Think that money-making market-beating investment opportunities are only to be found in far-off places? Or that Wall Street’s got a lock on uncovering great companies with excellent long-term prospects? Peter Ricchiuti, who’s been teaching finance and investing at Tulane for the past 27 years, would ask you, politely, to think again.
In his new book, Stocks Under Rocks, Ricchiuti details his unique approach to identifying and researching promising publicly traded companies. To start, he’s looking where the big money and analysts on Wall Street usually aren’t, leading him to focus on smaller, underfollowed companies based in Louisiana, Mississippi, Texas, Alabama, Georgia and Florida. These companies are more likely to be undervalued, and are often so small that many big funds and money managers can’t invest in them.
Next, Ricchiuti’s Tulane students actually become the analysts themselves. They dig into businesses and create financial models, and most importantly, Ricchiuti and his students also visit the companies in person, meeting and asking questions of management face-to-face. Through his innovative Burkenroad Reports program, his students get the valuable, real-life experience of what it means to follow, research, and understand public companies.
What’s different about this book is that Ricchiuti uses the examples of actual companies he and his students cover to explain his investing philosophy, and you’ll likely recognize many of the companies mentioned. There’s a real Mississippi connection here, too. One whole chapter details the businesses and prospects of Jackson-based Cal-Maine and Laurel-based Sanderson Farms, which have both been excellent long-term investments.
Another interesting Mississippi connection is that Hancock Bank took notice years ago of the smart work and incredible investment opportunities being uncovered by Ricchiuti and his students and created a mutual fund to track their performance. Since its inception at the end of 2001, the fund has produced a total rate of return of 271 percent, outpacing the small-cap Russell 2000’s 132 percent and the S&P 500’s 77 percent. (What they’re doing works!)
A believer in sensible long-term investing, and in looking at the fundamentals of a business in order to determine its value, Ricchiuti’s book is an absolute joy to read. He’s very funny — it’s easy to see why Tulane students love him. His personality shines through in his writing, making the book lively and fun.
I should also add that I happily provided a blurb for this book’s back cover. I’d recommend it to anyone wanting to learn more about stock analysis and investing. You’ll look at the companies around you with different eyes after reading this one.
— LouAnn Lofton, firstname.lastname@example.org