After earning an M.B.A. at Washington University in St. Louis, Fred taught accounting and finance at several universities. His experience in the academic world provided Fred with knowledge that he draws upon on a daily basis in the management of our firm as he analyzes the financial statements of the companies that we own and others that we are considering for investment.
Our firm has a deep respect for unconventional thinking, and a correspondingly deep fear of thinking the way the crowd does. We do our best not to succumb to conventional wisdom in our selection of companies when constructing a portfolio. We also try to respect the intelligence of our clients by writing well-constructed letters to them, trying hard to be witty and informative and to avoid the use of soporific jargon.
We are, if you will permit us to surrender to Wall Street slang, an equity or common stock shop. Of course we manage fixed income --- instruments such as U.S. treasury notes and bonds --- but our experience, our passion and our edge, we believe, is managing positions in common stocks, digging deep to discover what is important but often misunderstood about the publicly traded companies that comprise the portfolios we manage for our clients.
For example, many investors are unaware that Stericycle (NASDAQ: SRCL) one of our holdings, is ten times the size of its nearest competitor. This fact you will not find in any documents that Stericycle has filed; we discovered this in a long conversation with the company’s chief executive officer shortly before we took our position in Stericycle at an adjusted price of twenty three dollars and twenty two cents in August, of 2004. (As of the close of trading on January 23, 2008, Stericycle stood at fifty seven dollars and twenty five cents.)
What got us interested in Stericycle was nothing complex, but instead an observation made over many days. Watching fellow health club members at the St. John Health Club in Tulsa shave each morning and dispose of their blades and razors in a plastic tub led to this question: which company removed the plastic tubs and subsequently sterilized them, turning them into fine particles of waste? The answer I found, after making a few inquiries at the St. John Health Center, was Stericycle.
In this example, innovative thinking and a fresh perspective on everyday life led to a question, which then led to a profitable investment opportunity. This line of thinking is the foundation upon which we base our business and our investment philosophy.
The business of investment management is centered on seeing who can get to valuable information first, legally, and then use this information in a street smart method for clients.
The purpose of the game is not, contrary to what professors trapped in protected and unreal walls of ivy believe, to make things complicated, but to make things simple, and that includes investing clients’ money and then telling your clients through fun to read and informative letters how you have invested their money so that they can understand what you have done.
Our record shows that we know how to play the game. We know which information is valuable, and how to get it.
For more information on how we manage money for affluent individuals, contact Meredith Bohot at 918-743-5959 or e-mail mnb@fredricerussell.com.