As I mentioned in the first part of this posting, Mr. Michael was very generous with his knowledge.  He encouraged the audience to ask questions and, believe me, I asked till my heart was content.  In fact, my friend Jayson and I stayed so long after the presentation officially ended I think we tired him out!

We won’t take all the credit, however.  Other investors asked him questions too.  Here is a very quick summary in note form:


After you open the ABC Dirt-Cheap Stock Fund, will your other funds receive the same attention and performance as in the past?

• Synergy:  Some stocks found for the Dirt-Cheap fund will also be purchased for the other funds.
• Mr. Michael is the largest individual shareholder in each of his funds, so he has the most to lose.
• His reputation is on the line.
• His family has most of their money in the funds.
• Trust.

If you’re going to invest internationally with your new ABC Dirt-Cheap Stock Fund, are you concerned with accounting fraud considering there is no SEC equivalent in those countries?

• Yes.
• Mr. Michael says he talks to management and asks them the tough questions.  He is not afraid of them.
• Extra research.

How do you evaluate mining and oil stocks?

• Net Asset Value (NAV).
• Management is very important.

Does that mean you look for what’s in the ground and not earnings per se?

• Yes

Once again, with mining stocks you DO NOT focus on earnings or sales?

• Yes

Your NAV calculations for mining stocks are not the same as Price/Book right?  You are just calculating the value of the stuff in the ground and not the book value on the Balance Sheet?

• Correct.

I noticed on your website that you said you look at charting (technical analysis) before buying.  Can you elaborate?

• Mr. Michael’s funds are purely fundamental, but he does respect what chartists have done.  He looks for solid bases and volume.  He also stressed a Jesse Livermore idiom:  “The ticker talks!”

Do you have a particular investing style that you follow the most?  Like Ben Graham?

• Mr. Michael said he read Graham’s book, but pointed out that Graham almost went broke twice.
• Rather, Mr. Michael said he takes a little from everybody.
• Experience is the biggest teacher.
• Learn from the School of Hard Knocks.

Do you use any special tools or computer software?

• Mr. Michael uses a special computer called a Bloomberg Terminal.  Bloombergs give you detailed feeds of all market data.  He pays $15,000/month for the service.
• Reads Value Line.

What happened to ENC (down 80%)?  Why do you think it got hammered like that?

• Not really sure, but there is always a reason
• He’s sticking with it.

What happens if you get hit by a bus?

• ABC Funds has a multi-million dollar key-man insurance policy.
• His team is very capable and would be able to carry on.

What kind of people do you hire?

• Mr. Michael said he hires people like he buys stocks.
• Prefers to hire kids right out of University.
• CFAs.
• He has a lot of faith in his employees and gives them a long rope.
  

How much longer do you plan to do this for?

• Mr. Michael says he loves his job and has no plans to retire in the near future.  He gave Sir John Templeton as an example of someone who, despite being 92, is still happily investing.