Dead Companies Walking: How A Hedge Fund Manager Finds Opportunity in Unexpected Places: Fearon, Scott, Powell, Jesse: 9781137279644: Amazon.com: Books
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Dead Companies Walking: How A Hedge Fund Manager Finds Opportunity in Unexpected Places
by Scott Fearon (Author), Jesse Powell (Author) __ Format: Hardcover
4.4 4.4 out of 5 stars __ (851)
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See all formats and editions Unlike most investors, who live in fear of failure, Scott Fearon actively seeks it out. He has earned millions of dollars for his hedge fund over the last thirty years shorting the stocks of businesses he believed were on their way to bankruptcy. In Dead Companies Walking, Fearon describes his methods for spotting these doomed businesses, and how they can be extremely profitable investments. In his experience, corporate managers routinely commit six common mistakes that can derail even the most promising companies: they learn from only the recent past; they rely too heavily on a formula for success; they misunderstand their target customers; they fall victim to the magical storytelling of a mania; they fail to adapt to tectonic shifts in their industry; and they are physically or emotionally removed from their companies' operations.
Fearon has interviewed thousands of executives across America, many of whom, unknowingly, were headed toward bankruptcy – from the Texas oil barons of the 80s to the tech wunderkinds of the late 90s to the flush real estate developers of the mid-2000s. Here, he explores recent examples like JC Penney, Herbalife and Blockbuster Entertainment to help investors better predict the next booms and busts―and come out on top.
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- Print length
256 pages
- Language
English
- Publisher
St. Martin's Press
- Publication date
January 6, 2015
- Dimensions
6.38 x 1.02 x 9.56 inches
- ISBN-10
1137279648
- ISBN-13
978-1137279644
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Editorial Reviews
Review
“If you want to read a sharp, insightful, bitingly funny, crystal-clear, quick-read book that could help you avoid making fatal mistakes with your business, pick up Dead Companies Walking.” ―CFO Magazine
“An excellent investing book” ―Barbarian Capital
“Sharp insights into human fallibility as a potential source of moneymaking opportunity.” ―Kirkus Reviews
“[A] surprisingly entertaining mix of business guide and memoir. The final takeaway of this spirited book is that “learning to love failure all over again” can help America recover the adventurous spirit that Fearon believes our economy needs.” ―Publishers Weekly
“Scott Fearon’s Dead Companies Walking is chock full of wisdom―not just about investing but about the way to read between the lines about just about anything in life. Fearon’s book reads like a rollicking adventure―it’s vivid, entertaining and informative―and it offers enduring lessons about Wall Street and beyond.” ―Professor Alec Klein, bestselling author of Stealing Time: Steve Case, Jerry Levin, and the Collapse of AOL Time Warner
“Beginning with his drive from Illinois to Texas, Mr. Fearon weaves a fascinating odyssey captaining his hedge fund. Funny. True. Plain English. Anyone who has ever bought a stock or managed a business, big or small, will devour this book.” ―J. Carlo Cannell, managing partner, Cannell Capital LLC
“[Scott Fearon's] insights on the common ways that mature companies often doom themselves apply equally well to startups. Every business, young or old, needs to avoid the ... mistakes that he outlines.” ―Martin Zwilling, Forbes
“If you run a business, read this book. It contains great management lessons and why we should all embrace failure. If you manage your own money, read this book. Picking winners is a loser’s game and Scott spells out why short selling―and understanding why most companies fail―can help protect your portfolio.” ―Lee Munson, President and CIO, Portfolio Wealth Advisors and author of Rigged Money: Beating Wall Street at Its Own Game
About the Author
Scott Fearon worked as a stock analyst and mutual fund manager before launching his own hedge fund, Crown Capital Management, in 1991. Since its inception, the fund has averaged an 11.4 percent annual return after all fees―50 percent greater than the benchmark S&P 500 index’s total return over the same time period, and well above the hedge fund industry average. He has written for Seeking Alpha and lives in Marin County, California.
Jesse Powell is the coauthor, with Scott Fearon, of the investing book Dead Companies Walking. As an editor, consultant, and ghostwriter, Powell has collaborated on prestigious, award-winning, bestselling, and critically acclaimed books. He lives in San Francisco.
Product details
- Publisher : St. Martin's Press
- Publication date : January 6, 2015
- Language : English
- Print length : 256 pages
- ISBN-10 : 1137279648
- ISBN-13 : 978-1137279644
- Item Weight : 2.31 pounds
- Dimensions : 6.38 x 1.02 x 9.56 inches
- Best Sellers Rank: #261,010 in Books (See Top 100 in Books)
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30 in Business Planning & Forecasting (Books)
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1,057 in Business Management (Books)
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1,085 in Investing (Books)
- Customer Reviews:
4.4 4.4 out of 5 stars __ (851)
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Jesse Powell
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Jesse Powell is a writer and editor living in San Francisco, California. He helps authors tell their stories and convey their ideas. For more information on his services, feel free to visit his website at http://www.powelleditorial.com/.
Scott Fearon
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I've spent more than thirty years in the financial services industry. Since 1990, I've managed the hedge fund Crown Capital Management. We seek out fast-growing companies to invest in while shorting the stocks of "Dead Companies Walking," businesses on their way to bankruptcy.
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Customer reviews
4.4 out of 5 stars
4.4 out of 5
851 global ratings
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Customers say
Customers find the book easy to read and entertaining, with one mentioning they finished it in one night. Moreover, the book is educational, providing real-life lessons and case studies, and is suitable for both beginners and experienced investors. Additionally, the writing style is well-executed, and customers appreciate the storytelling approach, with one noting the author's integrity. The book's investment philosophy receives positive feedback for its case study approach to intelligent investing. However, the ease of use receives mixed reactions, with some finding it straightforward while others note it's not a "how-to" book.
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Readability(56)

