“You’re not going into the meeting wearing that thing!”
After the year we’d had in 1998, my phone was ringing off the hook.
Barron’s had just listed the return results of advisers for 1998, and my money management firm was at the top of the list.
The past few years had been good ones for us. I was getting calls from investors all around the world. One was even flying in from Paris just to meet me.
But this hadn’t always been the case…
A few years earlier, I’d hired a business development person — a fancy name for a salesperson. I’ll call him George.
George’s job was to use his contacts to get me in front of allocators that could throw $5 million to $10 million my way.
It was notoriously hard to get appointments with them when I was first starting out.
Allocators are firms on Wall Street that give out money to managers. I’d left dozens of messages with some of them over the years. Now, they were calling me for appointments.
George was getting our name out there on Wall Street.
And when we got in front of our main target, I remembered a key lesson that has guided my investing to massive profits…
Time to Make a Splash on the Street
Our Barron’s ranking had come out over the weekend, and George called me early Monday morning.
“Charles,” he said, “I harpooned the whale!”
We’d been trying to get in front of a certain Wall Street allocator firm for years. George had exhausted all of his contacts in trying to get us a meeting. But nothing ever panned out.
The firm’s minimum allocation was $5 million.
While the money was great, having it allocated to us meant we’d passed the test. If the firm gave us money, others would follow.
Because as much as Wall Street takes pride in its independent thinking, it always ends up playing follow-the-leader.
After a few back-and-forth calls, George locked down a meeting — two weeks later, on a Wednesday at 4 p.m.
Over the next two weeks, I worked on my presentation. I made sure all the charts were perfect and that my pitch was laser-focused.
I also made sure my Allen Edmonds shoes were spit-shined and that my custom-made suit was pressed.
This meeting was big. If all went well, it would catapult us into the big leagues.
The morning of the meeting, I was as nervous as a kid on his first day of school. I knew how much was riding on this meeting going well.
Life boils down to just a few precious moments, and this was one of them.
Go Big or Go Home
That bone-chilling day in New York City, I met George in the lobby. On the elevator, George had me review the pitch one more time.
Upon our arrival, we were escorted to a private waiting room with refreshments. While sipping tea, my watch started to buzz. It was 4 p.m. — the time the New York Stock Exchange closed.
My watch had five alarms. It rang when different stock markets around the world closed. My watch was a Casio on a plastic watchband.
George almost hit the ceiling when he saw it. I’d never seen him lose his cool before. “You can’t go in there and ask for $5 million while wearing a $50 watch!”
George and almost everyone else I knew on Wall Street had expensive watches.
It was a sign that you’d made it. Those at the top of the food chain wore Rolex Presidents.
Back then, they sold for $18,000 and up. Today, they’re closer to $30,000.
Although I could’ve easily afforded one, I’d never cared to buy one. I didn’t have the need to show off to the world how successful I was.
Spending so much on something that wouldn’t have moved my happiness needle an inch seemed like a waste of money.
I told George: “First, my Casio cost $20. And second, I’m going to ask for $10 million.” I’d never lived my life needing to impress anyone, and I wasn’t about to start.
After trying to talk me into putting my watch in my pocket, he gave up. He wasn’t too happy about it either.
Clothes Don’t Make the Man
The meeting went well — much better than we’d expected.
I like to think my presentation made the difference. But the firm had been watching our performance for a few years.
It had done its homework on us before we’d ever stepped foot in the office. The meeting was just a formality.
A few weeks later, I received a fax. The firm had agreed to an allocation of $10 million.
Twenty years have passed. And since that meeting, I’ve met heads of state and billionaires. I’m not a flashy type of guy, and I’ll never pretend to be.
I’ve always been myself and I have never put on a show — what you see is what you get.
Maybe that’s why I’ve also looked to investing with CEOs who seem to lead their lives in the same way. I’ve found that those CEOs end up being the wealth builders.
The way I figure, if somebody is too busy and focused on making an impression with their appearance, they’re not busy and focused enough on running their business.
Warren Buffett is a tightwad and still drives his own car to work. Jeff Bezos works from a “desk,” which is nothing more than a door mounted on four pieces of wood. And he’s proud of that, too.
The combined wealth of these two men is greater than Portugal’s gross domestic product.
They don’t have the need to impress anyone with their mansions or yachts.
Instead, they let the results of their businesses do the talking.
Buffett takes pride in investing in so-called “boring” businesses. He should. They’ve been his best-performing stocks over the years.
This includes boring companies from the likes of soft drink giant Coca-Cola to financial service powerhouse U.S. Bancorp.
These companies won’t win any razzle-dazzle awards, but they do provide fantastic returns for the long haul.
Steady. Consistent. Profitable.
I Look at the Management Team — and You Should Too
As I explained in one of my recent articles, I look closely at the management team.
I’m not interested in managers who manage their business for quarterly earnings.
I want to be partners with managers who take a long-term view and think in terms of decades, not months.
Those are the ones who focus on increasing the worth of their business and returning cash to shareholders.
The information that increases shareholder value is what should dazzle investors.
Bruce Flatt of Brookfield Asset Management is one such manager. Under his watch, shareholder equity has increased from $5 billion to more than $88 billion.
From February 1, 2002 — the day Flatt became CEO — the stock price jumped from $2.37 to $42.36 as of January 29, 2019. That’s a 1,682% increase.
In that same period, the S&P 500 Index increased by 212%.
These companies are golden opportunities for investment, and I’ll be providing plenty of examples that meet my criteria in my upcoming newsletter.
All my best,
Charles Mizrahi
Senior Analyst, Banyan Hill Publishing