by Bill Miller, Portfolio Manager of Legg Mason
I want to emphasize that if you go into capital markets, you will realize that portfolio managers have ultra-short attention spans. And there is basically no successful portfolio manager of my acquaintance who has ever wanted to hear a story longer than ninety (90) seconds. Peter Lynch, when a senior analyst came into a pitch him a stock, would turn on an egg timer for 90 seconds. The analyst had to complete the presentation within 90 seconds and be out of there.
If you can’t get the portfolio manager’s attention within that time with a convincing case then they will assume that you either don’t have a convincing case or you are not able to articulate it, and you should go back and figure it out.
Stories not Atoms
The world is made of stories, not of atoms. Most people think of the world as analyzing atoms and its constituent parts, and then I am going to figure out how to value it and then describe it. The alternative way to think about it is to construct a convincing story. Take all your material together and construct a convincing story.
If you speak to a portfolio manager, the best thing to say is, “I want to talk to you about Homestore (HOM). It is at $2.25. The 52-week range is $4 to $2 and the all time high was $100 in 2000. I think it is a buy for the following five reasons:
The stock is trading a $2 and change. I think it is worth $6 or $8 or whatever. Here is why I think it is worth that. Here are the risks. Present no more than five positive points, three negative points, and what the business is worth. Then you are done.