Informative(39)

Content(25)

Storytelling(17)

Investment philosophy(14)

Writing style(11)

Entertaining(10)

Ease of use(9)
56 customers mention readability, 55 positive, 1 negative56 customers mention "Readability"55 positive1 negative

Customers find the book highly readable, describing it as an entertaining and easy-to-understand investment guide that can be finished in one night.
"An easy read. Successful investing relies on pattern recognition and common sense."Read more
"Great read for anyone eager to understand how capital constrained hedge fund strategies outperform their larger peers."Read more
"Easy, enjoyable read with great insight being offered about success and failure s of businesses."Read more
"...Good read though"Read more
39 customers mention informative, 35 positive, 4 negative39 customers mention "Informative"35 positive4 negative

Customers find the book insightful and educational, providing real-life lessons and relevant information, making it particularly valuable for experienced investors.
"...His well-formed criticism of the financial industry is insightful and invaluable for both the common man and the sophisticated investor...."Read more
"Great book. Very informative. Super smart guy!"Read more
"...on a short vacation trip and found it quite entertaining as well as educational. Sound common sense approach to investing. Time and money well spent!"Read more
"Very fast, entertaining and enlightening read :)"Read more
25 customers mention content, 24 positive, 1 negative25 customers mention "Content"24 positive1 negative

Customers find the book excellent from start to finish, particularly praising its content for investors, with one customer noting it's great for both beginners and professionals.
"Great book with a lot of interesting anecdotes on his experiences and investing...."Read more
"Best book I've read in years. A practical, honest, and entertaining discussion of how to spot companies headed toward failure...."Read more
"Good book...."Read more
"Excellent and quick read ! Great book for the investor like me who wants to avoid the pitfalls of the dreaded value trap"Read more
17 customers mention storytelling, 15 positive, 2 negative17 customers mention "Storytelling"15 positive2 negative

Customers enjoy the storytelling in the book, particularly the investment-related anecdotes, with one customer noting how they demonstrate integrity.
"Good story telling for people in the business of picking investments...."Read more
"The author provides colorful and relatable stories of hubris in the world of investing. This is not a how to book or get rich quick book...."Read more
"As mentioned by other reviewers, this book is anecdotal and story-driven. It is not a "how to" or a compendium of investing tips or tricks...."Read more
"...It is full of case studies and background stories from the author's own experience in shorting stocks over his 30+ year career...."Read more
14 customers mention investment philosophy, 14 positive, 0 negative14 customers mention "Investment philosophy"14 positive0 negative

Customers appreciate the book's investment philosophy, particularly its case study approach to intelligent investing and the insights from an experienced fund manager, with one customer highlighting the thought process of a short selling fund manager.
"Great reminder that markets, investors, and management never change...."Read more
"A very solid book from an experienced investor, very educational for me."Read more
"...is insightful and invaluable for both the common man and the sophisticated investor...."Read more
"...an immensely readable look at the career and approach of a successful hedge fund manager...."Read more
11 customers mention writing style, 10 positive, 1 negative11 customers mention "Writing style"10 positive1 negative

