The very first column I wrote for The Boston Globe offered advice to investors and beer drinkers who may have been tempted by the upcoming initial public stock offering of Boston Beer Co., the maker of Sam Adams.
That was in the fall of 1995, and my message was clear: Don’t buy. The deal, I concluded, was an overpriced sucker’s bet.
Nearly 20 years later, I can tell you one thing for certain: Boston Beer founder Jim Koch briefly became a billionaire in 2015, thanks to his holdings in the company.
Over two decades, I’ve looked into many more IPOs — from A123 Systems Inc. to Zipcar Inc. — and offered readers advice about their prospects. You can’t get them all right, but I think I was on the mark most of the time.
Whether my call on the Boston Beer IPO was right comes down — like so many other investment decisions — to timing. The stock has returned an average of 11.1 percent a year since its debut, beating the roughly 8 percent gain turned in by major market averages such as the Standard & Poor’s 500.
But most of Boston Beer’s big gains have really taken place in the recent past. For most of its first decade, Boston Beer stock was a loser. Ten years after the IPO, the price of those shares was practically unchanged. Investors needed a really long-term view to make out on the initial offering.
What stands out in this story is Koch’s very obvious passion for his product — regardless of what happened in the stock market. When demand for craft brews really went through the roof, the quality of Sam Adams was well-established, and Boston Beer became a stock market winner.
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The mutual fund industry was booming when Boston Capital first appeared in the Globe. It had captured the hearts and minds of middle-class America by earning big money for individual investors in a go-go era.
The fund business was loaded with star money managers in those days, and no city had more of them than Boston. They made great column material.
But fund companies soon decided the star system was bad for business. They turned money management over to faceless teams of investment pros. Employees couldn’t walk out the door with the company’s business if customers never knew who they were.
Now, actively managed mutual funds are getting clobbered by passively managed index funds and exchange traded funds. They desperately need to revive the old star system, a point I made just a few months ago.
Sure enough, I recently ran across an two-minute video ad online, featuring Fidelity Contrafund manager Will Danoff and a story that would remind you of the heart-warming old commercials Hill Holliday once produced for John Hancock.
The storyline: A man writes to Danoff long ago, explaining how his family hopes its investment in Contrafund will help put his young son through college someday. Over time, the letter becomes an inspiration for Danoff, the kid grows up, and Contrafund makes lots of money for everyone.
It certainly helps that Danoff, who celebrates his 25th anniversary leading Contrafund on Thursday, is one of the best managers in the business. But the actively managed mutual fund business needs to do whatever it can to revive the old star system.
Downtown Boston depends on that business.
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Everybody loves to read about a rogue, but we have seen so many come and go. How do you choose a favorite? My vote is a tie between two deserving candidates.
Emanuel Pinez ran Centennial Technologies of Wilmington, one of the hottest stocks on Wall Street in the late 1990s. He led an amazing con that was based on some unusual Wall Street math.
Pinez owned a large percentage of the public company, and that hot stock was priced at an astronomical multiple of earnings. Thanks to those two facts, Pinez could make a fortune by placing product orders and paying for them — even though the company never filled the orders. The increased revenue drove up the value of his stock by more than the cost of paying for the fake shipments. A judge sent Pinez to jail for five years and ordered him to pay $150 million in restitution. I lost track of Pinez long ago, but doubt shareholders ever got much of their $150 million back.
Robert DiIanni was never convicted of any single fraud quite so audacious. But he was one of Boston’s most prolific, unrepentant financial con men. And he never let a little jail time get him down.
I wrote about DiIanni in 2007, after his latest “investment opportunity” seemed to be unraveling and he had apparently decamped from New Hampshire for Switzerland. He had only recently gotten out of prison for the third time in his career. Soon, a warrant for his arrest was issued in New York, and it appears to remain in effect. As far as I know, DiIanni is still in Switzerland. But he never writes or calls.
The Red Herring
This is the last Boston Capital. Thanks to so many sources and colleagues for your help over the years. And most of all, thank you for reading.