Back in March, I wrote about John Rogers' Ariel Investments. Charles Bobrinksoy, who manages the focused value fund, currently doesn’t like names that are omnipresent in indexes. Instead, he likes names that aren’t in many indexes at all.
One category that’s underrepresented in indexes is partnerships; Lazard (LGI) is one he named.
At the time, it traded at just 4.2 times enterprise value-to-earnings before interest and taxes.Ă‚ Today, it trades at 5.5 times EV/EBIT. You could argue metrics like that don't require much more research.
Since I didn't know much about Lazard or its history, I remedied that deficiency by diving into "Financier, The Biography of Andre Meyer: A Story of Money, Power and the Reshaping of American Business."
Meyer lead Lazard from 1944 until 1975 and is a key figure in shaping its culture.
Who shouldn’t read this book?
If you aren’t interested in financial history or Lazard but want to learn more about investing or the banking business, I would pick up something else.
Although Meyer is pictured as a shrewd deep-value investor and you occasionally get an idea of the kind of financial engineering he pulled off, there are more informative options out there. Financial engineering techniques age way too fast anyway. You could argue it is interesting to learn about the drive and the great lengths Meyer went to deliver for his clients; really pushing the envelope at times.
Who should read this book?
If you are a Lazard employee or would-be employee, it's a no-brainer. If you are thinking about investing in the company or one of its competitors, it can’t hurt to pick up this excellent biography. If you are more generally interested in financial history or the competitive landscape of investment banking, this could be of particular interest. Finally, if you are specifically interested in the thought process or life of the investment banker himself, this is the one and only book for you.
It is also interesting to learn more about Meyer's thought process and how others perceived him. The research done to complete this biography really impressed me. Often we get great insight into a deal or investment that happened decades before we were even born.
There are times where I felt a better understanding of investment philosophy or theory would have given the writer a better perspective into Meyer's motivations and actions. For example, the author implicitly criticizes him for some investments where he reaped a quick 50% win, quick double or even triple. Some of the companies would have gone on and become 100-baggers eventually.
Holding a portfolio or even a few stocks like that comes with a whole different level of risk, however. One I can easily argue may not be well suited to an old-fashioned partnership structure. Meyer appears to buy and sell like a deep-value investor, so the hindsight investment evaluations are one of the few flaws of the biography.
Finally, the book also reviews Meyer’s “social life” (I don’t think there was a personal life). He advised the Kennedys, befriended Jackie Onassis and impressed even Rockefeller. Without giving away too much, he lived a curious social life, including his marriage, without anything remotely resembling the modern notion of work-life balance.
Disclosure: No positions.Ă‚