Customers appreciate the writing style of the book, finding it well composed, with one customer noting it is written for financial laymen.
"I enjoyed this book thoroughly. I thought if was well written and an interesting account of Scott's investing education...."Read more
"Very interesting and well written book on the works of financial markets - part of it - by a Professional who works there."Read more
"Book is well written and provides relevant information, as well as a view at the markets from a different perspective"Read more
"Really well narrated. Pretty good to know how a succesfull money manager works!!! Really interesting book and really easy to read"Read more
10 customers mention entertaining, 10 positive, 0 negative10 customers mention "Entertaining"10 positive0 negative

Customers find the book entertaining and funny.
"...This is a fun and enjoyable read that if implemented into your arsenal of techniques, will lead to improved results...."Read more
"Insightful, important and funny. Must read if you are serious about investing in the stock market (both short and long)."Read more
"...It’s an easy read and entertaining as well. It peters out with a preachy last chapter, but otherwise, I enjoyed it...."Read more
"...You'll read it in a day, laugh a lot (the scene where he meets with the Blockbuster executive who tells him their plan to beat Netflix is priceless)..."Read more
9 customers mention ease of use, 5 positive, 4 negative9 customers mention "Ease of use"5 positive4 negative

Customers have mixed opinions about the book's ease of use, with some finding it straightforward and easy to read, while others note it's not suitable for beginners.
"Easy, enjoyable read with great insight being offered about success and failure s of businesses."Read more
"...It's not a book for beginners. It's not a book to teach how to invest...."Read more
"...Really interesting book and really easy to read"Read more
"...Read this book for that. However, this is not a "how to" book, if that is what you are looking for."Read more
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5 out of 5 stars
Definitely worthwhile
Reviewed in the United States on March 8, 2015
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Republished from the February issue of my newsletter Mayer's Special Situations:
“Failure is one business trend that never goes out of style.” — Scott Fearon
Scott Fearon is an investor who built the foundation of his success on the bedrock of failure. “Things go wrong more often than they go right,” he writes. He calls this insight “the single most important lesson about business and life.”
On the plane rides to and from Switzerland, I read his book Dead Companies Walking: How a Hedge Fund Manager Finds Opportunity in Unexpected Places. It is a fun read as he takes you through how he figured out what companies would fail well before the market did.
“My specialty,” Fearon writes, “is identifying what I call ‘dead companies walking’ — businesses on their way to bankruptcy and a zeroed-out share price.”
He’s good at it, too. His fund has delivered 11.4% annual returns since inception in 1991 — way ahead of the market overall. As a hedge fund manager, he shorted over 200 companies that eventually went bankrupt. (A short seller makes money when stocks go down.) Even if you never short a stock in your life, you’ll still enjoy this book — if only to help you avoid such disasters.
An important point in this book is that failure due to fraud or the passing of some fad is relatively rare. Far more common are just plain-old failures,
a naturally occurring phenomenon, born of mistakes people make.
Failure, Fearon writes, “happens every day to some of the smartest people in the world.” Fearon has also had his share of failure, as he cheerfully admits, and not just in his fund. He’s opened two restaurants, one that failed.
He shares six common mistakes he finds these failures make:
They learned from only the recent past.
They relied too heavily on a formula for success.
They misread or alienated their customers.
They fell victim to a mania.
They failed to adapt to tectonic shifts in their industries.
They were physically or emotionally removed from their companies’ operations.
Fearon takes us through a number of fascinating examples of each of these.
As to No. 1, people do learn from the past, he says — but only the recent past. He tells a story about meeting with the CFO of Global Marine, an owner of offshore drilling rigs. This CFO is unworried by the drop in rig utilization rates. He shows Fearon a chart that shows how every time the rig utilization rate hits 70%, it rallies and recovers.
This chart covered just over two decades. In the grand scheme of things, that’s really not a lot of time. And Fearon points out that just because a trend has continued for a really long time doesn’t mean it will always be that way. Needless to say, Global Marine’s rates went well below 70%, and the stock went bust.
It seems simple, but it’s amazing how many times smart people suffer from historical myopia. “Failure terrifies people,” Fearon writes. He goes on to note:
They’ll do whatever they have to do to downplay it, wish it away and just plain pretend it doesn’t exist. Most of the time, they’ll go on living in denial long after the truth of their predicament becomes obvious.
I think this is certainly true. I think it is especially true of corporate executives. Fearon writes that he’s had over 1,400 meetings with executives and declares they almost always err on the side of optimism.
