market folly

Philippe Laffont, founder of hedge fund firm Coatue Management, recently sat down with OneWire to give an interview on investing, his career, how he got started, and advice for others.


Laffont on Investing

On how to think as an investor: "For us, the key to investing is thinking: how can a company perform 3 to 5 years out?  Not to focus so much on the short term, try to see the forest from the trees, think about the long term.  Few people in the market think about the long term, and that's our edge.  It's patience and long term thinking."


On going long:  "The long side is hard because you're trying to project what can happen 5 years out and then come back.  It so happens, it's much easier to disprove things."


On short selling:  "If there's enough red flags, sooner or later it's like a sand castle, there's too many bad pillars.  Sooner or later, the castle crumbles.  The short side is more about pattern recognition and seeing odd things.  If there's enough odd things, that leads you to believe the company is wrong.  There's a second type of short, which is opposite of your long, which is: if Google does well, the Yellow Pages are probably not going to do well.  If Apple does well, that's probably not great for Nokia/RIM.  So that's the sort of thesis/anti-thesis winner vs loser. There's a whole big other group of shorts that are like strange anomalies that you have to pick."


On Coatue's beginnings:  "We started with $50 million in 1999.  In our first few years, the Nasdaq was down 80%.  In your professional life, more than once, you're going to come across something that goes absolutely the opposite way of what you were hoping."


On how he started as an investor:  ""We (he and his brother) started buying tech stocks in the 90's, blue chip's like Microsoft, Intel, stuff we knew (like Peter Lynch's approach).  We confused luck with skill.  But nevertheless, it gave us the passion.  If the market had gone down in those three years, I would have been doing something else.  The luck is very important."


Laffont's Career Advice

His advice: "The career advice I would have for people, is you need to do two things when you graduate. You need to do them both passionately. You need to do one thing passionately that is the obvious thing that you are supposed to do after you graduate (if you are in business, go to Goldman Sachs or Morgan Stanley).  At the same time you do that, in my mind, you need to do one thing completely off the beaten path, but also passionately.”

If you're seeking an investment career, he strongly advocated going to the big investment banks for 2-3 years in a "competitive" environment because you'll get the training you need, you'll see if you have the passion for it, and you'll learn a lot.

On seizing the moment: "When someone opens a door for you.. and everyone in life will have a few times doors opened... you have to come to that meeting prepared to achieve one thing.  For me, I knew I would speak with (Julian Robertson) for 1 minute, I went right for it (asking for a job)."


For more on Coatue's founder, we posted up Laffont's most recent media appearance on technology trends.

Embedded below are the videos of Laffont's OneWire interview, h/t to ValueWalk:

Video 1




Video 2



For other rare interviews with 'Tiger Cub' hedge fund managers, we also posted up Viking Global's Andreas Halvorsen and his thoughts on investment process.