NAOS News & Insights

NAOS 2018 Book List

November 15, 2018

The NAOS team have compiled a list of their best reads this year, with a short review...Enjoy!

 

Big Money Thinks Small by Joel Tillinghast

Ben Rundle, NAOS Portfolio Manager: "In the early 1980s, Joel Tillinghast made a series of phone calls to superstar Peter Lynch’s Boston office. The famed manager of the top-performing Fidelity Magellan said he’d give him five minutes. An hour later, he said, 'We’ve got to hire this guy.' He has managed the small cap portfolio for Fidelity Magellan ever since. Since inception it has returned 13.8% a year, compared with 9.6% for its benchmark, the Russell 2000 index, and 9.7% for the Standard & Poor’s 500."

 

The Barefoot Investor by Scott Pape

Robert Miller, NAOS Portfolio Manager: "For good reason this book has gone viral and The Barefoot Investor has developed a cult following amongst many Australian households. Scott Pape does an excellent job of explaining the old fashioned ‘money guide’ in very simple, interesting & relevant terms. For those with a limited knowledge of the world of money, it is a great place to start reading about wealth building, savings & compounding. For those with a better understanding, there are plenty of good common sense reminders. Everyone who reads the book will be better off doing so."

 

A MAN FOR ALL MARKETS BY EDWARD THORP

Robert Miller, NAOS Portfolio Manager: "Mathematician, card counter, inventor, author & hedge fund manager. A mathematics professor who turned his attention to Las Vegas where he devised formulas to beat the casino in Black Jack & then Roulette. He published the original book on card counting which had widespread ramifications throughout the gambling industry. During his career as a professional gambler in the 1960-70’s he went on to invent the very first wearable computer. Ed Thorp then took his skillset to the casino of Wall Street where he founded & grew numerous hedge funds, invented a options pricing formula & invested in Berkshire Hathaway early on. A great story about why markets, regardless of what type of market, are not as efficient as made out to be."

 

Resilience by Eric Greitens

Ben Rundle, NAOS Portfolio Manager: "One of the best books I have read. In 2012 Navy SEAL Eric Greitens heard from one of his former SEAL colleagues Zach Walker, whom he hadn’t spoken to in a decade. Zach had been one of the toughest SEALs in the Navy, but after returning home from war to his young family he became heavily depressed. The two began writing letters to each other, with Eric setting out his thoughts on what it takes to build resilience in life. This book is an edited version of those letters. At NAOS we believe a key attribute of many successful entrepreneurs is a very high level of resilience and the ability to use failure as a tool for success. The book is an excellent blueprint for how to keep pushing forward despite many hurdles that will get in the way of life and business."

 

The Deals of Warren Buffet by Glen Arnold

Robert Miller, NAOS Portfolio Manager: "A concise summary of how Buffett went about building his first $100m over his first 40 years of investing. The years in question are from 1941 through to 1978 and includes information on some of his best & worst deals. Some of the best were investing in GEICO, See’s Candy & The Washington Post. Some of the worst were investing in Berkshire Hathaway and selling his 5% stake in Disney in the late 1960’s. This book gives great background to the foundations behind one of the largest companies in the world. It provides a good snapshot of Buffett’s qualitative thinking and given the relatively small size of his investments, it is quite relatable to everyday investors. After each deal there is a summary of the lessons learned. These lessons are very useful takeaways for developing your own investment principles."

Robert provides a chapter summary of the book, which can be useful as a reference tool when analysing companies.

 

The Fish That Ate The Whale by Rich Cohen

Robert Miller, NAOS Portfolio Manager: "An in-depth history of one of the world’s most powerful companies – United Fruit. United Fruit from Boston were the first to pioneer the banana trade in the USA and had a monopoly. United Fruit would ship unripe bananas up from Central America to all the lands of the US, overripe bananas were a problem, the waste was incredible.

