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Today I am interviewing Pierr Johnson, a veteran of Wall Street with twenty-two years as an analyst in both investments and banking. Pierr is the founder, Principal and Analyst at Neoga Advisors, a firm that offers research, analytic and advisory services to Tech and Life Sciences companies and investors. Prior to Neoga, he was a Vice President and Equity Research Analyst at John Hancock Funds where he specialized in technology companies. Pierr also was a Senior Vice President and Analyst in Bank of America’s Tech Banking Group, where he supported a wide range of M&A and related financing transactions. He got his start in the business as an Equity Analyst at The Value Line Investment Survey in the early 1990's.
So, what's in your library Pierr?
Graham & Dodd's Security Analysis 3rd Edition by Benjamin Graham & David Dodd I first read this great work when I got hired as an Analyst at Value Line. I devoured a library copy eager to learn about a discipline that was new to me. I soon bought the 5th edition, along with various finance books, as my mentors there guided me through their analytic program. As it has been for so many analysts, Graham & Dodd was my doorway into a profession I’ve truly loved to pursue. It’s a great book for learning how to do investment analysis.
Margin of Safety by Seth Klarman - This is a very hard-to-find book on value investing by a hedge fund legend in Boston, where I live. Yet through networking with colleagues I learned that a pdf is available via the Internet and it is well worth the read, even in a notebook display. (A hard copy will set you back a couple thousand.) As a Tech investor, I realize scarcity always enhances value. With so many growth companies and stocks to follow, a focus on valuation to me is very important.
The Dark Side of Valuation: Valuing Young, Distressed, & Complex Businesses by Aswath Damodaran - Damodaran is well known for his classic Investment Valuation, which explains the discounted cash flow valuation process. Here he offers ways to apply these processes to valuing bubble-like stocks, which for me was very useful when he published it at the time. The book also gives strategies that are useful for investors looking to value trending stocks. Understanding discount rates with high-multiple stocks (e.g., when P/S looks like P/E) is very helpful to me, especially once I’ve aggregated the fundamental factors that support the high valuation.
Standard & Poor's Fundamentals in Corporate Credit Analysis by Blaise Ganguin - When I first became the Senior Analyst to the BofA Tech Banking Group, my Research Director had me read a number of works to get me up to speed on Corporate Finance and Investment Banking. The obvious one to single out is S&P’s guide to Credit Analysis. I had read Fabozzi’s giant tome twice, but as a bank, they had an army of people pricing debt. When you participate in a company’s manifold capital transactions, credit analysis and corporate finance have a different importance. This book and the Van Horne/Wachowicz Fundamentals of Financial Management were both required and valuable reading.
Valuation: Measuring & Managing The Valuation of Companies by Tim Koller, Marc Goedhart, & David Wessels - With the Banking Group, I got involved in all the significant strategic and financing events of our closest clients, especially those related to M&A. Investors purchase marketable securities, hoping to sell them for a gain. With our clients’ capital transactions, however, Valuation and Financial Management required a broader perspective and I found this book (published by Wiley for McKinsey and Company) a great resource to me.
Acquisition & Corporate Development: Contemporary Perspectives For The Manager by James Bradley & Donald Korn - My firm grew from networking with local Investors and Corporate Development professionals as they sought to leverage my deep skills and experience. Two of a number of books I read were especially interesting as I rounded out my service offering. Bradley and Korn’s work I found on Google Books, which at the time allowed full access to the text. Placing M&A at the heart of strategy in the corporate development process was key. There is also Christopher Clarke’s Shareholder Value: Key to Corporate Development, which is still in print, if a bit pricey.
Biotech Valuation: An Introductory Guide by Karl Keegan – Some years back I was asked to extend coverage to Life Sciences and Biotech, having at the time covered Tech for way over a decade. Two books were very helpful to me is getting my coverage launched. Karl Keegan’s book is targeted more to Equity Analysts and provides both a great introduction to this unique industry and a useful framework for valuation. Keegan for many years was Canaccord Adams’ Biotech Analyst. Boris Bogdan’s Valuation in Life Science also has a great introduction to the industry but is more targeted to valuing transactions and alliances in the industry.
Valuation in Life Sciences: A Practical Guide by Boris Bogdan & Ralph Villiger - (mentioned above)
As always you can buy any of the books Pierr mentioned at the The Sniper Book Bin. If you'd like to see another great read, sign up for The Sure Shot Letter, my monthly newsletter that is packed full with great investment ideas.