Scott Fearon has spent thirty years in the financial services industry. Since 1990, he has managed the hedge fund Crown Capital. The fund has significantly outperformed the S&P 500 by investing in fast-growing companies while shorting the stocks of “Dead Companies Walking: How A Hedge Fund Manager Finds Opportunity in Unexpected Places,” businesses on their way to bankruptcy. Scott holds a BA from Stanford University and an MBA from the Kellogg School of Management at Northwestern University.
Five Good Questions: Scott Fearon – Dead Companies Walking
We wrote about Ben Graham's activism at northern pipe line, but there are other interesting stories involving the father of value investing Value investing and activism go hand-in-hand. Benjamin Graham, the godfather of value investing, discovered how important it is to incorporate activism into a value strategy relatively early in his career, a strategy that 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 JC Penney, Herbalife and Blockbuster Entertainment to help investors better predict the next booms and busts—and come out on top.