Today’s post comes from a guest blog, New Rules of Investing:
Institutional investors have powerful tools at their disposal to screen through reams of data. Part of the institutional investment process entails screening through thousands of securities looking for a needle in a haystack — stocks that fit certain investment criteria. From thousands of stocks, analysts can filter through a couple of hundred that fit these so called screens. With a couple of hundred stocks in hand, analysts set out to do the hard work analyzing these companies, comparing them to one another, speaking to management and whatever else hedge fund and mutual fund 
analysts do when looking at prospective investments.
If I’m a value investor, I’m probably going to use some metrics that focus on Return on Capital (RoC) or Return on Equity (RoE) and Earnings Yield (E/P). Growth investors might like to compare the price/earnings ratio (P/E) to the actual growth prospects of the stock in question. There are literally thousands of things to look at. So, where to start?
As we discussed in the “Piggybacking the Pros“, the Internet is a wonderful place to get information on stocks. From monitoring actual moves that uberinvestors make to seeing what your peers think of certain firms, the information is out there. You just need to be able to find it. Investment Screening 2.0 is all about using screening criteria from super investors like Warren Buffett to find the next big stock. Think of it as tapping the world’s greatest minds to see what they think of a given investment.
John Reese, a well-regarded entrepreneur with degrees from the two best schools in Cambridge, MA, has created a premium service that is the product of many years of research into the strategies of super successful investment managers. Having devoured numerous investment books and interviews with the world’s best investors, Reese embarked on an ambitious project to computerize this information. His firm, Validea, has created an algorithm capable of analyzing thousands of stocks according to differing investment strategies ranging from Fidelity’s Peter Lynch to Berkshire Hathaway’s Warren Buffett and applies screens to the overall market to find stocks that would fit these uberinvestors’ criteria.
John Reese joins New Rules of Investing for an exclusive interview. (Continue »)
We recently had a chance to interview Maureen Wolff-Reid (bio at the end of the article), a pioneer in the investor relations and corporate communications industry. She is a past chairman of the National Investor Relations Institute (NIRI) and President and Partner of Sharon Merrill Associates in Boston. This post originally appeared on New Rules of Investing.
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It seems in regard to newer channels of communication, Reg FD has led to a diminishing in frequency of communications. In spite of leveling the investment playing field, is this a long-term good for investors?
Maureen Wolff-Reid, President: Reg FD has largely succeeded in leveling the playing field while maintaining the frequency of communications between companies and the investment community. This is a long-term good as investors have a higher degree of confidence that they can make educated investment decisions with access to the same information as any other investor.
What’s the communication plan for companies in the future with new technologies like webcasting, XBRL, blogs, Facebook and Twitter?
MWR: Webcasting has been a ubiquitous tool for companies to reach out to investor audiences for many years, and XBRL soon will be a requirement for all public companies. It remains to be seen how prevalent some of the new technologies will be, although blogs are being used increasingly by both investors and public companies. The next generation of investor communications is still in its early stages. In the future, online resources such as Facebook, MySpace and Twitter may offer opportunities for groups of investors to exchange ideas.
Are execution issues with wire services perpetuating a form of selective dissemination for paid subscribers to these services? Will companies follow Sun’ Microsystems’ lead and go direct to EDGAR in the future and bypass the wires?
MWR: Wire services currently constitute full disclosure of material news. News releases distributed over a wire service are publicly available on the services’ websites and are sent to online resources such as Yahoo! Finance. Bypassing the wire services as Sun has done may offer companies significant cost savings; but there is a trade-off in the loss of potential visibility and opportunity to fully explain the news. In the future, posting to the company’s website might constitute full disclosure under the SEC’s guidelines and then companies may decide to simply post press releases on their corporate web sites in lieu of wire service distribution.
SeekingAlpha is providing free access to earnings transcripts. Is this something that individual investors will benefit from or are these reports somewhat arcane for most investors?
