As part of our ongoing efforts to provide our readers with the highest quality investment content, ValueWalk is now offering the Harvest Interview Series.

The Harvest Interview Series provides exclusive access to financial business leaders including money managers, institutional allocators, research firm founders and other top investment professionals. Interview questions are crowd-sourced from thousands of professional managers, allocators, and investors. The most relevant and interesting questions are selected and then posed anonymously to the Interview Series subject.

Harvest Interview Series: Jim Osman of The Edge Consulting Group

Jim Osman founded The Edge in 2005 and leads the analysis and ideas process. He is passionate about ensuring that the analysis is geared towards ‘real situations’ and offers more than just a buy or sell-side analyst’s view. Jim brings to The Edge two decades of portfolio management experience in the securities and fund management industry.

His vast expertise includes special situations and Spinoffs, as well as specialized equities and derivatives hedge funds. His previous roles included portfolio manager of a London based special situations fund focusing exclusively on Spinoffs, portfolio manager at a highly regarded specialized equities and derivatives hedge fund based in Chicago, and an equities and derivatives trader at one of the largest French banks. Jim Osman studied Investment Management at The London Business School.

Khai Nguyen: Jim, welcome and thank you for joining us.

Jim Osman: Thank you very much.

KN: You founded The Edge in 2005 to provide investors with access to insights into Global Special Situations. What makes that space so compelling for investors to look at?

Jim Osman: A special situation in our view is a name where we believe there is a gap between price and value and moreover a catalyst, or multiple catalysts to bridge that gap that is normally hidden. It makes sense for investors to look at these situations for a number of reasons. Firstly, the coverage is limited. The traditional mainstream buy, sell, and hold community usually ignores what is unseen and therefore they are often overlooked. Secondly, even if they are spotted they can be wildly misinterpreted and valued incorrectly. It takes expertise to do it. Lastly, and I guess quite importantly, they often provide superior returns above and beyond the index.

As a portfolio manager for many years I never saw a comprehensive service that covered the interesting special situation names out there. The broker community was, and still is in my opinion, pure vanilla buy, sell and hold. This approach can mean anything on an investment perspective. On the larger cap and more well covered names it means even less. Consequently, the large big bank research has shrunk significantly because it has limited value add. The Spinoff Report, as it was formally known and now The Edge, has a ‘why’ to its existence. Something most research providers are without and this is key. We aim to provide an insight to our partners by understanding and analyzing the situation fully and if warranted, present it as an investment opportunity in this under covered space.

Having experience is not enough. The experience has to be transformed into expertise. It’s one of our core values and I firmly believe it.

KN: Why is that space so under covered by investors?

Jim Osman: In a word, it’s understanding. Generally we try to identify a profit opportunity for the benefit of the investor and specifically, and most importantly, our partners. The mainstream research community doesn’t push the envelope enough. We try to challenge the status quo. We try to identify the edge in this situation. We don’t “cover” stocks. A second key point is packaging up the situation to show that it has been fully analyzed with a clear precise view as to what to do. Investors and people generally will shy away from what they don’t understand and quite rightly so.

Jim Osman, Founder & CEO

The Edge Consulting Group

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Harvest Interview Series: Jim Osman of The Edge Consulting Group