How to Identify Winners, Beating the London Whale, and an Interview with Mitt Romney-

Success is not easy, and it is not supposed to be easy.  The whole world admires and embraces winning, and people are rewarded for it, in many instances, far more than they should be.  Failure is not tolerated, and in society today, ridiculed.  However, what most people don't quite get, is that success is born from failure, if a person can learn from their experiences.  So how does one identify people or businesses, or entities which are going to be successful?  What qualities should you look for?
1)  Leaders who are bold and not afraid to lose.  It is easy to find people at the top who are always hedging their bets.  Hedging is a good strategy, especially if you have large gains.  However, to be a big winner, you need people at the top who have a bold plan about what they are going to do, and how they are going to do it.  One such leader is Howard Schultz, the CEO of Starbucks.  I can remember listening to a presentation by him when their stock prices was way down in the dump.  Their strategy was impeccable, and they knew exactly what they had to do.  Not once did their strategy change.  Over time, the company executed and the performance spoke for itself.  Shareholders get rewarded, and the success is played up in the press.  Schultz and his team learn from their mistakes, and are applying those lessons to all areas of the business, in countries across the globe.  If the stock gets pounded again, believe me, I buy a lot more.



2)  Leaders who embrace the challenge, and stick with the task all the way from start to finish.  Many people hope they get an opportunity with a successful business or organization.  However, most often, the real big chances one has are in situations which look very bleak.
I am very familiar with the head coach of the Oklahoma City Thunder, Scott Brooks.  Mr. Brooks has a background which anybody can and should admire. He was not drafted out of college, played a year in the CBA, and made the Philadelphia 76rs when they had Charles Barkley and Maurice Cheeks.  After playing 10 years or so in the NBA, he wanted to coach and had to start by being an unpaid assistant in something called the American Basketball Association.  He landed a job with the Denver Nuggets as an assistant, and then moved to Seattle to work for PJ Carlesimo.  The team then moved to Oklahoma City, and Carlesimo was fired twenty or thirty games in after losing every game by nearly 20 points.

Brooks is given a chance to coach the team as an interim coach, which he embraced.  The team wins 20 or 25 games that year, and the franchise rewards him with a 3 year deal to coach the team permanently.  OKC wins 50 games in his first year, and has now made the Western Conference Finals two years in a row.  Mr. Brooks takes advantage of his opportunities, and they have a heck of a chance to win the NBA championship.  He played young players like Russell Westbrook, Kevin Durant, Serge Ibaka, and James Harden and has stuck with them, sometimes suffering losses which were difficult.  Now the team is poised to reap the rewards of those lessons, possibly for a very long time.  A big thing Brooks has done is to emphasize the essential habit of trying to improve each day.  If you get better every day, over the long term, it adds up to tremendous improvement.
 

3)  Leaders who are building for the future, as well as executing today.  You should look for organizations who are strong today, but have large ambitions for how to go about growing in the future.  I look for companies who are investing in the largest countries in the globe- China, India, Brazil, Russia, Indonesia, etc, as a way to grow for the future.  You want companies or leaders who place a large emphasis on positioning for the path going forward.  You want to see what plans are in place, and how the group is executing versus those plans.  Many talk about their plans, but you don't want talk.  I want to see action- partnerships, agreements, new stores, new products, goals for next year, three years, five years, etc.  A great example of a company which invests in the future is IAC Interactive- led by Barry Diller (yes, full disclosure, my clients and I own shares in IAC).  Diller is investing in the future, and has his hands in a lot of pots, across the globe.  Will they all work out?  No, but he does not need them to.





Nice story in the NY Times about how JP Morgan got unseated by a smart trader-
http://www.nytimes.com/2012/05/27/business/how-boaz-weinstein-and-hedge-funds-outsmarted-jpmorgan.html?pagewanted=1&_r=1&ref=business

Great Interview by Peggy Noonan with Mitt Romney-​http://online.wsj.com/article/SB10001424052702304707604577424642695167400.html

Mobile Shopping is a huge opportunity-​Mobile Online Shopping Holds The Real Opportunity In Mobile Payments

A massive difference in global gas prices-​http://www.bloomberg.com/video/93419911-where-in-the-world-is-the-cheapest-gas.html

Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital.
As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charterholder.

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