The Entrepreneurial Investor

The Entrepreneurial Investor will inspire you to treat investing like a business and to think of yourself as an owner. Through solid examples and a light narrative, Paul Orfalea skillfully explores the essence of the entrepreneurial investor, which includes balancing the art and science of this discipline, and viewing investing itself as a business. Along the way, he also examines how the elements of focus, opportunism, and involvement can improve your overall investment results.

Foreword
by Neil Cavuto vii

Introduction: Is Investing an Art or a Science? xi

Part I: Think Like an Owner: The Art of the Entrepreneurial Investor 1

Chapter 1 Eyes Believe What They See; Ears

Believe Others 3

Chapter 2 Others’ Irrationality Is Your Opportunity 9

Chapter 3 Dirty Harry’s Investment Philosophy 13

Chapter 4 Adversity in Diversity: Portfolio

Concentration 17

Chapter 5 Just Buy the Best (Which Does Not

Include Most Mutual Funds) 21

Chapter 6 Inspirational Figures: Benjamin Graham 27

Part II: Companies Worth Owning 33

Chapter 7 Who Really Manages The Brand?

(Hint: It’s Not the Company) 35

Chapter 8 What Makes You So Special? 39

Chapter 9 Company Culture Is More Important than Ever 45

Chapter 10 Bogie & Bergman Explain

Elasticity of Demand 51

Chapter 11 Red Flags and Roaches 57

Chapter 12 Inspirational Figures: David Packard 65

Part III: The Owner’s Manual 71

Chapter 13 Televised Advice: No Worse than

Drilling Your Own Teeth 73

Chapter 14 Lies, Damned Lies, and

Financial Statements 79

Chapter 15 How to Be an Annual Report Detective 85

Chapter 16 How Inventory Can Skew the Financials 91

Chapter 17 Great First Impressions: 10 Signs of a Strong Company 99

Chapter 18 Inspirational Figures: Bernard Baruch 105

Part IV: What’s It Worth—To Me? 111

Chapter 19 The ABCs of Market Ineffi ciency 113

Chapter 20 “Wait Till the Moon Is Full” 119

Chapter 21 Today’s Price for Tomorrow’s Growth: The X Factor 123

Chapter 22 The Long View, and Why Women Are Better Investors 129

Chapter 23 Intrinsic Value: Putting it All Together 139

Chapter 24 Inspirational Figures: Howard Hughes 147

Epilogue: The Fortune Cookie That Ate Wall Street 153

About the Authors 157

Notice and Disclosures 159

Notes 163

Index 167

Contents

"…the notion of looking at each investment through the lens of an entrepreneur and ignoring market noise is a good one." (Financial Times, Tues 26th February 2008)

PAUL ORFALEA is the founder of Kinko's and cofounder of West Coast Asset Management (WCAM). He holds a business degree from the University of Southern California and has been investing successfully for more than forty years.

LANCE HELFERT is President and cofounder of WCAM. Previously, he oversaw a $1 billion portfolio at Wilshire Associates. Helfert has a BS in business administration from Pepperdine University.

ATTICUS LOWE is a CFA charterholder and Chief Investment Officer of WCAM. He has a BA in economics and business from Westmont College.

DEAN ZATKOWSKY is the former vice president of marketing at WCAM and oversees their newsletter, Exclusive Outlook (please visit www.wcam.com to subscribe). He holds a BA in communication studies from the University of California, Santa Barbara.

The Entrepreneurial INVESTOR

Paul Orfalea is a revolutionary entrepreneur widely renowned for his success in growing Kinko's from a single copy shop to an industry leader with 1,100 branches worldwide. Less well known is his long history of successful investing, which dates back to his early teens, when Orfalea would skip school to spend afternoons at the office of his father's stockbroker. In 2000, Orfalea and Lance Helfert cofounded West Coast Asset Management (WCAM) on the same principles of value investing that Warren Buffett used to become one of the world's greatest investors.

Now, in The Entrepreneurial Investor, Orfalea—along with Lance Helfert, Atticus Lowe, and Dean Zatkowsky—reveal how you can use their version of this approach to achieve unparalleled success in your everyday investment endeavors.

Through solid examples and a light narrative, Orfalea and company skillfully explore the essence of the entrepreneurial investor, which includes balancing the art and science of this discipline, and viewing investing itself as a business. Along the way, they also examine how the elements of focus, opportunism, and involvement can improve your overall investment results.

Divided into four comprehensive parts, this reliable resource will put you in a better position to make profitable investment decisions. Some of the issues addressed include:

• Think like an Owner: The Art of the Entrepreneurial Investor covers WCAM's investing philosophy and some of the context and chatter that can cloud one's thinking.
• Companies Worth Owning discusses the heart of entrepreneurial investing—choosing to invest in individual companies rather than in mutual funds or "the market".
• The Owners' Manual highlights some of the important information available to investors—from the advice shouted on television to annual reports, financial statements, and the ever-ambiguous subject of inventory.
• What's It Worth—to Me distinguishes investing from speculating and helps you understand the actual value of a company, so you can act when the price is low enough for buying or high enough for selling.

Filled with in-depth insights and practical advice, The Entrepreneurial Investor will inspire you to treat investing like a business and to think of yourself as an owner. Once you realize that making money is your business, you'll be a better investor for it.