Friday, June 03, 2011

But...But....I Know David Tepper! - A Humorous Networking Tale

Actually, I don't know David Tepper. Never met the man, nor do I expect to.

This post is about networking. And how it isn't all it's cracked up to be. And sometimes can be downright exasperating, though, at the same time, rather humorous.

Take, for example, a recent so-called networking experience I endured over a period of a month or so.

It all began when a well-intentioned friend contacted one of his friends who allegedly has ties to the hedge fund community. One thing led to another, and the alleged contact called me, leaving a message basically instructing me to call him back and show appropriate gratitude for his attention because he knows David Tepper. In fact, he has known him for years!

David Tepper is, of course, the legendary hedge fund titan, billionaire and philanthropist. I don't know David Tepper, although I live within a stone's throw of the offices of his firm, Appaloosa. Of course, anyone in the business of managing equities would love to be allocated even morsels of Apaloosa's funds under management. The closest I've been to Tepper is, like thousands of other people, seeing him once or twice on CNBC.

Within a few days, my friend and I had a conversation about the phone message. He informed me that his contact told him I wasn't showing appropriate homage, so maybe he wasn't going to do me a favor by introducing me to David Tepper.

My friend, who is well-intentioned but naive, works in a white collar union job in the public sector. So his idea of networking was that someone does a favor for a favor-seeker. It took a few conversations to explain to him that real networking is quite different. It's not about favor-seeking, but, rather, someone with a business deliverable of real, demonstrated value being connected, via someone else's network, to third parties who may have use for, and be in a position to benefit from, the first person's valuable business deliverables.

My friend repeated this to his contact, explaining that it wasn't a favor to me, but, if anyone, to the contact's hedge fund community contacts, that was involved.

A week or so passed, and I received a copy of email correspondence between my friend's contact and one of his investment community contacts. From that email, however, I learned that my friend's contact doesn't actually know David Tepper. At all.

No, it seems the contact's investment community colleague works at a firm that may do business with Tepper's Apaloosa Management. Big difference. In fact, not only was it now clear that my friend's contact had simply lied about knowing Tepper, but his contact was not clear that even he knew the hedge fund mogul.

What that investment firm colleague actually wrote was something like,

'I'm not about to introduce your contact (me) to David Tepper- for several reasons.'

Fair enough. I can think of three reasons for his reluctance, nay, refusal to introduce me to David Tepper.

First, he isn't in a position to do so without losing his job. As it happens, upon seeing the email exchange, I recognized the guy's address as being at an institutional broker that caters to hedge funds. Quickly Googling the firm, I had no trouble finding the guy's picture and bio. He is by no means a heavyweight, either at the firm, or in the general investment community. He's not on the firm's board. He's not even listed as an "executive." No, he's a 'market strategist' for one of the firm's asset classes. That means his job is to try to come up with daily ideas to pitch to traders at hedge funds, hoping that they'll bite and reward his firm with some brokerage volume. I've read some of his observations- they're not a lot different from some of my own blog posts, except he's a lot pithier.

The guy's picture reinforced this. He had a worried, frazzled look, as if he was only two bad daily market direction calls away from unemployment. Despite the firm's contention that its people appear on widely-viewed business cable programs, I've never seen this guy on CNBC or Bloomberg nor, for that matter, anyone from the firm. There was no way this guy was introducing anyone directly to any heavyweights at his firm's clients without substantial vetting by his superiors.

The second reason the guy wouldn't introduce me to David Tepper could be that he doesn't actually know David Tepper. My friend assured me that the this brokerage employee 'lived in the same complex as Tepper,' and/or 'has been to Tepper's parties.'

Indeed? But the guy's brokerage firm isn't located anywhere near Tepper's firm's Short Hills/Chatham, New Jersey offices. And Tepper reportedly lives in nearby Livingston, so it's unlikely they actually were residential neighbors, either. Unless, that is, the brokerage firm's market strategist has a 90 minute one-way commute each morning across the NYC metro area to his middle-management job. Possible, but unlikely.

