Welcome to the Occupation

Well I just flew in from Wall Street and boy are my arms tired!

My wife and I made a brief trip up to NY / NJ so that I and the money manager I consult for could get some face time. My last visit just happened to coincide with the Flash Crash. I was all about asset allocation back then, after my candidacy-so-far in the CFA program had put the fear of God into me concerning any ability I thought I might have had to properly analyze financial statements.

These days I’m transitioning back to the land of the concentrated portfolio, searching for businesses that have put the fear of God into their shareholders by some recent slip-up, and therefore can be had on the cheap. If I can find a high ROC business with a low EV/EBIT and some sort of competitive advantage, I’ll put a lot more than my standard 1%-of-my-assets into the idea. I’ve since graduated to 5%!

We spent 24 hours in NYC first – staying with friends who actually live & work in the financial district, so Occupy Wall Street was only blocks away. We strolled by and gave it the old look without looking like we’re looking approach of introverts. I was amazed at how small it was – maybe a couple hundred people creating a tent city on a plot of land about the size of the almost-acre our house sits on. It was mostly quiet except for one guy and his mohawked friend shouting at passersby (presumably businessmen) to “Don’t Be That Guy!” “Don’t Be That Guy!” “DON’T BE THAT GUY!”.

I half got it, half didn’t – about the same experience I have when viewing conceptual art. My wife spotted a mysterious truck parked nearby. Look but don’t look…

Just blocks away our attempt at a pilgrimage to the famous bull statue were met with barricades and police cars. A glance down the street revealed an angry mob swirling in front of Federal Hall. It was a full-fledged riot complete with fistfights and things being set on fire. Not anarchists & occupiers this time though, but actors filming what we were told was “Magnus Rex”, which we later learned to be the top secret code name for the next installation of The Dark Knight. It was pretty convincing, have a look…

Afterwards we sipped a quick coffee to the tune of Ghostbusters (of all songs!) at a Wall St. cafe before hopping aboard the SeaStreak ferry ride to New Jersey. It’s a beautiful voyage that passes quite close to the Statue of Liberty. But who could afford to pay the $50 round trip ticket to commute in from NJ to Wall Street every day? Hedge fund managers, of course!

The time in NJ passed quickly. Mornings my wife and I would walk from our nice room at a local Jersey Shore inn in Atlantic Highlands to find breakfast. Then the guy I work for would swing by to pick me up on his way in to the office. It was a beautiful drive, taking us through the city of Sea Bright. Along the way he pointed out one huge waterfront property where a famous local hedge fund manager once lived with his wife… only to run into a second huge property of his a couple miles down the road where he died with his mistress “in a sort of Nelson Rockefeller situation, if you know what I mean”. On the trip home we’d pass the homes of other famous locals, Mr. Springsteen and Mr. Bongiovi.

Evenings our wives would join us for dinner – sometimes at their place and sometimes out on the town. It all felt more pleasure than business to be honest. On the way home from dinner one night, we passed the headquarters of the somewhat famous Tradeworx quant firm. The lights were still on and engineers still sat at their terminals, presumably HFT-ing in the after-hours markets or maybe just tuning the algorithms for the next day.

And before we knew it, we were back at Newark Airport doing the old iPad/iPhone charge-a-roo as we waited to go back to Florida. I spent the flight re-reading Greenwald and dreaming of finding franchise businesses trading at less than 4.5x normal EBIT. Not a bad way to spend a couple of days.