MWR: Quarterly conference call and investor conference transcripts have become a valuable resource for both individual and institutional investors. SeekingAlpha’s approach to publishing transcripts at no cost to the public is a great asset for individual investors, who previously had limited access. Very few people have the time to listen to a complete webcast or comb through the SEC filings of all the companies in their portfolio. Additionally, with more companies holding their conference calls closer to the 10K and 10Q filing deadlines, there are many calls being held at the same time. By making the transcripts available and easily searchable by keyword, SeekingAlpha is saving investors time and money, while helping them to make more educated investment decisions.
Thanks.
Maureen T. Wolff-Reid
President & Partner
Based in Boston, Sharon Merrill Associates has been executing award-winning programs and staying in daily contact with Wall Street and the media since 1985. Today, the firm is a nationally recognized investor relations and corporate communications strategic advisory firm serving public and private companies in a broad range of industries. In addition to providing Sharon Merrill Associates with leadership and long-term vision in her role as president, Maureen supports clients with strategic counsel, directs the agency’s operations and is active in business development. During her more than 20 years with the agency, Maureen has conceptualized, planned and implemented investor relations and corporate communications programs for a diverse array of companies across a broad spectrum of industries. A nationally recognized leader in the fields of investor relations and corporate communications, Maureen is a past chairman of the National Investor Relations Institute (NIRI) and is currently serving on the editorial advisory board of NIRI’s IR Update publication. She was a member of the board of directors of the organization for four years. She also is a past president and honorary director of NIRI’s Boston Chapter.
She is a frequent speaker on IR issues and has authored numerous articles for business publications. A noted expert on IR topics, Maureen’s comments have appeared in Bloomberg Magazine, CFO Magazine, CBNC, Compliance Week, FinancialWeek, Financial Times, Investor’s Business Daily, IR Update and Management Review. Maureen’s work at Sharon Merrill Associates has earned her awards from the Public Relations Society of America and Publicity Club of Boston. In 2005 she was named as one of the “Top 10 PR Specialists” in Boston by the readers of Women’s Business magazine. She holds a bachelor’s degree in communications from Montclair State University.
IsraelNewsletter.com had the chance to sit down with an amazing, young pair of college students who are leading an innovative initiative that will give college students hands-on exposure to the Israeli economy by learning and by doing. The TAMID Israel Investment Group at the University of Michigan is just the tip of the iceberg for this pair.
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Tell Us A Bit About TAMID Israel Investment Group.
Eitan Ingall, President: This whole idea started because Sasha Gribov and I are both the Presidents of Pro-Israel groups on campus at University of Michigan. Sasha is head of the Hillel group, American Movement for Israel and I am currently heading up a pro Israel political advocacy group called the Israel Initiative for Dialogue Education and Advocacy. We have both noticed a serious void in hasbara (Israel advocacy) on our campus in that there is a serious lack of sustained and substantive interaction with Israel. Sure, anyone can go hear a lecture or seminar for two hours, but what about interacting with Israel in a way that runs a bit deeper?
We also noticed that for all the hummus and pita we were providing the students and for all the guest speakers coming to campus to talk about Israel, no one was talking to the business students. No one was talking about Israel’s economy and speaking directly to the future Jewish business leaders of the world.
So, those two things—the combination of the lack of substantive and sustained interaction, coupled with a serious lack of interaction with Jewish business school students—were what drove us to establish this fund.
What we also understood, however, was that in order to attract business minded Jewish students to Israel, we had to reach them in their space. What are they interested in? What makes them tick? And how do we align these interests with the greater collective of Israel and the Jewish people?
What are their interests? investing and finance. So we came up with quite a simple way to align these interests with Israel—we created a student-led investment group that manages a portfolio of Israeli companies. It’s actually quite simple. These students are all joining investment clubs anyway. They want something they can slap on a resume and something that will give them real life experience with the investment landscape.
So, we said, how about we have them do all this while investing in Israel? Its quite a simple solution.
And so we created the TAMID Israel Investment Group.
