Vol I, No. 6     

July 2013  

 

 

A monthly review for investors and consultants about how the quirks of human behavior 

drive investing...and what you can do about it

 

 

The Misbehaving Investor
     

Some top music acts sometimes seem as though they focus more on promotion than musical artistry. 

Similarly - in investing there are companies that also excel in the art of self-promotion.  But we've found that companies that shun the limelight are often some of the more intriguing opportunities.

All the best,

 

John Feb 5    

John Heldman, CFA

President

 
About Us
Triad manages equity and balanced portfolios with a focus on absolute return and investor behavior. The firm is 100% employee owned.  New relationships for private clients and institutions begin at $1 million. 

Founded in 2008, Triad has $117 million of assets under management as of 3/31/13.  The Equity composite return, annualized and net of fees, since inception is 12.0% vs. 4.9% for the S&P 500 Index  (4/30/08 to 3/31/13).

For more information:

Dave Hutchison, CFA
Managing Director
(949) 679-3991
dhutchison@triadim.com

Please visit us at:
www.triadim.com




Unheard Of

 

The music world has lots of great musicians who never achieve broad popularity. Is this a conspiracy by the "suits", the executives who run the business? No. The music industry is a business, and the executives who run the giant music labels would rather focus on mega artists. Mega artists sell mega recordings, concerts, T-shirts, etc. It's the prevailing industry model to seek out the next Justin Bieber, Bruno Mars, Beyonce, Rihanna, Nicki Minaj, etc.   Megastar equals mega-appeal. But in my humble opinion it's not necessarily great artistry. Sorry, Bieber fans.

 

Artists flying below the megastar banner-a few of my favorites include Badly Drawn Boy, Neko Case, Leonard Cohen, Camera Obscura, The Go-Betweens, and Lucinda Williams-don't feed the music industry machine with monster hits. Their reward is to live in relative obscurity. Of course, some artists don't crave stardom first and foremost, but are content to churn out great music, and will take whatever fame comes their way-or doesn't.

 

Similarly, some corporate CEOs prefer to focus on running their businesses, and don't focus on promoting their company. Since they spend more time managing the business, they're more effective than promotional managers. As you might guess, we prefer the former to the latter.

 

How to tell one from the other? Does the company make lots of investor presentations, or is the CEO constantly on CNBC? Does the website gush about the company's greatness? Is the annual report full of glossy pictures, including a large, prominent photo of Mr. CEO? Does the CEO sit on multiple corporate or non-profit Boards of Directors? If so, when does Mr. CEO have time to actually manage the company?

 

In contrast, we find low-key executives and companies to be interesting, precisely because they spend most of their time managing the business, not promoting the stock to Wall Street. Less hype also means less investor notice, which allows us to invest at attractive valuations. As in the music industry, the less promotional the company, the harder it can be to find. But as with music, it can be worth the search.

 

You could, of course, hire us to play "A&R man" for you...that's Artists and Repertoire in the music biz-the guy trolling the clubs night after night looking for new talent. We scour the landscape seeking the corporate equivalent of "artists" who focus primarily on running a quality business. Unlike the music business, it's not glamorous, but with a disciplined approach and a little hard work, we think it pays off. When it comes to investing your capital, we'll take hard work over glitz and glamour any day.


Past performance is not a guarantee of future results.
Results are presented net of fees and include the reinvestment of all income.

     

2013 Triad Investment Management, LLC