Dead Companies Walking: How A Hedge Fund Manager Finds Opportunity in Unexpected Places by Scott Fearon, discusses methods for spotting doomed businesses, and how they can be extremely profitable investments. First a little something on the book and then a link to a very interesting article about the book.
Dead Companies Walking – Description
David Einhorn's Greenlight Capital funds returned -2.6% in the third quarter of 2021, compared to a return of 0.6% for the S&P 500 in the same period. Longs detracted 4.5% in the quarter while shorts added 1.2% and macro added 1.0%, according to a copy of the letter ValueWalk has been able to review. In Read More
Unlike most investors, who live in fear of failure, Scott Fearon actively seeks it out. He has earned millions of dollars for his hedge fund over the last thirty years shorting the stocks of businesses he believed were on their way to bankruptcy. In Dead Companies Walking, Fearon describes his methods for spotting these doomed businesses, and how they can be extremely profitable investments. In his experience, corporate managers routinely commit six common mistakes that can derail even the most promising companies: they learn from only the recent past; they rely too heavily on a formula for success; they misunderstand their target customers; they fall victim to the magical storytelling of a mania; they fail to adapt to tectonic shifts in their industry; and they are physically or emotionally removed from their companies’ operations.
Fearon has interviewed thousands of executives across America, many of whom, unknowingly, were headed toward bankruptcy – from the Texas oil barons of the 80s to the tech wunderkinds of the late 90s to the flush real estate developers of the mid-2000s. Here, he explores recent examples like J C Penney Company Inc (NYSE:JCP), Herbalife Ltd. (NYSE:HLF) and Blockbuster Entertainment to help investors better predict the next booms and busts—and come out on top.
About the Author
Scott Fearon worked as a stock analyst and mutual fund manager before launching his own hedge fund, Crown Capital Management, in 1991. Since its inception, the fund has averaged an 11.4 percent annual return after all fees—50 percent greater than the benchmark S&P 500 index’s total return over the same time period, and well above the hedge fund industry average. He has written for Seeking Alpha and blogs at scottfearon.com. He lives in Marin County, California.
There is a great article about this book which Hedge Fund Intelligence posted, you can see the article here.