There are a lot of great companies with shares trading on the public markets. Sometimes the hardest part of investing is trying to figure out which is the best stock to buy.
Appearing on Motley Fool Live to record the “Industry Focus” podcast, Motley Fool analyst Tim Beyers chats with “Industry Focus” host Dylan Lewis about where his new investment ideas come from.
Dylan Lewis: Let’s start with the idea. I think there’s a lot of lore to discovering companies, you know, there’s this idea of sifting through spreadsheets or filters or that old wives’ tale of being in line at a fast-casual restaurant and seeing the line is long and realizing, hey, this might be something, you know. So, where do the ideas come from for you?
Tim Beyers: Yeah, it’s very interesting. I hope this isn’t a horribly boring answer, but there are three places, principally, and almost none of them have to do with the traditional things you might think of, like, looking at a list or doing a screen, I just really don’t do that. And part of the process for me has been, I’m drawing on my experience in tech. And so, I started many years ago, like, I started my career as a sports reporter, you know, we talked about sports before we came on air here. I started as a sports reporter. I was a really terrible sports reporter, but I was a sports reporter. And then I worked in sports PR. And after a while when I got my graduate degree at Syracuse; so, you know, Go Orange! You know, I got a little exhausted with the process of just being in sports, because it was intense and it was amazing, and I’m so grateful for it, because — and we can talk about this sometime or maybe even before the hour is over. But I had a chance twice, while I was at Syracuse, to cover NBA preseason games and I got to meet Charles Barkley and Michael Jordan.
And in the second game, I’m doing stats for the late, great Tom Mees of ESPN. And you know, it’s a Chicago Bulls preseason game; I don’t remember who they were playing, it might have been the Nets, which don’t even … you know, I guess the Nets is Brooklyn now? I’m not even sure, is that right? Okay. This is when they’re still in New Jersey. And I’m just doing stats. And Michael Jordan comes over to the table, says “Hi!” to Mr. Mees. I’m like, wow! This is amazing.
And there were lots of great moments like that, but I got a little exhausted by it. So, when I went back to California, I started working for this tech PR firm and I got enamored instantly, I just got completely lost in it and learned everything I could about deep tech. And so now, when I start looking at deep tech stocks, I draw on that experience, and the first thing I do is talk with people, I talk with our developers, like, that’s the No. 1 filter for me. Every two weeks I have this call on the books with one of our cyber security experts, this really wonderful guy named Jeff Levitt, and Jeff and I just spent an hour just talking about stuff. And he will help me dissect things that I don’t see, because he’s deep into the weeds.
And so, the first thing that happens when I’m looking at an idea is, somebody who has used the product or knows about the product has told me something that, sort of, sparks like, I heard something, OK, that’s unusual. So, for example, people have heard me talk about Snowflake (NYSE:SNOW) on Fool Live very often. When BG, who I’ve had gone on this week in tech, who’s in our Data Platform team, when BG and Nicole, who are the leaders of our Data Platform team, tell me that this thing is amazing and it would be very hard for me to not use this, I get really interested.
Lewis: Yeah, there’s usually good money to be made with delighted customers, I think, [laughs] that’s a good investing axiom to follow.
Beyers: Big time. So, I really do start with the product, like, that’s the thing in tech for me, there are many other investors who have different processes, like, Jim Gillies always starts with the proxy statement. He wants to see if leaders are aligned with investors; that’s a great way to go. I always start with the product. Like, I want to know whether or not the product is a meaningful product that’s going to delight customers in some way.
And sometimes, that comes, like, another thing that I’ll use, I’ll look for unusual stories. So, the way I found Peloton (NASDAQ:PTON), this is true. I don’t know if I’m not proud of this or if it’s just like, it’s sort of just, kind of, sort of blew me away, like, I had heard about it —
Lewis: I can’t wait to see where you’re going with this, Tim. [laughs]
Beyers: I didn’t know what it was — I didn’t really know what it was — I had to ask people what it was. And then my wife told me a little bit more about what it was and how people really love it. And then I didn’t really get serious about it until I read this article called, I Joined a Stationary Biker Gang, that was it, in The Atlantic. And the whole thesis for it was that people go crazy every year going to what’s called Peloton Homecoming. Like, I knew about the bike and I knew that it was interesting, but nothing really put me over the edge on this until I learned about Peloton Homecoming.