Will Attending an Investment Conference Make You Sad?

A couple of weeks ago I attended the famous Robin Hood conference, where prominent investors discuss markets and pitch stocks, all to raise money for the underprivileged of New York. I’d been comped by J.P. Morgan, or I wouldn’t have gone — that it’s for charity is nice, but I have a policy of not taking stock recommendations so I’d have worried it was a waste of time.

One presentation did catch my interest, on Heidelberg Cement. The bull case on European infrastructure seems obvious, Heidelberg trades at reasonable multiples, and as a contrarian I liked the audience’s evident uninterest during the pitch, which followed an AI panel that had them riveted. Still, I won’t be buying Heidelberg unless I do independent research, which I don’t have time for as I manage my own fund and Germany is outside our mandate.

The question is, why not? Why don’t I just personally buy a few of the Robin Hood stocks, knowing that the presenters were among the best in the business? It’s true that most are promoting their own positions, which often have already gone up and may be less attractive than when they first got in. On the other hand, no speaker wants their pick to a room full of peers to fail. I’ve pitched twice at conferences: one stock became a big winner (I won Best Idea Over Five Years) and the other also worked out well, but that one took seven years and at one point had more than halved.

So the presenters are great, let’s assume they’re sharing their best ideas — and yet, whenever I’ve taken advice from idea conferences, I’ve never ended up happy. After some consideration, I think I’ve figured out why.

Selection Problem

If you see, say, twenty presentations at an idea conference, how many will you actually buy? It won’t be all, but most likely a selection that stood out to you. Assume, given quality speakers, that 60% of the ideas are good, i.e., market beaters in the near-to-medium term. As Peter Lynch noted, 60% would be a very high batting average for any investor. How can you be sure you’d pick from those? And if you do have the ability to tell only the good ideas, why weren’t you up on the stage yourself, presenting?

In fact, I have a history of choosing badly from groups of ideas. When I’ve been in a hedge fund and personally bought a holding they’ve written about in their investor letters, it’s more often been one of their losers. This is also true of conference pitches, maybe because I gravitate to the most contrarian ones — e.g., Heidelberg and a Midwestern drainage/sewer pipe company at Robin Hood, instead of the sexy tech stocks that were mentioned.

But I’ll give you the benefit of the doubt and assume that your selection is equal to the conference’s overall good/bad rate, so you outperform on 60% of your buys. You get one “happy point” for each of those. As to the other 40%, I’ve found that buying stocks based on bad recommendations when I haven’t done a lot of independent research makes me disgusted with my own laziness and greed. It feels so much worse than a correct purchase feels good that I must give each occurrence 1.5 “sad points.”

Bought and Not Bought

Mathematically, with my assumptions an investor would be better off buying all the pitches at a conference rather than just some. I’ll get to why that is, but anyway no one would do that, so I’ll assume the investor buys 25% of them. It may be a bit higher or lower; that doesn’t matter much for my analysis. Of the 75% of pitches not bought, let’s assume that 25% of those were interesting enough to at least consider.

If you have considered an idea from a conference, you did not buy it, and then it does well, you will feel bad. I heard Bill Ackman pitch General Growth Properties at the 2009 Ira Sohn Conference, thought it was a great idea, checked the stock price and then did nothing about it. As it 10x-ed over two years, I felt sad inside, and apparently still do. This feeling is much less painful than a loss from a bad purchase, and unless you’re insane like me you might not even remember, so I’ll assign only 0.25 sad points per occurrence.

If you have considered an idea, did not buy it, and it went down, you may experience a little satisfaction from your discernment. This will be a faint emotion and you’re even less likely to remember the stock than one in the “interested-not purchased-went up” basket, so I’ll only give this situation 0.05 happy points.

If you have not considered an idea at all, you probably won’t track its future performance, so those are rated neutral.

Calculating the Formula

I have mentioned before that I was an English major and am basically innumerate, so I asked my good friend Chet Gepetti to run the calculations and here is his work:

Let = N=total recommendations, f= fraction bought, g= fraction good, i= fraction of not-purchased that interested you.

General formulas

Compute piece by piece (digit by digit):

A.

B.

→ So the first two terms

C. Now the last term:

Compute inner brackets:

Then multiply by

So total inside brackets (before N):

Multiply by N=100

Final Result:

Conclusion

Using my assumptions, Chet calculates that you would be slightly sad as a result of attending an idea-focused conference. This doesn’t include the admission fee or the cost of travel and lodging (food is normally included and normally not great).¹ Note that the math says if you buy all the ideas at the conference, you’re better off than buying only some. The utility of such a conference turns net positive at about 62% good ideas, whereas obviously the closer the ratio falls to 50% the worse off you are. So why go?

#1: Conferences are fun. Value managers can meet like-minded value people and complain together; tech investors can high-five while pretending they add alpha to the Nasdaq; and crypto enthusiasts can meet other con men and marks. Beer and wine are consumed, tennis and golf are played, and cigars smoked, including by non-smokers who feel sick from them in the morning. Lifelong friendships may be formed.

#2: There’s value in vibes. While I won’t buy or sell anything as a result of Robin Hood, the expert panels on AI and private credit and ruminations by giants like Jamie Dimon and Ken Griffin enhanced my overall understanding of the financial landscape.

I would argue that given these unquantifiable benefits — and of course taking into consideration the location’s luxuriousness or proximity — a professional investor should attend at least one conference per year, especially if someone else is paying.

1. My friend Sophocles Sophocleous runs a highly popular value conference in Cyprus where the food is reported to be great. I was going this year but got sick and canceled, though my stock idea, which was presented on my behalf, is off to a good start!