Neal Tully — Partner and Senior Research Analyst
I still might hold the record as the youngest-ever New York Post paperboy. As a third-grade entrepreneur, lugging newspapers around after school not only taught me the importance of hard work but also the benefits of a dense logistics route. And during the lazy days of summer, while other kids were splashing at the shore, I was learning about merchandising, inventory management and the importance of “location, location, location” by way of my makeshift lemonade stand.
Despite these early entrepreneurial efforts, I did not receive a formal introduction to the stock market until my senior year in high school. My class had a semester-long project where we each managed a hypothetical portfolio — with a not-so-hypothetical $200 first prize. When I wasn’t pestering my older brother John, a newly minted Wall Street trader, for his advice and insights, I was spending my afternoons poring over Value Line research at the local library. By the end of the semester, I was not only $200 richer, but I also had the tiniest glimmer as to what a future in investing might hold.
As a student majoring in political science at Manhattan College, my interest in the stock market grew. After graduation, I worked at JRC Partners, an investment partnership with an absolute-return approach. It was a great learning experience, but JRC focused on a short-term trading strategy, and I was more interested in working with a firm that had a long-term investing approach — exactly what I found at Daruma when I joined in 1997.
As one of Daruma’s first employees, I have learned nearly all aspects of the business firsthand. Although I’ve been here for over a decade, and lived through a number of market environments, it was in my first year that I came to fully appreciate the strength of Daruma’s long-term approach. In the summer of 1998, as the hedge fund Long-Term Capital Management was imploding, the Russell 2000 Index quickly traded down over 20%. In all the hysteria, as investors were overcome with fear, we were calmly scooping up bargains.
What I love about investing is finding great businesses at bargain prices. To uncover these opportunities, you have to stay focused and be willing to think differently. The most challenging part of the process is analyzing business models, getting to know the management teams and understanding their strategies. For me, these are all crucial steps in developing the conviction to own a stock for the long term. I don’t limit my focus to any one sector, so it doesn’t matter whether it’s a 10-year-old software company or a 100-year-old railroad equipment manufacturer; if the risk/reward is compelling, then it belongs in our portfolio.