As for No. 2, he has a great personal example of how he didn’t invest in Starbucks in the early 1990s. If he had invested, he’d have a 100-plus-bagger just 22 years later. But he missed it because he was too much a slave to his own formula.
He used a growth-at-a-reasonable price formula to picking stocks. Starbucks didn’t meet his formula and he passed on it even knowing it was a special company. So he missed a once-in-a-lifetime opportunity that was sitting right in front him.
He also talks about businesses commit No. 2 by thinking they have a winning formula and then being unable to see its faults. They roll it out too quickly and the whole enterprise goes belly up. Restaurants and retail chains that seek to double their number of stores in a year is an example.
In the course of these case studies, Fearon works in a number of other tidbits of investor wisdom. Take the example Value Merchants. It is a discount retailer that seeks to double the number of stores it has in a year. The CEO is a super-
competitive guy. Wakes up at 4 a.m. Runs marathons. Impresses everybody he meets.
Fearon hears from other investors about how you don’t want to bet against a guy like that. But in Fearon’s view, being extremely competitive is one of the worst traits you can have in markets.
“Competitive types think they can will their way to success,” he writes, “no matter what. But no amount of will can counter a doomed formula — like doubling your number of stores every year.”
It can take time for these dead companies to play out. And the enthusiasm of know-nothing investors can carry a weak stock for years. “Time after time,” Fear writes, “I would study a company’s financial statements and be mystified that its share price was anywhere over a penny. And yet people would still be buying the stock.”
Turning to No. 3, look no further than Ron Johnson and his debacle at J.C. Penney. He tried to change the store into a hip place that wealthier, upper-class people would shop at. He cut out coupons, got rid of plus sizes and Spanish advertisements. He alienated much of the customer base. We know how this ended — with JCP almost brought to its knees and Johnson’s firing. But this is not an isolated example, and Fearon gives us some entertaining case studies on the theme.
On No. 4, there are several funny stories on companies caught up in different manias. One of my favorites is his meeting with the CEO of Women.com, named Marleen:
“If I buy 100,000 shares of your stock tomorrow morning, and a year from now it’s lost half of its value, why would that have happened?”
“You mean what could go wrong?” Marleen asked.
“Yes.”
“Quite frankly, Mr. Fearon,” she said, “nothing. We’ve looked at all the data, and we’ve discussed this very issue at the board level, and we all agree: There’s just no way we can lose.”
My goodness. At the time of the meeting, Women.com was $15. Ten months later, it was 70 cents, and within a year,
it ceased to exist. No way to lose, indeed. But this is what happens in manias. Stubborn optimism rubs out facts. People forget to do simple things like arithmetic. And downside risk becomes inconceivable.
“At their cores,” Fearon writes, “manias are about storytelling. People become enchanted with a story, and they convince themselves — and each other — that it just has to be true no matter what.”
We saw it in the tech boom. We saw it in the housing boom. We saw it in the commodity boom that drove oil and other commodities. People begin to craft a narrative that defies common sense and history. There was a “New Economy.” Housing prices never go down. And “Peak Oil” meant the end of cheap oil. People who believe these kinds of things get clobbered. “Manias happen all the time,” Fearon writes.
I’m not going to recount all six mistakes. I’ll just recommend that you read the book. It’s an easy read and entertaining as well. It peters out with a preachy last chapter, but otherwise, I enjoyed it.
A running theme in the book is what makes a good investor. One of these traits is being a good quitter. The best investors are the best quitters, Fearon maintains. They don’t get sucked up in their own ideas. When things go badly or differently than they expected, they bail. The investors who get tangled up in their own harpoon lines as they obsessively chase their own white whale are the ones who eventually drown.
Fearon cites Peter Lynch’s line about how the best you can hope for is to get six out of 10 ideas right when it comes to picking winning stocks. “Think about that for a second,” Fearon writes. “The man most people credit as being one of the greatest, if not the greatest, investor we’ve ever seen readily admitted that he was wrong almost as much as he was right!”
Therefore, quit early and quit often, Fearon says. No matter what, you are going to get to know failure really well if you invest in stocks. It’s inevitable. It’s natural. And so you better get comfortable with failure, and plenty of it.
Success, as Fearon shows, depends on it!
)
22 people found this helpful
4 out of 5 stars
Solid Book, Enjoyable Read
Reviewed in the United States on January 1, 2020
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First, the book is well written and an enjoyable read for a financial book. It is full of case studies and background stories from the author's own experience in shorting stocks over his 30+ year career. In both the storytelling aspect and the teaching aspect the case studies are quite good at illustrating his points. Where the book starts to fall down is in the last two chapters, the author goes off the rails a bit in his attacks on wall street and active managers. It is not consistent with the theme of the book which is to find successful shorts and why companies fail. It is more like "why my track record worked and the rest of wall street are crooks."
