Below is an exerpt from my book “Billionaire in Training.” This is a sample of the teachings that I gave at Prairie Meadows on Wednesday, October 24.
So often I meet people who think they’re in business for themselves, and yet by my definition, they’re not. Let me explain. read more
Information: At this first stage being information the entrepreneur needs education in his choice area or interest. “Education” is a broad term that can have many meanings, but it is generally defined as the process of learning and acquiring information.
Entrepreneurship is a system of being self-employ with no breakdown as being condition with the problem, situation or challenges of unemployment in a given system. An entrepreneur is an agent of change.
At least one ugly duckling on Wall Street didn’t grow up into a swan so much as an 800-pound gorilla. Google (ticker: GOOG GOOGL) made many analysts scratch their heads back in the day.
A search engine? What does that produce? Isn’t Yahoo! (YHOO) already doing that? Maybe Larry Page and Sergey Brin could Google “how to make money with a search engine” – at least that would be a start.
“In retrospect, Google was the ultimate ugly duck in that it was a nontraditional kind of business,” says Yale Bock, president of Y H & C Investments in Las Vegas and a portfolio manager on Covestor. “You might even include any Internet business in that category.”
Then again, some of those don’t even get the chance to hatch properly, let alone become duck-ugly.
Still other ventures in any sector grow into odd ducks – the kind of business so unglamorous or unusual, it’s hard to imagine anyone getting excited about them. Bock owns stock in Collectors Universe (CLCT), which authenticates and grades autographs and sports memorabilia, along with silver and gold coins. While it might be a lot more hip to invest in the coins themselves, Bock has his eyes on a different kind of treasure. “It’s a fabulous business with healthy operating and cash flow margins,” he says.
Odd or ugly, if you’re looking to hatch a nest egg, or money that (groan) ducks under the radar, here are seven more suggestions for places to look.
Secondhand Las Vegas show tickets. There’s something sort of melancholy about a company that deals in resale show tickets on the Las Vegas Strip. But Bock believes that TIX Corp. (TIXC) could easily parlay its Las Vegas presence into something bigger. Indeed, the stock has been flat over the past few years, with majority shareholders owning a substantial chunk. “They’re not a big grower,” he says. “But the model could very well be replicated in New York or London. … It could also potentially be a buyout candidate for something like StubHub or Ticketmaster.”
Treatment of obscure diseases. Summing up the core business of Apple (APPL) is simple and sexy: Apple makes computers, smartphones, tablets and MP3 players. And then, there’s Alexion Pharmaceuticals (ALXN). “Our analyst Gonzalo Arroyo had to repeat three times why we bought the stock: ‘Alexion makes Strensiq to treat hypophashhatasia'” – a rare bone disease. So recalls K.C. Ma, director of the George Investments Institute at Stetson University in DeLand, Florida. Stocks may get bypassed “even when they have product or company names nobody can pronounce or remember,” Ma says. Now say this three times fast: Money, money, money. ALXN stock is up more than 7,000 percent since its initial public offering 20 years ago.
Pull a stock out of the trash bin. Talk about a butt-ugly duck: Microsoft Corp. (MSFT) has made some highly publicized gaffes over the years, from missing out on the smartphone revolution to the bungling of former CEO Steve Ballmer, who left in 2014 – but not before earning the title of world’s worst CEO from several prominent publications. But it appears Microsoft is back, up 67 percent since 2012. “Microsoft was once in the trash bin of most investors: look at it now!” says Kim Forrest, vice president and senior equity analyst at Fort Pitt Capital Group in Pittsburgh. “We always understood Microsoft to be mainly focused on serving businesses; investors forgot that in the heyday of the company. It’s back now as more investors understand its customer base and the likelihood for growth.”
Combine macaroni and cheese with ketchup. Kraft Heinz Co. (KHC) sounds like food fit for a swan, though Mondelez International certainly didn’t see it that way when it spun (or flung) Kraft Foods Group off in October 2012. “Mondelez perceived it as being comprised of slow-growth brands such as Jell-O, Oscar Meyer, Velveeta and Capri Sun,” says David Kass, clinical professor of finance at University of Maryland’s Robert H. Smith School of Business. Then began Kraft’s steady climb, to the point where it nearly doubled before its July merger. “This ‘rejected’ business attracted the attention of H.J. Heinz, with 25 percent of the new company being owned by Warren Buffett’s Berkshire Hathaway (BRK. A, BRK. B) and another 25 percent by 3G Capital of Brazil,” he says. And by the way – up until the merger, Kraft Foods Group outperformed Mondelez. Sometimes the ugly duck gets the last quack.
Put your money in barcodes. Zebra Technologies (ZBRA) makes for quite the odd duck: Based in north suburban Chicago, it makes the vertical bars companies use to track items in their supply chain. What’s more, it’s had a slide more worthy of a penguin on a slope, down 35 percent since mid-June. But on the whole, it’s still up 23 percent over this time last year. And it stands a solid chance to grow, having acquiring its next-largest competitor from a Motorola Solutions (MSI) subsidiary. “It’s reaping the benefits through additional market share and efficiency gains,” says G. Mathis Conner, portfolio manager and quantitative value investor at the Conner Management Group in Houston.
Under-the-radar pharmaceutical research. Gilead Sciences (GILD) is another biotech company that’s escaped a good deal of public notice, as the message on its website sounds like a cryptic line Inspector Clouseau would read aloud in a “Pink Panther” movie: “Gilead Sciences is a research-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in areas of unmet need.” Gilead has been quite the balm for investors, its stock shooting up more than four times in the last five years. “After shifting focus to develop treatments for pulmonary disease in 2006, Gilead Sciences has seen tremendous growth,” says Kyle O’Dell, managing partner at O’Dell, Winkfield, Roseman & Shipp in Englewood, Colorado.
Aircraft castparts. What is a castpart anyway? No, it’s not the starring role in “Sweeney Todd” – and if only it were that exciting. Precision Castparts Corp. (PCP) makes machined airframe components for aerospace applications and aircraft engines. Yawn. And it’s been flat as a jet wing over the last year, up just 6 percent since mid-October 2014. Double yawn. But try yawning Buffett’s face. His deal in August to buy the company was the largest of his career at $37.2 billion, and shot the stock up 21 percent in a single trading day. “Precision is poised to continue to be a critical supplier to Boeing (BA), Airbus and engine makers,” says Michael Schwerdtfeger, managing director at Chapman Associates Middle Market Mergers and Acquisitions in Long Beach, California. But treat Precision more like a sluggish biplane than a slick 757, as Buffett’s known to invest for the long haul.