At the tiny offices of Bespoke Investment Group in Harrison, N.Y., the founders answer the phones and also provide clients with a stock portfolio that has jumped 65 percent in one-and-half years, more than double the S&P 500's gain.
Co-founders Paul Hickey, 39, and Justin Walters, 32, use a treasure trove of historical data, along with fundamental and technical analyses, to put together the "Bespoke 50," a concentrated growth portfolio that currently includes varied names such as Charter Communications, Lions Gate Entertainment, Yelp and Pandora.
"They definitely don't expect us to answer the phone," said Walters of his thousands of clients that hail from New York City, China, India, and even Trinidad and Tobago. The firm has just three employees—the founders and one analyst.
The two started the firm in 2007 after they both left Birinyi Associates, bringing with them many of the tools of the trade they learned from Laszlo Birinyi, the legendary market strategist who once ran the equities business at Salomon Brothers. "It was extremely noticeable when they left Birinyi," said Richard Rosso, a senior financial advisor at Clarity Financial.
The firm takes the Russell 3000 Index, which contains the biggest 3000 names in the stock market, and then runs a fundamental screen based on past and future growth figures that whittles the list down to about 500 names. A second screen using a proprietary technical analysis measures momentum, as well as overbought and oversold conditions, narrows the list to about 100 to 300 names.
From there, Hickey and Walters use subjective analysis, looking at the charts specifically with an eye for the stocks they see as on the verge of a breakout.
For example, Netflix was added last week because for the past year it's shown a classic historical pattern of pulling back to its prior high and then rocketing ahead. Right now, shares of the maker of streaming software and Emmy-nominated content has pulled back to it its previous high in May and in their eyes is primed for another bump.