My friend's contact asserted this guy is a multi-millionaire with a huge house in a fashionable financial services-dominated NJ town. Again, unlikely, because if he was that wealthy, he probably wouldn't be a middle-manager at an institutional brokerage firm.

It's possible that Apaloosa holds some annual holiday bashes to which hundreds of people from its many supporting vendor firms are invited. Perhaps this was the sort of party at which the daily strategist had "met" Tepper. A cozy little gathering of 400-500 financial sector employees all on the make to strengthen personal contacts with Apaloosa and other sector personnel.

Then there's the third reason this daily strategist wasn't going to introduce me to David Tepper. I'll get to that one shortly.

One thing led to another, and the investment guy, whom I'll call R, and I arranged, via emails to speak one afternoon. I had sent him a one-page overview of my strategy's style, history, performance and methodology. He acknowledged it in an email about an hour before our scheduled talk, only to ask me to re-send it.

Not a good sign. This talk was about as welcome for him as, I'd guess, a root canal.

Now, being a corporate veteran of many years, I had gone over his firm's website pretty thoroughly, as well as done some conceptual rehearsal of what value my work would have for him or his colleagues. Both out of respect for the guy's time, and self-respect to demonstrate I knew how to do professional networking. Frankly, I was coming up short on the value point, and had emailed him, thus,

"I'm appreciative of your taking some time to have read the description I sent you and talk by phone. In order to make the most productive use of our time, I'd like to ask if you could take the lead by letting me know what your thoughts are regarding my equity strategy. I'm not really sure at this point if you have interested parties at other firms in mind, or what. So perhaps you can directly let me know your reaction and any ideas you have as to whom would benefit from my work."

 See, given his day job, it didn't seem that he was really in a position to pass me along to his clients, which would be the natural interested parties for my equity portfolio work. And his firm was unlikely to just have wealthy individuals pining for new equity strategies. So I wasn't really seeing the point in even talking. But, in order to exhibit due diligence to my friend and his contact, I played along.
Upon speaking with R, despite my email and one-pager, his opening remark was calculated to show me who was who, and who (R)  was going to show whom (me) where to piss, so to speak,
'So, what's your story?'
That was it. I was to verbally prostrate myself and hurriedly give him a 30-second elevator pitch on the phone.
Instead, I reminded him of my email of that morning, and quickly moved to conclude, for him, that, given his position at the firm, the firm's business, etc., it didn't seem likely he could just pass me along to his firm's multi-billion dollar hedge fund clients on the strength of a phone call.
That caught him by surprise, and he paused, noticeably. Then he shot back with a snarky,
'Well, that's not my entire job, you know. I do other things here, too. And your results of an average gross annual 20% return over 20 years isn't so exceptional. I've done the same over 30 years!'
Hey, maybe he handles making coffee, too? Or perhaps he captains the firm's annual United Way campaign? Maybe they just failed to mention that in his bio.
'Really?' I replied. 'So you manage a large chunk of institutional money at your firm, in addition to your daily market strategy job? Because I'm looking at your firm's website page with your bio and picture right now, as we speak So I'm just going by what your own website says are your job responsibilities.'
'Ah, no....... Actually, it's a personal account,' he replied rather sheepishly.
So now the third reason he wouldn't introduce me to David Tepper becomes clear.
R has his own agenda. Like many analysts, market strategists, and other people who are not and have never actually been professional managers of portfolios of other peoples' money, he secretly hopes to join those ranks some day. On the strength of his 30-year personal account track record.