Also, while Mr. Fearon's track record is good, there is a lot of apples and oranges aspects to it, and I think it is intellectually inconsistent to compare a long / short, do anything small, cap oriented hedge fund with less than $400 million of average AUM to the S&P 500. It just doesn't make sense. If you are long short, you should not have the same degree of draw downs, and it would be helpful to know whether one has the ability to be net long or he ran a balanced book which was truly net neutral. Hedge funds are generally not constrained by turnover and most active managers are highly scrutinized in this area. My recommendation would be to tone down the "all wall street are crooks" aspect of the book, and probably explain a bit more about his mandate and why he found success. While hedge fund 101 may not be the purpose of the book, if that is the case, present your numbers vs a representative hedge fund index as well as the S&P, and show that you are in the top two quartiles of your category.
Otherwise, it is a solid read, but the tone of the last two chapters detracted from the book. Hence, 4/5 stars. I would love to read a book about how he found success in running his portfolio and find out more about his mandate.
)
7 people found this helpful
5 out of 5 stars
An exposé of failure - and how it's better for everyone
Reviewed in the United States on May 18, 2015
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Fearon writes with a snappy, energetic voice that has you zooming from page to page eager to soak in his prime examples of failure. His excellent sense of humor is not to be overlooked as you read through his tales of investing from the early 80s to the near present.
His investing style focuses on not only avoiding pitfalls such as groupthink, formulaic business models, and manias that run wildly out-of-control, but also 'shorting' the stocks of companies that exhibit such symptoms. Fearon tackles the stigma associated with short-selling head on in his book. He understands the implementation of capitalism in our modern economy in ways that many overlook. Failure is indeed a key part of what has made our economy so successful historically.
His anecdotes and stories of corporate failure are just long enough to sustain the reader while at the same time laying out the fundamentals to search for when perusing for failing companies. As you get deeper into the book his examples of failing companies begin to manifest several of the 6 'deadly sins' that Fearon identifies.
While the examples of failure are truly enjoyable to read, I believe the most engaging tidbits of Mr. Fearon's book lay towards the end. His well-formed criticism of the financial industry is insightful and invaluable for both the common man and the sophisticated investor. If we are supposed to be able to accept and utilize failures of both individuals and companies, why is it that the financial services industry can't come close to this realization.
If you've ever wondered about why the financial industry - ripe with the 'best and brightest' from our top schools - continues to be mired in scandals and morally questionable actions Fearon provides one of the most brutally honest and insightful explanations we've seen to date. The only I found lacking were proposals as to how we move forward or correct that behavior. Perhaps one day we will see from Mr. Fearon a more serious critical analysis of this industry alongside his suggestions for improvement.
Until then I highly recommend this to any aspiring investor, no matter the age.
)
6 people found this helpful
5 out of 5 stars
How To Celebrate Failure As An Investor
Reviewed in the United States on January 11, 2015
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This book (which the author is donating all profits going to charity) reads like a pleasant and nostalgic look back on about three decades of being in the investment game as a smaller hedge fund manager and conducting in excess of 1,400 office and business visits over those years. It's clear that Fearon's niche is exposing inefficient markets and pricing in smaller cap companies that fail to evolve in an ever changing world. His mission is to seek out these companies which usually have falling revenues, growing debt loads that eventually result in bankruptcy and a zeroed out share price.
The subtitle is spot on, "How a hedge fund manager finds opportunity in unexpected places." That place is everywhere but inside his office being Excel crazy. It is quite clear that Fearon does old fashioned analysis. He could learn more in a few minutes talking to management, visiting their business locations and watching how the world is changing around them than he could doing hours of number crunching. In an investment world that appears to have shifted towards quants, computers, high-speed trading, instant gratification and chasing returns in shorter time horizons, Fearon shows us that there is still a level playing field for any of those who are willing to actually do old fashioned analysis along with independent thinking. REFRESHING INSIGHT!
There are two sub themes that stand out to the careful reader. The first is that failure is one business trend that never goes out of style (and we should actually celebrate failure as part of a capitalistic and efficient economy). The second is that it's okay to be wrong. It's just not okay to stay wrong.
