chronological order:
· Princeton undergrad
· Harvard MBA
· Goldman Sachs
· Sanford Bernstein
· Swiss Re
· A Couple of Secretive Family Offices
· A Bunch of Hedge Funds (you probably haven’t heard of them, but they each had their moment in the sun)
If you want my formal resume, you can find it here on LinkedIn.
My last two picks in my premium, paid newsletter at my former employer before leaving there last summer were some of the best of my career. My June 2022 pick – footwear maker Crocs (CROX) - has more than doubled since I initiated on it in that newsletter. My July pick – oilfield services company Weatherford (WFRD) - has almost tripled. I certainly can’t promise all my picks will perform like these most recent ones did… but it is nice when it works out that way.
A little bit more about me: Mom, Wife, Daughter, Friend, Lover of Dogs, Pop Culture Maven, Musical Theater Dork, Fashion Enthusiast, Indoor Cyclist, Frequent Flier.
If you don’t like pictures of dogs, consider yourself warned… I am sure my motley crew will make an appearance here eventually.
One final note… you may have noticed, I’m a woman. Women at hedge funds are a rare breed, especially once you get beyond the junior ranks. It was often not easy being the only woman in the room at meetings. My entire career, I felt like I was in a constant state of proving myself. In fact, I still do. In 20+ years of meeting with corporate CEOs and CFOs, I can’t remember a single time I ever winged it in a meeting… I always came in having done my homework, question list in hand, because I knew how easy it would be for any slip up to lead to me losing credibility or being voted off the proverbial hedge fund island.
But I also know that being a woman is often an advantage when investing. Women do more than 80% of the household spending, but far less than 20% of the investing. Being the consumer in so many situations gives us women tons of qualitative insights – and we can use them as an important input when investing.
There is study after study that indicates that the admittedly sparse ranks of professional female money managers outperform their male peers. I’m not here to start a culture war… but I am here to say, ladies, you can do this! Don’t tune out! I’m a big believer in life being full of uncertainty and the need to always be able to take care of yourself.
I have been blessed with a wonderful husband and a wonderful father… but I firmly believe that every woman should have the skills to take care of herself… and investing is one of those must-have life skills.
And for the young people who somehow landed here – it is never too early to start learning. No matter your gender, race, age, bank balance, highest degree attained, sexual orientation, professional aspirations… investing (not speculating!) is an important tool for building independence and security.
If you’ve gotten this far… thanks for hanging in! Next time, I’ll stop talking about myself and we’ll get to the markets!
Prosperous Investing!
Welcome to My New Substack on Investing
Excited to become a regular reader Berna!
Hi Berna, it was quite a while back that I used to read your articles in the empire financial and always used to look forward to it. I missed your writing, and I am glad you are back to teach us more.