1. Thursday, July 6th, 2017
    into the workshop

    Sometimes you just need to get yourself into the workshop to explore new possibilities.

    Last week, I had the chance to attend the CFA Institute’s Investment Management WorkshopCFA Institute | Here is the website for this year’s workshop. at Harvard Business School.  This was the fiftieth year for the program.  (Amazingly, Wally Stern, one of the founders, has been in attendance all fifty years.)

    Billed as “Strategic Decision Making for the Investment Executive,” the workshop brought together investment people from around the world who hold a variety of functional roles in vastly different kinds of organizations.  I think I was the only sole proprietor and was definitely at the “well-aged” end of the spectrum.

    There were around seventy participants.  The program uses the case method, with classes led by Harvard professors.  (I appreciated the opportunity to see them in action; it helped me to think about how to lead my own workshops on due ... continues

  2. Thursday, June 1st, 2017
    precision farming

    I recently came across a report, written almost a year ago, by a group of Goldman Sachs analysts.  Part of a series on “Profiles in Innovation,” it is titled “Precision Farming: Cheating Malthus with Digital Architecture.”Doc Drop | At the time of this writing, the report is available online via this site.  (If that doesn’t sound interesting to you, be patient.  The point I will try to make is a broader one about the investment world.)

    The cover of the report explains that its authors “explore how agriculture offers fertile ground for a confluence of technology trends, from sensors and the Internet of Things to drones, big data and autonomous driving,” asserting that precision farming can lift crop yields 70% by 2050 (and that a number of companies stand to thrive as a result).  That would extend the rise in food production which started in the 1800s with a sustained increase in acres planted, continued with mechanization in the following ... continues

  3. Tuesday, May 2nd, 2017
    surprisingly popular

    For the first four years of this century, I taught at the University of Minnesota’s Carlson School of Management.  The classes were made up of MBA students who managed real-money equity and fixed income funds that had been established by the school (now totaling around $35 millionCarlson School of Management | The students working on the funds now include undergraduates as well as MBAs.).

    In addition to learning about the operating aspects of the funds, the students wrote in-depth reports and gave presentations to a group of industry mentors about investments that they wanted to make.  (A recent experience as a judge at the CFA Research Challenge Americas competitionFreezing Assets | Here’s a piece that I wrote about that competition (and the importance of good communication skills in presenting research ideas). reminded me of those student presentations.)  The class sessions that were a part of the program usually included a discussion of a recent development in the ... continues

  4. Tuesday, April 25th, 2017
    site visits

    In my work as a consultant advising investment organizations, I generally get access to the people that I would like to interview and am able to see the things that I would like to see.  That degree of openness is uncommon for others doing site visits (for the purpose of evaluating an investment in company, for example, or the selection of an asset manager), who face a more daunting challenge.

    While those visiting are hoping for helpful transparency to aid in their analysis, those being visited are also trying to manage the encounter to their advantage.  One side is trying to create a narrative and the other should be focused on cracking it.the research puzzle | I wrote about creating the narrative versus cracking the narrative in this 2014 piece.  The success of a site visit by an analyst depends upon how that struggle unfolds.

    Sometimes, virtually all of the interaction takes place in a conference room, with a limited number of people involved, and much of the information is ... continues

  5. Monday, March 13th, 2017
    circles of risk

    In October 2009, McKinsey Quarterly published an article with the intriguing title “Risk: Seeing around the corners.”McKinsey Quarterly | It was written by Eric Lamarre and Martin Pergler.  A few months earlier, the world was convulsed by the financial crisis, so the title that accompanied the graphic below — “Companies are susceptible to interconnected cascades of risk” — seemed obvious.

    mckinsey risk

    The article was written for the leaders of companies, so the risk triggers identified are oriented to the bottom line of company operations.  That framework could just as readily be used by a fundamental analyst at an asset management firm who is trying to anticipate the affects of various risks on the companies she covers.  The listed risks are all over the place:  some slow-moving, others that can show up overnight.  Depending on the business models in question, they could be negligible in potential impact for one firm and devastating for another.  And, ... continues