Lessons from Jimmy Rogers

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“What you think is useless to me. Tell me what you know.”

Jimmy Rogers slammed his hand on the table to emphasize the point to a group at Columbia Business School.

It was 1996 and Rogers, who had co-founded the Quantum Fund with George Soros in 1973, was teaching a class. Rogers used the Socratic method to pepper students with questions about specific industries they studied.

Steven Grey was the unfortunate graduate student on the receiving end of a lesson he would never forget.

“It was the defining experience of my training as an investor,” said Grey. “It's a nuanced point but so important.”

Rogers, who “retired” at 37 after making his fortune with Soros, was at the height of his fame as a Wall Street pundit. He has just written a book, Investment Biker, chronicling a round-the-world motorcycle trip.

Grey would go on to work at a hedge fund and then later help former Secretary of State Madeleine Albright launch Albright Capital Management, an emerging market-focused investment firm.  Following his time with Albright he was employed as the chief investment officer of a family office before launching the Grey Value Opportunity Fund in November 2014.

He took lessons from Rogers to heart, especially the message of doing your own fundamental research and being clear about what you know.

“There are so many investors who don’t understand that they don’t understand what they are investing in. There is nothing more dangerous to your capital,” Grey said. 

Grey spends at least 200 hours researching each of the 15 to 20 companies in the portfolio. The fund doesn’t use leverage, goes both long and short and focuses on extreme mispricings. 

Rogers was a value investor professionally and personally. He famously bought a mansion on Riverside Drive in 1977, an era when New York was flirting with bankruptcy.

According to the New York Times: “After six years of searching, he decided on Riverside Drive and bicycled the street jotting down the numbers of the houses. At the time, the city real estate market had collapsed. He looked up the owners and sent them self-addressed stamped envelopes.”

Rogers paid $107,000 for the property, which boasted a limestone facade, an original Tiffany skylight, a working dumbwaiter, and mahogany detail. 

Grey remembers they would drink cocktails and look out over the Hudson River from the roof of the mansion, where Rogers had installed a hot tub.

Rogers sold the house three decades later for $15 million and moved to Singapore, arguing Asia is the future. 

Rogers told the National Review: "If you were smart in 1807, you moved to London, if you were smart in 1907, you moved to New York City, and if you are smart in 2007, you move to Asia.”

Grey hasn’t kept up with his mentor. He’s been busy putting the lessons into practice. 

To paraphrase Rogers, “What you say is useless to me. It’s what you do.”

BRIEF OBSERVATIONS

A MARKET OF STOCKS: Gains in the S&P have been unusually concentrated.

VENTURE CAPITAL’S WINTER: Note to anyone starting a company and looking for funding: Venture capital valuations continue to get revalued.

MAN CAVE 2.0: This seems like a waste of time and money.

DROPPED CALL: This seems like a sign of the times.

CONTEXT SWITCHING: This seems true.