INVESTMENT CLUB TEAMINVEST RELIES ON A COMBINATION OF EXPERIENCE AND ANALYSIS – AND A LITTLE HELP FROM WARREN BUFFETT.
TEAMINVEST CO-FOUNDER JOHN PRICE was head of the mathematics department at a university in Iowa in the 1990s when he was given a copy of Roger Lowenstein’s Buffett: TheMaking of an American Capitalist.
The Melbourne-born Price, who began investing in shares at the age of 14, devoured the book and soon become a fan of Warren Buffett, the billionaire value investor who focuses on sensibly run companies with low debt levels and predictable long-term earnings.
“I felt that my background as a research mathematician, computer programmer, educator and writer came together,” says Price, who has a Master of Science from the University of Melbourne and a PhDin pure mathematics fromthe Australian National University. “I read everything I could get my hands on by and about Buffett. He became my research project.”
Price made the trip to Omaha in neighbouring Nebraska to attend an annual meeting of Buffett’s company, Berkshire Hathaway, and grew even more enthusiastic about Buffett’s approach. “Despite the fact that there were about 14,000 attendees, I had the feeling he was talking to his family. His good humour, common sense and integrity supported his wise words on investing in the stockmarket.”
Price returned to Australia in 1999 and took up a post at the University of NSW, where he oversaw a double-degree program in finance and mathematics and developed a computer model to analyse shares based on Buffett’s investment principles.
In 2008, hemet Sydneybased businessmen Howard Coleman andMark Moreland, who had been holding regular coffee meetings with friends to discuss share investments. Price’s model could provide a financial analysis of target companies, but he knew it needed an overlay of experienced business skills to pass judgment on the quality of boards and management and to assess potential risks. So the trio founded Team invest. The group opened to outside members in 2009 and now includes 425 high networth individuals. Mostly aged over 55, members want to manage their own money, rather than leave it with fundmanagers or outside advisers, and they meet once amonth to discuss investing in specific companies. “Our members like to control their money well, rather than pay others to do it badly for them,” Coleman says.
Each member is expected to contribute to the discussion, allowing the group to pool expertise. Coleman says many members have run their own businesses or been senior executives, and so have far more hands-on business experience than the analysts employed by stockbrokers and investment banks.
“Our members have a lot of wisdom. Their biggest strength is probably an understanding of what drives the success of a particular business and how it actually makes money.”
While the Price model is the first filter for identifying potential investments, the group assesses a company’s outlook in terms of 16 risk categories. As with Buffett, the Team invest approach regards a trustworthy management as a core requirement.
While the group is an investment club, it is up to the members to invest their own funds. “We do not touch anyone’s money,” Coleman says.
Team invest prefers companies with a 10-year record of solid earnings, but will consider companies that have been listed for at least five years. Woolworths and CSL have received the tick of approval in the past. It excludes investment in start-ups, shooting stars or companies with chief executives who splash money around on risky takeovers.
However, membership is not cheap – a joining fee of $8900 gives access to Price’s software and a monthly fee of $599 provides entry to the discussions and access to reports on companies.
Coleman says membership is still growing, but will be capped at 500. Many members have already attended one of Buffett’s annual meetings and about 30 plan to be in Omaha next May.
the deal will use Price’s model and Team invest filters to help assess companies for its annual CEOof the Year award, announced in the next issue.
Co-founders John Price (left) and Howard Coleman examine investments through the prism of 16 categories of risk.