If you pay attention, and take good notes, I can assure you that you could generate some good qualitative items for your own investment checklist that could be combined with quantitative items that are available from countless other investing and trading books. Fearon has specifically identified six common mistakes that management of failing companies make, but there are plenty more nuggets of insight in this book.
This is a fun and enjoyable read that if implemented into your arsenal of techniques, will lead to improved results. It is a delight to any short seller, but could easily be adapted to long only investors who could use the reference points to head for the exit doors on stocks that are showing signs for concern.
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19 people found this helpful
3 out of 5 stars
It's okay, no framework or process that systematically identifies companies to buy or sell
Reviewed in the United States on January 7, 2015
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I bought this book, after reading a review in IBD, in which there was high praise and how the hedge fund manager uses 52 week lows to short an equity. But I did not see any framework or process that describes this in detail (in the book). So, it appears that IBD writer was just generating some press to sell its newspaper and/or this author's book is unclear. This book does not give any framework to analyze a company in depth. Main emphasis is on what the company is doing whether its product is selling or how it competes etc. Easy read. No analytical framework, or in-depth analysis of how author selects the companies to short or go long. The book reads more like a novel describing how author finds out that a company is in trouble by visiting some of the facilities or reviewing its products. One story regarding CYGN was right on the money.
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32 people found this helpful
5 out of 5 stars
Great books with profitable lessons [An easy read for any investor]
Reviewed in the United States on January 29, 2017
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I really liked the book because it had good lessons.
Here are the most important lessons when investing/ shorting that I have learned from Fearon.
1. Be wary of management who relies on the past. Yup, there are those who say since we had nice growth past ten years, it will be the same. This is as much dangerous that claim that the new big thing will change everything.
2. Not adapting to change. Industry are in a constant flux. With globalization and technological advancement, it is really hard to predict the future. And management really has to be focused. Well, they can't be chasing the latest fads, they should at least know what is going on. If the manager seems non-adaptive or not willing to change from 10-K or conference calls, be wary.
3. Managers that play, play, and play. There is a reason that we have activists that go after lazy managers because they do exist and are not just handful! If the firm's managers do. You can read some examples from Einhorn or other activists' letters.
4. LEVERAGE! Yes, overleverage will kill anything. Remember 2008 and recent oil industry destruction. When in doubt avoid highly levered firms.
I highly suggest that every investor reads the book. It is an easy read and the lessons will help your investment.
Just remember that Fearon's strategy requires substantial homework. Well, any investor should do good due diligence.
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3 people found this helpful
4 out of 5 stars
Great insight from an abrasive contrarian, with a so-so ghost writer
Reviewed in the United States on January 13, 2015
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There are several less than perfect things about this book:
1. The ghost writer has penned it at roughly an eighth grade level, and his writing is style is bland; there's plenty of extraneous detail, but seldom does the detail add the depth and humor that a great financial writer (e.g. Michael Lewis) would bring.
2. At the beginning and the end, this book proclaims itself to be a celebration of failure. That's a nice attempt by a rigidly idealistic author to give his book deeper meaning, but is unsupported by the content of the book.
3. It lacks some of the serious financial details one would need to actually be able to recognize the right moment to bet against a company; we get a vague description of Fearon's methods, such as recognizing one or more of the six signs of failure, and then waiting for the share price to fall considerably, but more granularity would have been helpful.
There are also some really good things about this book:
1. Fearon is an abrasive, non-conventional guy who is well above-average at his profession and shares with the reader real insight in terms of the failings of corporate executives and the shenanigans of Wall Street analysts.
2. This book isn't a how-to manual for short-selling, but it does contain a lot of valuable wisdom regarding shorting stocks. Even for folks who would never short a stock, this book would help any serious individual investor to lose less often, by being on the lookout for fads, frauds, and failures.
3. It is a quick read.
If you are a serious individual stock investor, or a fund manager, you should read this book.
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16 people found this helpful
5 out of 5 stars
A good read well worth the price
Reviewed in the United States on January 19, 2015
