Names

Hedge Fund

Equity Index

MF/ETF

Ticker: or Name:

FatPitch approach advocates finding outstanding business with long-term competitive edge and observable long-term holdings from insiders and major concentrated investors.

You probably found our site in your research of a money manager or the stock ownership of a particular insider. You've probably read about Benjamin Graham's Intelligent Investor, Peter Lynch's One Up On Wall Street, or read about some famous investors /funds like Warren Buffett, Bill Miller, Martin Whitman, Sequoia Fund, Clipper Fund, Gabelli Fund, etc.. Or you are even educated in money management. You want to find the Ten-Baggers or something called "outstanding business" that you can hold it tight for several years.

FatPitch is a product of this same quest.

• If a stock is so good, why isn't anybody owning a lot of it?
• If a stock is so good, why not insiders put their money in it?
  (Or instead of buying, they are actually selling?)

• Where do the large money managers put their money? (exclude the day-traders)

FatPitch thinks that an investor better asks these questions before the hard work of security analysis. This is contrary to what a typical investment book would teach you. What if you do your fundamental or technical analysis and find a wonderful stock, but you can not find any large investor owning this stock? Do you think you are finding a gem that nobody else notice, or you are simply wrong in your analysis? Think again! -- If you plan to hold it for many months to come, if not years... (We remind you that the number of security analysts are many times more than the number of stocks traded on major exchanges.)

Corporate Governance

The ownership issue has a role in corporate governance. Heavy ownership can not change the economics of the industry or the inherited competitive position of the business in the industry (this can be improved though). Weak industry is weak due to large competitive environment. On the other hand, it is much easier to make money in a prospering industry. This is not something a few investors can change. However, large investors can advise the business and monitor the efficiency and the cost structure; therefore, improve the stewardship of shareholder's value.

Another aspect of ownership is how the resource and earning are allocated. If the CEO (or director) is a major shareholder, he probably does not like anything that may dilute shareholder's value because he himself is a major shareholder. But if the CEO does not own any share and there is not enough influence from shareholders, he probably think it is more important to make other people happy than shareholders (who are anonymous to him anyway), such as spending tones of money in party, food, bonus, salary, 401K; throwing out stock options, ESPP discount, etc.. You wonder why the earning reports are always bad...

Imagine a stock that does not have any major investors (e.g. the largest investor holds less than 1% of shares). The shareholder's strength in influencing executives probably is not very strong. We can conclude the CEO is the major player here. You are basically investing in the integrity of the CEO alone. This is quite dangerous. And on top of this, if CEO does not own much of shares either, God forbid, shareholder's interest is probably much less important, compared to other interests in his mind.

Businesses that are not watched over is doomed to be abused. If you do not care how money is spent, why should the management team care? You are expecting a Saint-like management to care that much. But many executives are just as ambitious and greedy like anybody else. Small investors have to invest side by side with large investors -- those investors who are long term oriented and do not play the market. (If someone is here today and be gone tomorrow, that is not helpful either.)

Finally we hope you have a happy browsing experience here at FatPitch!