The structure of the group is also very simple and is designed to target the specific interests of each student. The Executive Board is made up the fifteen most talented Jewish business minded students at the U of Michigan. We shouldn’t say only Jewish, we do in fact have a non-Jew on the board as well.
How does the board work?
EI: The board is broken down into 4 teams: investing, marketing and PR, IT and fundraising. The investing team has students who are incredibly well-versed in investing—some of them have already begun to manage money professionally. The marketing team is currently led by a girl who recently had a job with Walt Disney’s Marketing department. A member of the fundraising team was the president of his regional USY chapter and has raised tens of thousands of dollars.
The IT team has a few kids double majoring in Computer Science and business—they’re designing a highly advanced and interactive website for the group.
As you can see, we’ve made it a priority that each student is working in an area that interests him or her. This isn’t the usual, mundane form of Israel advocacy. What we’re trying to say with TAMID is, “This is Israel and all that it has to offer you. This is Israel’s economic environment.” Plain and simple. In a way that students can relate to and enjoy. TAMID brings a perspective on Israel that these students can fit in with their professional aspirations.
The board also has the opportunity to interact with four support bodies.
The Advisory Board is made up of top Israeli executives and fund managers who have commitment to interacting with students once every financial quarter. This gives students an opportunity to interact with Israelis who have built the economic culture of the country and will leave a lasting impression on the students.
The Resource board are American and Israeli lawyers and accountants who are working to establish and maintain the infrastructure of the organization
We are working with three U of Michigan business school professors who are overseeing the general operations of the group and are assisting with the educational curriculum.
We will also be working with Israeli students at Israeli universities to align our generation of business minded students. Students will have the opportunity to interact through various forms of media and will work together on various projects.
Please explain a bit about how it all works.
EI: There are three phases to the fund: Education, Investing, and Fund Management
During the educational phase students are engaged in a curriculum that teaches them about general investing and Israel-specific investing through a series of seminars, lectures, guest speakers and interactive activities. It is during this phase that students will have their first interactions with Israel’s economic landscape in an effort to prepare for investing.
Next, the students make the initial investment, and thus begin investing the portfolio.
We are in the process of raising $1,000,000 [ed. Fundraising activities are taking place through TAMID's channels. IsraelNewsletter.com is not party to these activities]. Professional Israeli account managers will manage half of this in order to reduce risk. These account managers, however, have committed to maintaining a high level of interaction with the students in order to teach them about the Israeli economic environment.
The other half of the portfolio will be managed by the Executive Board, led by the investing team. They are working to create a conservative growth investment strategy that will allow the students to interact with Israel’s economy. The students will use what they learned from the educational phase of the program coupled with their interactions with the professional account managers, to successfully manage this half of the fund.
For the duration of the program, students are actively managing a portfolio of Israeli companies. They are making day to day investment decisions while interacting with Israeli company executives to be constantly learning about Israeli markets. The Executive Board thus becomes fully engaged with Israel’s economic environment.
So if the principal of the fund comes from tax-deductible donations, not investments, what do you plan to do with the returns?
EI: The fund is a perpetual fund, hence the name TAMID. It stays on the college campus and the money stays in the Israeli market. Therefore, a large portion of the returns are re-invested in order to grow the fund.
The remainder of the ROI will be used to establish the TAMID Business Scholarship Fund, where we will be providing financial compensation for business minded students to work in Israel. We have begun working with Israeli companies to set up infrastructure to house 1-2 business students for an internship. Our dream is that instead of working one summer for an investment bank in Manhattan, students will come work in prestigious financial internships in Israel, which they can use to further their own professional aspirations.
How did you elect students to the board?
EI: We sent out an initial press release in February of 2008. After receiving an overwhelming number of inquiries, we set up formal interviews with the most qualified students over the course of the following two weeks. We then selected 15 of the brightest, most experienced students for TAMID’s Executive Board. It is a prestigious group of students. These are the students going on to top jobs in the American financial sector and working their way to becoming business leaders and top executives.
How is this an answer to divestment?
