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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.


Bloomberg


FIM Performance History (Growth)


Finding Companies for Investment


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


Approach to Investment Analysis


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


Schlumberger -- SLB


Core Labs (CLB) vs. SLB


Apache -- APA


EOG vs. APA


Kinder Morgan LP (KMP)


Plains (PAA) vs. KMP


Magellan (MMP) vs. KMP


Allergan -- AGN


Valeant (VRX) vs. AGN


Illinois Tool Works -- ITW


Middleby (MIDD) vs. ITW


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


McDermott International Inc. (MDR)


McDermott International Inc. (MDR)


McDermott


SXC Health Solutions, Corp. (SXCI)

Partial

Sale


SXC Health Solutions, Corp. (SXCI)

Partial

Sale


Catamaran


Digital River Inc. (DRIV)


Digital River earnings revenue


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.


Digital River Inc. (DRIV)


Digital River


Some Energy Companies with Excellent Management


Plains All American – PAA/PAGP


Magellan Midstream LP -- MMP


EOG Resources -- EOG


Noble Energy -- NBL


Core Labs -- CLB


Oceaneering Intl -- OII


Matador Resources -- MTDR


Some of Our Favorites


Wabtec -- WAB


LKQ Corp -- LKQ


Oceaneering Intl -- OII


XPO Logistics -- XPO


Polaris -- PII


Matador Resources -- MTDR


EPL Oil & Gas -- EPL


Bonanza Creek -- BCEI


Questions?

Thank You

[email protected]://twitter.com/dowjeff


Stock Picks for 2013

Ansys ANSS +30% Liquidity Svcs LQDT -45%

Bonanza Creek BCEI +56% Middleby MIDD +87%

Cardtronics CATM +83% Magellan MMP +47%

Campus Crest CCG -23% Oceaneering OII +47%

Core Labs CLB +74% Plains LP PAA +14%

Clean Harbors CLH +9% Shuffle Ent SHFL acquired

Catamaran CTRX +6% STAG Industrial STAG +13%

Digital Globe DGI +68% Titan Machinery TITN -28%

HMS Holdings HMSY -24% Monotype TYPE +94%

ITC Holdings ITC +25% Valeant Pharma VRX +85%

Total +36%


Stock Picks for 2014

American Electric AETI -32% Noble Energy NBL +2%

Ansys ANSS -4% Oceaneering OII -10%

Ardmore Shipping ASCP -13% Plains GP PAGP +4%

Black Diamond BDI.TO -1% Polaris PII -5%

Catamaran CTRX -7% Power Integ POWI +14%

EPL Oil & Gas EPL +6% ResMed RMD -6%

Genesee & Wyo RR GWR +4% STAG Industrial STAG +14%

ITC Holdings ITC +9% Wabtec WAB +10%

LKQ Corp LKQ -15% Westlake WLK +12%

National Inst NATI -8% XPO Logistics XPO +23%

Total -1%


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