Growing Rich - Arabictrader.com

GROWING RICH WITH GROWTH STOCKS
But it wasn’t until after the announcement was made that their decision
to hold onto the cash made sense. Several of the companies
I’ve invested in have been bought out. They’re good businesses and
are attractive to others. If they are having problems, that usually
makes management more willing to sell out. It happened to Tambrands
in 1997. The company was temporarily struggling so it allowed Procter
& Gamble to acquire it.”
THE DOWNSIDE OF MEETING MANAGEMENT
When Robert Stovall first started in the investment business more
than 40 years ago, he, too, spent a lot of time visiting companies in
person before committing any of his cash for purchase. In many cases,
he met with management and got to know them face-to-face. Occasionally
he even put in his own two cents about what direction he
thought the company ought to be heading. However, Stovall has since
changed his attitude about the benefit of forging such close relationships.
“I found it doesn’t always necessarily pay to get tightly involved
with management, because when they make a mistake, you are
sometimes left saying, ‘He’s such a great guy, I’m sure he’ll straighten
this out’ when the problems are really beyond easy repair,” he explains.
“I guess you could say I’m an agnostic when it comes to the
value of becoming intimate with management. I don’t restrict myself
to buying stock only in companies where I have met the people in
charge. I think that’s too confining. Sometimes waiting to meet them
costs you an opportunity to get in or out at an attractive price. Besides,
I’ve been lied to by some of the finest names in north America over
the years. I know you can be misled or blindsided by what you think
are close connections, but really turn out to be no connections at all,
or even short circuits.”
That’s not to say Stovall completely ignores the track records of
executives in the companies he invests in. Quite the opposite. He pays
close attention to what they’ve done and to what they say they’re
going to do in the future. He just isn’t convinced that it’s necessary
to meet them face-to-face in order to make an informed decision
about whether to become an investment partner.
Neither does Elizabeth Bramwell. She utilizes conference calls extensively
and finds analyst meetings with managements to be very
helpful. This is one reason she decided to locate her firm in New York’s
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