Sunday, November 04, 2007

"It's All About the Mustard"

“It’s All About the Mustard”

It was a blast. I’m referring to the Baron Investment Conference on Oct. 2 at the Metropolitan Opera House, where for almost eight hours 4,000 shareholders
• received a flood of stock tips from astute Baron portfolio managers – like Intuitive Surgical (microsurgery);
• heard CEOs of various Baron companies speak – the star being the down-to-earth Mickey Drexler of J. Crew Group, a specialty clothing retailer, and
• listened to the mystery entertainer, Bette Midler, sing as well as tell old, dirty jokes, channelling Sophie Tucker (people on stage even called her “Soph”).
The Divine Miss M, at 62, is no longer so beautiful and voluptuous as she once was, but she had three gorgeous dancers on stage with her, and they were smashing. (Earlier, during a break, three fine female classical string musicians had also performed, and they, too, I am happy to report, were not attired excessively demurely.)
First, Drexler, then the stock tips, then the entertainment.
Retail is Detail. The title of this article might have been “Bette at the Met,” but the mustard reference won out. Drexler recalled attending a business luncheon where sandwiches were distributed. Where’s the mustard? he demanded. None was available. And Jews from the Bronx, like him, want mustard and not mayonnaise on their sandwiches. His motto, “It’s all about the mustard,” means: Retail is detail. Everything is detail.
Advice that Drexler gave:
*New leaders should have relevant experience. Don’t put a department-store guy in charge of a car company. (Nardelli from Home Depot to Chrysler?)
* “Women will buy anything, anytime. You don’t get rich off of men. Guys get led into a clothing store, every six months, and they’re scared shitless.”
* Forget about mister, missus and miss. Call people by their first names. Formal terms “create barriers.” By the same token, offices shouldn’t have walls. And don’t be fancy. His own headquarters has a loudspeaker, so everyone can quickly hear important messages.
* Visit your stores and chat with the people. “What can we do better?” (When he worked at Bloomingdale’s, employees were thrilled if top management just said hello.) “Just because you have a lofty position doesn’t mean you’re a big shot.”
* Be available. “Who can do something better and faster than the CEO?” He himself is careful to return phone calls within three hours.
* “Eliminate the crap on your desk every day.”
* Listen to young people. “Although no one listens to you when you’re young.” (When I was in my 20s and working for Pageant Magazine in the 1960s, I knew: I could run this crummy little magazine far better.)
* “You’ll never win just on price. You need price plus an edge.”
* Don’t listen to focus groups. “No one told Apple to produce an iPod.” (He’s on Apple’s board.)
* Do your own research. Don’t ask a headhunter what he or she thinks of an applicant when the headhunter stands to win a commission on a placement. Ask people who worked for the applicant what they think of him or her. Remember that some people can get to the top just by sucking up to their superiors—whereas if you drill down you find that two or three other people were doing all the work.
* Let go of anyone ineffective. “Most wait too long. The team knows when it’s time.”
*Have an exit strategy. In case a sure thing turns out to be a disaster.
* Act like a small company. Apple, like a small company, makes quick decisions.
* “I will continue to rely on my instinct and my gut.”
Asked why more clothes aren’t made in the good old USA, Drexler said, “I’d like to be here, but the expertise isn’t here, and it hasn’t been here in years.” You’ll find expertise in Hong Kong.
Another speaker, Roger S. Penske of the Penske Automotive Group, sang the praises of the SmartCar – of which his company owns nearly 40%. It goes on sale here in January. Forty miles a gallon; 9 feet long, 5 feet wide and tall. Price: $11,500 to $16,500. Repairs will be made by Mercedes Benz dealers. For $99, you can pre-order one. Go to www.SmartUSA.com.
“SmartCars will be ubiquitous in short order,” he predicted.
***
Stock Tips. Ron Baron himself described promising areas (“megatrends”): infrastructure, health care, education, financial services. He also announced that Baron is introducing a foreign stock fund.
Portfolio managers and their favorite stocks:
*Cliff Greenberg, Baron Small Cap: SunPower (solar cells), Intuitive Surgical, Great Wolf Resorts, Brookdale Senior Living, Wynn Resorts.
*Randy Haase, Fifth Avenue Growth: Diageo (spirits), Microsoft, Transocean (offshore drilling).
*Mike Lippert, iOpportunity Fund: Apple, Research in Motion, Google.
*Andrew Peck, Baron Asset: VCA Antech (animal hospitals).
***
Entertainment. Bette Midler was foul-mouthed and funny, and started by complaining that one CEO had “droned on and on.” Her fair is no longer red; it’s blonde. Have you noticed that when men grow older, they become bald—and women become blonde?
At lunchtime, shareholders could choose to hear either Sheryl Crow or someone named Michael Bolton. The Crow room was full, so I went to Bolton. Now, the last famous singer I had heard at the Met was named Natalie Dessay, and Bolton just wasn’t my cup of tea, so I left.
But I enjoyed listening to another singer, after lunch, [FILL IN LATER], from “The Pajama Game”: Powerful voice, nuanced singing.
Okay, I heard a few complaints. Not enough box lunches. Not enough diet sodas. Sometimes everything was too loud, sometimes people couldn’t hear. But the lunches were fine, the entertainment generally first-rate, the talks interesting. And, yes, the funds very worth considering.
I can’t wait till next year and next year’s conference. The mystery guest then will be… [FILL IN LATER].

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