ABOUT
I’m a product of my experiences, and I’ve had the good fortune to learn from some very smart people who provided me with the opportunity to succeed.
Growing up in Nebraska I always read the newspaper articles about the brilliant investor in Omaha who still drove a Ford Taurus. Then one day, I was probably 19 at the time, I picked up a book in my grandma’s basement that my deceased grandfather had read at one time. It was a green and yellow book written by Benjamin Graham titled The Intelligent Investor. Inside the book was a collection of notes that my grandfather took. I proceeded to read the book every chance I could. At the time I was working my way through school as a delivery driver in Omaha. I recall ...More
sitting in the parking lot of Mutual Omaha reading about margins of safety and buying stocks as if you were buying the whole company. That was the seed that got me started investing. After reading the book I decided on finance for my major at the University of Nebraska – Omaha. Of all the books on my bookshelf, this copy of The Intelligent Investor is the most sentimental to me because it has shaped my life.
My first finance class was taught by a guy named Dr. Robert Benecke. He was older and a bit gruff, but his advice to “follow the cash” and treat “cash as king” was some of the simplest yet best advice I received. To this day, when I try to solve a fairly complex problem I think about that advice and work backwards from a simple stream of cash flows.
While I was in college I had the good fortune and opportunity to work as an intern in the investment division at The Omaha World-Herald Company, publisher of Nebraska’s largest newspaper. I was exposed to people applying the very things I’ve been reading about. This was my first value investing laboratory where I could apply some of the things I learned in school and in the investing books. After graduating from college I worked full-time in this company and the experience I gained was priceless. In addition to making investments in companies, I also was involved in the annual valuation of the company’s stock since it was employee-owned. I found it fascinating to see how these professionals determined the value of companies. This was really applying the discounted cash flow methodologies I’d read about for years. I remember thinking that it would be so easy to make money if a computer could just run a discounted cash flow on all public companies and buy the most undervalued (this was probably where FetchXL was conceived).
It was around this time that one of my favorite professors from college, Dr. Graham Mitenko, suggested I take a look at the CFA program. After a brief review of the curriculum I enrolled for the Level I CFA exam. The CFA exam is a self-study program that requires a candidate to pass 3 exam levels. There were only a handful of candidates taking the exam in Omaha at the time and I thought there should be a better way to collaborate with other candidates from around the world so I started my first company, AnalystForum, in 1999.
A few years later I started a new job in the development and acquisitions group of MidAmerican Energy, the Berkshire Hathaway subsidiary run by David Sokol at the time, where I really learned Excel. This was probably the toughest job I’ve ever had and it did two important things for me. First, I learned a lot about spreadsheets and building financial models which are the basis for almost every investment I make today. Second, it made everything else I did after that job seem easy. I’ve never met Warren Buffett but the closest I’ve come is while working at MidAmerican Energy and I regret that I did not introduce myself at the time. I was working on a project that required the interest rate as quoted in The Wall Street Journal so I walked up to the lobby to get the Section C. Unfortunately, there was an older gentleman facing the other direction reading the only copy in the lobby so I started walking up the him to see if I could take Section C. About 5 feet away I realized that I was about to take the Section C from Warren Buffett so I turned around and found another copy somewhere else in the office. In hindsight it was the perfect chance to meet a legend and I should have taken advantage of the opportunity to introduce myself.
My next professional role was at a private equity firm called McCarthy Group where I worked on making investments in privately held companies in the $25-100 million range. The focus on buying companies, not shares, was very valuable experience. This approach is the foundation for the public company investing I do. While building financial models at McCarthy Group I started to think more about the need in the market for a cost-effective Excel add-in for retrieving financial data. After 3 enjoyable years at the firm, I decided to launch my second company called FetchXL to capitalize on this opportunity.
Fast forward a couple of years when my phone rang about moving to San Diego to help build a new investment group. My two companies were doing well and were requiring less and less of my time so I moved west, ironically, to help start West Partners. At West Partners I make investments in private companies, real estate and infrastructure for a wonderful family who sold their business in 2006.
That’s a long-winded autobiography but it’s these experiences that have shaped the way I approach investing in public companies.