Samuel Zemurry, a Russian immigrant decided he could do it differently by bottom feeding off United Fruit. He started small in the late 1800’s but was ruthless in expansion. Samuel Zemurry became intertwined with the United Fruit company throughout the 1900’s, which at its peak had amassed significant political sway, very large Central American landholdings and controlled one of the largest fleets in the world.

The story is a journey that sways from US lawmakers to Central America political coups, wars & revolutions, and of course bananas, which you’d be interested to know are not a fruit but a herb. A very interesting read."

 

Leonardo Da Vinci by Walter Isaacson

Robert Miller, NAOS Portfolio Manager: "This is Walter Isaacson's latest biography, he has also done some incredibly detailed biographies over the years on the likes of Steve Jobs, Albert Einstein & Benjamin Franklin. 

The book transports you to the Renassiance period of 15th & 16th century Europe. A period where Da Vinci’s star grew as did his relationships with tyrants, kings, popes, rulers, Michelangelo, Machiavelli, and others. We learn about Da Vinci’s skills as not only a painter (which at stages during his life he despised) but as a military engineer, architect, sculptor, surgeon, scientist, inventor and more. Of most interest are the stories behind his famous artworks.

This book is a very powerful story recounted from a vast array of sources that will teach you plenty about a truly fascinating and unique genius who in some ways was also a very ordinary human. An engrossing read which I would recommend to anyone." 

 

Built from Scratch: How a couple of regular guys grew The Home Depot

Ben Rundle, NAOS Portfolio Manager: "Built from Scratch tells the great modern success story of how two men built The Home Depot from nothing to become the largest home improvement retailer in the United States in under 20 years. In 1978, Bernie Marcus and Arthur Blank were running a successful chain of hardware stores called Handy Dan when they were unexpectedly fired. They hatched the idea of starting their own home improvement business which had a very heavy focus on low prices, extremely high levels of customer service and an employment culture that they see as the key to the success of the business. Despite being a flop on opening day, the two ultimately created one of the greatest success stories of corporate America. A highly entertaining read!" 

 

Who wants to be a billionaire?: the james packer story

Robert Miller, NAOS Portfolio Manager: "Paul Barry, the author behind both Kerry Packer & Alan Bond’s biographies, does an excellent job writing the stories behind James Packer’s varied investments, not to mention the relationship he had with his father, which seem to be inextricably linked.

Dealing with a tough and uncompromising father, whom, with his unlimited wealth and power, cast a very large shadow. The book describes how Packer Jr tried and failed and tried again to get out from this shadow through his investments and deals, some of which will go down in Australian investment history.

Paul Barry speaks to the people closest to the action when Packer Jr, convinces Packer Sr and the Murdoch’s to jump on board and collectively be left fooled by the infamous Jodie Rich of One Tel. What’s more is the big bets Packer Jr placed on Macau, paying top dollar for assets and doubling down even further when things weren't going to plan. We learn about the impeccably timed sale of Channel 9 to private equity, only to quickly see billions wiped away through ill fated Las Vegas casino ventures.

At times he was wealthier than his father in his own right, at other times he almost bankrupted the family. Published soon after the GFC the most recent chapters of his life are not included, however they seem to be rhyming with all those detailed in the book." 

 

THE ART OF STOCK PICKING BY CHARLIE MUNGER

Ben Rundle, NAOS Portfolio Manager: During one of his many speeches at a Daily Journal Annual Meeting, Warren Buffett’s partner Charlie Munger outlined what he believes to be the art to stock picking.

In my view, Warren and Charlie are often misrepresented as investors who are only trying to buy extremely cheap stocks trading on low Price to Earnings ratios or below book value. Certainly this was true of them in their early days but over time their approach changed. They started buying much higher quality businesses and paying more for them. Charlie believes this approach is what made them successful and states that 90% of the wealth created in Berkshire is from 10 or so holdings.

It is an excellent read and a fantastic lesson for investors that very cheap stocks are often that way for a reason. I highly recommend anyone who is serious about investing to read it themselves. 

Published 15 November 2018

 

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