How to Think Like Benjamin Graham and Invest Like Warren Buffett

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Chapter14. The Fireside CEO

T

he legendary investor Phil Fisher described his scuttlebutt ap-

proach to investing as requiring diligent investigation of man-

agement. He boldly interviewed a company’s customers, suppliers,

and employees about the managers and also spoke to management

directly. The Fisher method is followed today by venture capitalists

but is prohibitive for most average investors, who cannot get out and

visit those folks or even talk to them.

Some reasonable substitutes are available, though. You can listen

in on the investor conference calls held by most companies on a

quarterly basis and chaired by the CEO (the dial-in numbers for

these calls are available from the company and from most brokerage

firms). You can also attend the periodic “road shows” that companies

take through your locality; they are particularly worthwhile when the

CEO is in tow (which isn’t always the case) and you can attend

annual meetings to get a bird’s-eye view of the chief. These and other

events are often available on the Internet as Webcasts.

You can also read the voluminous material written about the

CEOs of most companies and by the CEOs themselves. At the top

of the reading list for insight into the character and business ori-

entation of a CEO is his annual letters to shareholders. Most of

these are public relations documents, ghostwritten, stylized, and full

of puffery. No one is fooled by messages written in the promotions

department, but among the glossy, photograph-laden, chart-strewn

marketing materials are a handful of letters actually written by the

CEO. Those are the letters worth reading.

MASTER SERVANTS

The seven basic characteristics most widely cited by venture capi-

talists as important to loo kfor in managers are integrity, achieve-

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