Of course, if he's the multi-millionaire he was asserted to be by my friend's contact, he'd more likely have retired by now to manage his own money and that of various friends and colleagues. If you do the math, having even as little as $5MM of personal money self-managed at 20% per annum, on average, gives him a pre-tax $1MM/year. Add a few of his 30 years of 20% annual gains while living off of his day job salary and he's not going to be putting up with where he currently is. Then, again, considering that the guy making these assertions also claimed, falsely, to know David Tepper, one would be forgiven for simply disbelieving his entire story about R.
However, if anyone was going to be calling David Tepper about an equity strategy to which to allocate a few crumbs from Apaloosa's groaning board, it sure as hell wasn't going to be me.
It's going to be R, and he's going to be talking about his own equity strategy.
But if he does know David Tepper, and he's been beavering away on his secret little personal account strategy for over a quarter of a century, what's he waiting for? The Second Coming? December 21, 2012 and the Mayan calendar end of days?
Seriously, if R, who allegedly knows David Tepper, hasn't, by now, cashed in on that close, intimate and personal connection to join Apaloosa as one of its portfolio management masters of the universe, just when does he plan on doing so?
Perhaps the reality is that R has surreptitiously felt out contacts at his institutional brokerage firm's various clients, on the quiet, to see if he could join the other side. After all, it's no secret that an equity portfolio manager, or even analyst, at a firm like Apaloosa can make much more money than one of several mere market strategists at an institutional brokerage firm.
And he's probably had to be careful, because exposure of his atttempt to bolt from his current gig might jeopardize that job and subsequent career. But, judging from R's current day job and 30-year private efforts at equity portfolio management, it hasn't apparently been going very well. Perhaps he approached Apaloosa but his strategy wasn't a stylistic fit. Or was too volatile. Or wouldn't scale up in volume once Apaloosa directed some of its massive asset base to it. Or maybe Apaloosa understandably just doesn't need nor want strategies invented elsewhere, because they make so much money with their own ideas.
R could see from the one-page overview I'd provided him that I had managed money with one hedge fund, and had another started around my strategy by a legendary ex-Salomon Brothers partner, after only two years of work on the research and implementation of my business strategy and equity portfolio management concepts. Then developed, at a former business partner's request, a robust and profitable equity options strategy based upon my consistently superior-performing equity strategy. And he subsequently learned, from our conversation, that I was open to investors or partners because my recent, now former, business partner had misrepresented his financial ability to invest as promised in either the options or equity strategy. It wasn't the failure of either strategy's performance, but that of my erstwhile partner to fulfill his partnership obligations, that led me to acquiesce to my friend's networking initiatives.

It wouldn't be the first time that envy, jealousy and/or simple insecurity has driven someone to react negatively to another's profitable business opportunities.
After an awkward 15 minutes or so of conversation in which I provided some additional details about my work to R, after which he fell conspicuously silent, I again took the initiative to end the call by wishing him luck. From his silence and long failure to attract any other investments, I'm guessing his approach is qualitative, not prone to scalability, and/or probably exhibits more volatility than institutional clients typically prefer. In short, he's not bolting his day job to work for David Tepper at Apaloosa anytime soon. But, he can, like all of us, dream.

As for Apaloosa, David Tepper and me? Well, I already know from a cursory Google search and years of being aware of the firm that my equity management style is quite different from Tepper's firm's. They thrive on turnarounds and wounded companies, while I stick to consistently superior performing firms. As it happens, I was acquainted with one of Apaloosa's partners a few years back. When I struck up a conversation, in which I carefully did not suggest that he introduce me to someone at the firm, nor consider vetting me for an allocation to manage, he basically sniffed, looked down his nose at me, and sagely intoned that first I should get about $25MM to manage. After that, things would be easier. Somehow, after that incident, I wasn't particularly keen on making further contacts at Apaloosa.
I related the whole story involving R to my friend, who was understandably a bit chastened. He remained in denial that his prized contact had, quite clearly, lied about and invented his nonexistent direct personal connection with David Tepper. A direct connection about which he had boasted to both of us not once, but several times. Further, the contact couldn't engage in mutually-beneficial networking, confusing it, instead, with a game of parading his delusional and/or real social connections with other people, of whose jobs he had no comprehension whatsoever.
So much for networking among those who lie about relationships with famous portfolio managers, insecure portfolio management-wannabes and the like. Networking can be far more challenging than one might think, even when a product or service of clearly-demonstrable value is involved. But it can also provide some laughs along the way, as one sees human nature and all its foibles up close.

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