Outsider Leadership by Chris O’Riordan & Felicity Kelliher & Patrick C. Flood & Malcolm Higgs

Author:Chris O’Riordan & Felicity Kelliher & Patrick C. Flood & Malcolm Higgs
Language: eng
Format: epub
ISBN: 9783319974637
Publisher: Springer International Publishing

We’ll return to John’s venture into the whiskey market later in the chapter, but for now it is worth contemplating the gestation period of most ‘overnight’ business leader successes.

6.1.3 The Easiest Way to Make Money

Simultaneous to his lecturing roles and studying in the USA, John dabbled in the stock market from the very start of his career as “the stock exchange was always the easiest way to make money so I would have bought a few shares, so anyway, that was it and I was teaching.” He developed a particular interest in undervalued public companies while studying at Harvard and applied the principles of Graham’s net-net asset (NAV) model2 that he learned about while at Wharton. Under this model, if the net assets per share of a company (net of all long-term debt) were higher than the market price, then you bought (Kennelly 2014). Applying this principle to trading, John “picked 11 shares on the stock market that I thought were seriously undervalued and over the subsequent seven or eight years I managed to create mayhem in several of them.” When he returned to Ireland from the USA in the mid-1970s, he had “enough to get a house. Seven or eight grand [thousand].” John continued to speculate, on his return to Ireland. He realises that his activities on the stock market could be construed as asset stripping, but he takes a pragmatic view of stock trading: “a dollar is an orphan, the dollar has no loyalty to anybody. It’ll move and so capital will move where it’s most wanted.” Selecting investment opportunities required a combination of realism, ingenuity and support from others:I picked companies that I would take stakes in and given that you’d no money you had to take, the biggest stake in the smallest company. Irish Wire Products (IWP) had a total market capital of around 300,000 and we borrowed money again.

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