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Angus Geddes Fat Prophets

;

established 2000; thirty-five employees;

сл

I$5 million-plus turnover

Ш

almost freakish, about

CL

highly successful city businessmen.

Very often you find that before they applied their nuclear-powered brains to finance they studied quantum physics, built their own computers or wrote papers about how to solve Rubik's cubes, things that are incomprehensible to most people.

By the time he turned twelve, Angus Ged- des had memorised the names of every director of every company on the New Zealand stock exchange. Rain Man would have been proud. 'I was just fascinated by investing,' he recalls. 'I'd read every company report to soak up all the information I could. I read annual reports from cover to cover.' That same year, Geddes decided that the savings he'd put in the bank weren't returning enough interest. So he became an investor. 'In the early 1980s, interest rates in New Zealand were pegged at about 2 per cent, and I'd saved up a couple of hundred dollars.

I told I'd read every company

my dad, There has to report to soak up aN the

, r . information I could. I read

be a way of getting a ^ „

j^b annual reports from cover

better return on my to cover money. So we went

to the stockbrokers to open an account.' By the age of sixteen, Geddes had turned his $200 into $40,000.

'I made some extraordinary calls,' he says. 'And I had some luck. But I also had a good broker who gave me some good steers that chimed with my own judgment.' That was the era of Wall Street the movie, yuppies and the 'greed is good' mentality. But for Geddes, it was never about the money. He claims never to have aspired to big houses or flash cars. He drives an eighteen-year- old Mercedes 560SL which, he says proudly, has appreciated in value.

For Geddes, everything is about value.

He won't fly first class because he doesn't think it's worth it, but does fly business because it delivers comfort at a reasonable price. His investment approach is the same. He looks for out-of-favour companies that have been underperforming the market for an extended period and are, in his view, underpriced. Then he invests, waiting for a turnaround in sentiment to take the share price back up. The approach has served him well for two decades, although it took him six years to recover from the 1987 market crash.

In the early 1990s, Geddes travelled to London and New York and worked in stockbroking, gaining valuable experience that he put to good use when he arrived in Sydney in the mid-1990s. 'I took a job at a small brokers on full commission—no salary at all—and I hit theYellow Pages, cold-calling professionals like doctors, lawyers and accountants. I asked if they'd be receptive to good investment opportunities, and I would often leave them with a tip. They'd see the company do well, and that would get them interested. Many of those clients are still with me.'

At the time, Geddes says, he was a bit of a maverick: 'No one was doing that kind of cold- calling in Sydney—but I'd seen the guys on Wall Street doing the same thing. It's hard, but it worked. Within six months, I was writing $300,000 to $400,000 of business a year, taking home the best part of $200,000.'

Soon afterwards Geddes was headhunted by BT Financial, where he stayed for a couple of years before moving on to broker JBWere. His value- investing approach meant standing firmly against the trend. 'Back in 2000, when the technology bubble was inflating, everybody was piling into it. But I just knew it was going to crash. You see, I'd seen it all before, in 1987, when I lost a huge chunk of my own money that I'd spent half my life accumulating. That really hurt. And I could see all the warning signs again: hugely overvalued companies based on virtually no earnings, massive speculation, the madness of crowds.

It had gone crazy.'

While many of his peers were cheerleading for high-tech, 'I was advocating gold and energy stocks, both of which had been completely out of favour and were coming out of long bear markets. I think a lot of people thought I was a bit mad. It turned out to be a great call, because gold and value stocks such as energy companies did exceptionally well.'

Geddes tried to get his clients out of tech and into these value stocks, but was largely ignored. 'I showed them graphs of the '87 crash and the past and present Nasdaq index, and said the same thing was going to happen, but most of them were so sold on the tech story they'd just go and buy tech stocks through another broker,' he says.

That was a turning point for Geddes, who

found the experience so exasperating that he

decided to quit. 'I just thought that I'd be better

off backing my own

ideas: starting my It's tough as a ь :

stockbroker, because own newsletter and you're interacting with website where I can people's greed and fear, write my thoughts

which are very intense down and clients emotions.

can read it or throw it away, but I'm not going to go hoarse on the phone every day giving people advice they're just going to ignore. It's tough as a stockbroker, because you're interacting with people's greed and fear, which are very intense emotions. It can be exhausting, like banging your head against a brick wall, especially if you're a contrarian investor like me.'

Geddes set up his own independent research house and named it Fat Prophets. Thanks to some astute stock-picking, his small base of initial subscribers quickly expanded—to the surprise of some early nay-sayers: 'People thought it was crazy to call ourselves Fat Prophets, because it's a bit "out there" and not very conservative; they said investors wouldn't trust us. And they were probably right in the very early days, but we soon made some good calls and our reputation started growing.'

Although he had been earning good money for some time, Geddes says it wasn't until 2002-03, when the business had gained some momentum, that he made his first million—a combination of his personal share portfolio and the value of the business.

But his response was just business as usual: 'I certainly didn't stop and think that I'd made it, or that it was any kind of milestone.'

The business was so successful that Fat Prophets opened an office in London and now has a funds-management arm as well as a listed investment company with $50 million under management. Geddes has also launched a popular range of so-called separately managed accounts: preselected portfolios of shares for investors. And soon he wants to launch a hedge fund.

His mantra, 'There is no such thing as failure in business,' has made him fearless, giving him the drive to make Fat Prophets a truly global brand and the belief that he can. So what is Geddes investing in now? Not property, that's for sure. 'I sold my apartment in 2003 and have used the money to much better effect by investing in equities,' he says. 'You're better off renting and investing your money in shares than buying a property right now. Why buy an underper- forming asset that might yield 2 per cent when you could get into shares that will give returns of five or ten times that much? I think residential property prices are at risk: interest rates are going to rise, and in eighteen months or so I think you could see prices falling and some good buying opportunities springing up. But I won't be buying anything till I see some value in the market.'

When Geddes says his investing philosophy is not about the money, that isn't entirely true. It is about the money, but as an abstract score rather than hard cash. The dollars he earns are just points in a big game called Success in the City. All Ged- des wants is to be right, see his theories borne out and prove his critics wrong. So far, so good.

Nick Gardner

golden rules

1. Follow your passion. If you're passionate about making a sandwich, open a sandwich shop.

Be prepared to work like hell.

Surround yourself with excellent people- people as smart, if not smarter, than you who complement your skills.

Don't be afraid of failure—there is no such thing as failure in business. If you go down a path and it doesn't work, go down another path; you will always find a way. Once you lose the fear of failure you can do anything.

Maintain your focus and the determination to achieve what you want.

Have fun.

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Источник: Nick Gardner. How. I made-.my first million. 26 self-made millionaires reveal the secrets to their success. 2010

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