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Like many of the other people who have commented on this book, it was a very quick read. I have read a tremendous number of books on the markets and investing and I liked the lack of technical detail for a change. The lack of technical detail replaced by "an increasing debt load coupled with declining revenues is a recipe for disaster" was a nice change but made the point clear. Obviously, Fearon did plenty of work on the companies he shorted but as he showed through his examples, sometimes the most important thing about a company and its future prospects may be the obvious (but overlooked) (ie a company selling a product that its founders are passionate about but may not be a product others want to buy (his failed Cajun restaurant is a great example), the product is a fad or a company holds on to an outdated business model at all cost (ie the Yellow Pages)).
I think Fearon did a great job laying out, explaining and providing real world examples of his 6 tenants for failure and I found the book to be entertaining. Those examples made me think of modern day businesses which may have those same characteristics. But under no circumstances did this book lay out a formula or financial roadmap of companies to be shorted.
For me, I judge a book's value to be in whether there was one or more ideas in it which will allow me to recoup the cost of the book through either a positive trade or limiting a loss. There were plenty of ideas to more than make up the cost of the book. For those who are new to the world of shorting, the concept of shorting a stock after it has already been cut in half, is worth the cost of the book alone. I was raised with the concept of "buy low and sell high" and it has taken years to realize "buy high and sell higher" is the better road. Fearon's concept of shorting at half off is the same principle in reverse and is just as relevant.
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4 people found this helpful
Top reviews from other countries
- Juan Calbo
5 out of 5 stars
Excellent book
Reviewed in Spain on October 11, 2021
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Easy lecture and loads of interesting information. A must
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- Joshua S
5 out of 5 stars
Made my top 10 best investment books to read
Reviewed in Australia on October 25, 2015
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I would go so far as to put this into my top 10 investment books worth reading. Well written, full of valuable insights from a seasoned investment manager.
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- Stephen Sharkey
5 out of 5 stars
Words of Wisdom through experience
Reviewed in the United Kingdom on October 26, 2025
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I really enjoyed this book. Great anedotes from the author's career. He has an natural intution for CEO's and CFO's that has been backed up by many decades of experience. Most of all it's..funny, I've not read a book this amusing since reading Peter Lynch's 'One up on Wall Street'. I finished with a smile on my face.
It's as much about strategy, mindset and the philophy of investing. He is long and short but as the book progresses you realize that he is mainly long. Failure is a nececcassey part of growing and he takes advantage of it but ultimately, like Buffet, believes that good businesses with good managment will grow and prosper. The last chaper which deals with Wall Street was something that I always suspected and given the nature of money, not surprised by.
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- John Harvey
5 out of 5 stars
Great book
Reviewed in Canada on May 1, 2019
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Great read. Finished in a day. Couldnt put it down.
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- Shashank V. Nerurkar
5 out of 5 stars
Gem of an Investing Book
Reviewed in India on August 10, 2020
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This is one of the best books on investing in small cap stocks by a successful hedge fund manager. The author has managed a hedge fund specialized in investing in small cap stocks in Mid-West USA. The fund has consistently outperformed S & P 500 index, after charging all fees for over two decades. The title 'Dead Companies Walking' stands for companies which are almost dead but continue to operate for a much longer time than expected. The author identifies such small cap companies and shorts those stocks at the right time. This has been a major source of superior investment performance. As a hedge fund, Scott Fearon also invests in small cap stocks for medium to long term. The book covers the common mistakes made by the leaders of small companies, how formulas fail, madness and manias, losing without trying and the wrongful practices of Wall Street. There are ample practical examples of investment situations explaining the thought process before taking an investment decision. The best example is when Scott Fearon met managements of two small companies in Seattle on the same day, which went on to become large companies over next two decades. These two companies were Starbucks and Costco. He did not invest in both of these companies as the valuations were bit higher (in the range of 20 to 25 times of earnings). This book will be of great help to equity investors who concentrate on investing in small cap stocks. The short sellers will gain valuable insights. The long term investors, company managements and management consultants will find this book equally interesting.
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