EI: The initial idea for the group actually came out of a response to divestment. As two leaders of campus pro-Israel organizations we knew resolutions calling for the divestment of Israel are brought before the regents of the University of Michigan. To counteract these resolutions in the past, students have launched pro-Israel flyering campaigns and invited high-profile speakers to campus to speak about Israel. However, we felt none of this was enough and we felt we could come up with something more creative and more effective that would have a profound impact on our generation of Jewish college students.
So, at 4am in the study lounge, we looked at each other and said: if they want to divest from Israel, we are going to invest in Israel. Not only are we going to invest in Israel financially, but are also going to invest human capital in the future of the State of Israel.
Do you see this as something that could work beyond the University of Michigan?
EI: Absolutely. We have purposely created an extremely scalable model—TAMID Michigan is just the pilot site. Within the next year there will be a TAMID UPenn, TAMID Harvard, and TAMID Northwestern. Within the next five years, there will be a TAMID National Organization which will be setting up sites at top universities across the U.S., each site managing its own $1 Million portfolio of Israeli companies. We are talking about millions of dollars being invested in the Israeli economy and hundreds of students having sustained, substantive interaction with Israel in a way that has never been done before.
What’s the end game?
EI: TAMID will lead a paradigm shift by creating a new status quo where business students across the nation are active stakeholders in the economic growth of Israel. This organization will be a bridge between the passions, interests and aspirations of American business students and the Israeli economy which, until now, had been inaccessible to these students. As such, TAMID will realign the mismatch of personal and collective by engaging the personal and professional goals of American Jewish business students. TAMID has made Israel’s economic landscape accessible to the full time student by utilizing the tangible incentives of professional opportunities, experience and success.
We are building a massive network of business minded Jewish students and exposing them to Israel in an unprecedented way. Our vision is create a sustainable, highly interactive ecosystem of businessmen working in symbiotically with Israel’s economic landscape. We are thus opening direct access to a pipeline of the next generation of Jewish philanthropists and cultivating the next generation of investors in Israel.
Why invest in Israel/what makes Israel interesting as an investment destination?
EI: Israel has a flourishing economic landscape. Whether it is in high-tech, life sciences or consumer goods, Israel is pioneering a business culture of entrepreneurship and innovation. Our goal is to get people to recognize Israel beyond just a distant place to support through donations and activism.
How do motivated college students in Ann Arbor research small cap technology firms in the Middle East?
EI: Thanks to research vehicles, companies and organizations on the ground in Israel that we have partnered with, the research will be easy and engaging for the students. Additionally, the University of Michigan has a state of the art virtual investment lab with advanced research programs, which the executive board will be using during the educational phase and to assist in fund management.
Disclaimer: IsraelNewsletter is not affiliated with the TAMID Israel Investment Group and this interview should not be construed as an offer or a solicitation for TAMID.
I’ve just begun writing about the New Rules but part of the thesis is that expert communities can and will play a bigger role in investment decisions and idea generations for savvy investors going forward. We’ve only just begun, as has MarketGuru, a new site focused on providing New Rules-type functionality for a community of experts. I had a chance recently to chat with the founder and CEO of MG, Gili Beiman.
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Can you tell us a bit about yourself?
Gili Beiman, Founder and CEO: I was the founder of the largest groups site in Israel, Tapuz, which we sold a few years back. lived in the States for 3 years. Like any good American, I opened an etrade account and 2 things stood out as problems in the whole data acquiring process, meaning trusted data and content that I could invest on:
- too much information: There is a ton of information out there. But if you don’t have a ranking system on all the content, I can’t really tell what to think – if I see a guy who’s writing a great blog on Apple, I have no idea whether he’s been right or wrong in his analysis. There was no rational order or hierarchy in this information.
- generic information: I find it interesting to know that the biggest source of financial content is via subscription newsletters, which is a $6.5 billion industry. What an anomaly to think that all this content is generic, meaning newsletters are making recommendations to people they don’t know. Your picks may be great but they can also be really risky — certainly not suitable for a retired school teacher.
So, where does MarketGuru come in? (Continue »)
