Sandy Chin on the Importance of Mentorship

For over 20 years, Sandy Chin has managed the buying and selling of consumer staple stocks securing her expertise as a portfolio manager. She is the brainchild of the hedge fund Tidal Bore Capital, which she launched in 2016 and which has allowed her to manage portfolios focusing on bottom up analysis.

Chin was the senior analyst at SAC Capital Management in a consumer only portfolio management group. She began managing a hedge fund during her time at Visium Asset Management. Prior to SAC Capital Management Chin worked at Moore Capital Management, her first position on the buyside at a long/short firm. Before that, Sandy Chin served as the Vice President and senior analyst at Neuberger Berman.

Chin also worked on the sell-side at Bank of America and Donaldson, Lufkin & Jenrette where she met her mentor, William “Bill” Leach, who she would collaborate, learn, and study from throughout ten years.

Chin has an MBA from the prestigious New York University Stern School of Business and received a BA in political science from Columbia Universities Barnard College.

Chin spent ten years under the mentorship of Bill Leach and through that time honed her analyst skill set. She launched Tidal Bore Capital with Bill, reuniting as a team after six years at separate firms.

How did you establish your relationship with your mentor?

Bill hired me at Donaldson, Lufkin & Jenrette to join his team that was covering food stocks. At the time I was only the second associate Bill hired in his 20-plus-years as a Senior Analyst at DLJ. This seems so hard to believe now.

Bill was incredibly knowledgeable in his sector having been a top ranking analyst for years. Bill asked me to attend meetings and conferences with him. My tagging along enabled my real education in learning how to value staple stocks I learned how to question management companies and looked for pattern recognition in answers, tone, and body language. Bill told me when he first started out in the industry his analyst instructed him to attend meetings with managements and companies with no pen and paper. This was so the focus could be on the people, what they would say and how they would impart vital information about their company. Bill would joke that as soon as the meeting was over he’d run out and pull out his notebook and jot down as much as possible as quickly as possible. This skill set Bill honed of studying management tone and body language helped informed him on how to pick stocks. This process, as my mentor, he passed along to me.

This was in 1998, and at the time I was the only associate attending these meetings. At one investor day I had an analyst come up to me and state that he doesn’t let his associate leave his desk and he was not allowed to attend meetings like I was. It was implied that an associate’s role was to sit at the computer and work on models for the analysts. This was not a good system since the associates, with little to no interaction with management companies would not be able to then model the companies properly. Within several months other analysts started to bring their associates to company meetings and presentations. The other analysts were learning from Bill as well. They realized he was taking the time to teach and mentor his young associate, which made them stronger team members and made their modeling and stock picking better.

As an even stronger testament to the Bill’s character and dedication as a mentor and teacher, Bill took me with him to three different firms, ensuring that we stayed as a team and that I was able to continue to learn under his aegis. He essentially dragged me to the buyside, our third shop together, because I wanted to stay on the sellside but after meeting the Director of Research at Neuberger and understanding Bill’s idea to help me propel my career on the buyside I then happily and willingly left the sellside to go Neuberger.

What made my relationship with Bill unique was that he was willing to teach me in real time versus keeping me at the desk working on models. I would otherwise have no interaction with other analysts or management teams, which was the standard practice at the time for other associates.

What was the most significant hardship your mentor helped you overcome?

When Bill and I were at our third shop together, on the buy-side, I decided to attend the part-time Stern Business School program at New York University,. At the same time, Bill was helping me to launch coverage in my own sector. Bill was supportive of the dual work and roles I was taking on and helped me prioritize with the types of companies I’d launch and my scheduling for business school.

Bill helped me obtain promotions and new titles in tandem with attending business school. The business school program was an arduous two-and-a-half-year. He helped me navigate the overwhelming responsibility of managing my own sector while also making sure I was able to meet my academic goals. In Bill’s case he was able to help me see the forest and the trees bykeeping me focused on my long-term goals while meeting short-term assignments and requirements. This is unusual in a mentor as most tend to help with long term goals not daily analysis and stock picking.

What are the most valuable lessons you learned from your mentor?

1) Never turn down a meeting no matter how small the company or how junior the analyst may be. You never know what tidbit or insight of information they could impart to help build a larger mosaic for a higher conviction position.

2) Always develop your own quarterly and annual models. Never borrow models from the sell-side as you cannot have confidence in the numbers unless you created and maintained the model yourself.

3) Always ask questions in meetings, on earnings calls, at conferences and during investor days. This will enable you to develop a relationship with management and analysts and will allow you to compare their responses at any given point to past answers to gauge if anything has changed for specific line items. Having a stable baseline relationship requires understanding the company and top management on a personal level, and this means investing time to get to know their approach to running a company, how they view investors, near term and long term earnings and what they deemed was the most important use of cash.

4) Always invest your own personal money in stocks so you understand and learn the feel of how these stocks move after a disappointing earnings report or strong investor day presentation. One of the best ways to assign value to a company is when everyone else is dumping the stock in the market, causing it to plummet. That can be the single best time to step in and buy the stock. The bad news is mostly likely all baked in, other value investors see a stocker that is cheaper on a p/e basis and the management companies appreciate you supporting their stock when it has been pummeled. The returns can be excellent and learning how these stocks move on good and bad news is vital to investing. Back around 1999 when trades were phoned in, I recall Bill standing over me and my phone encouraging me to buy a stock (that was not in our coverage universe) that was down over 20% on bad earnings. It was a commodity chicken company that we did not cover because it was so volatile but since we, at the time, put out a weekly commodity report, we were well aware that the chicken pricing cycle was going to turn. The stock was $8 at the time and jumped up to $16 by the time we wanted to sell. Having a mentor impart their conviction and help you learn as strongly as Bill did was incredibly invaluable in how I value and look at stocks to this day.

Would you recommend that new associates seek out a mentor to others entering your field? Why?

Absolutely. The best way to understand how to value stocks and what to look for in consumer staples companies is to dig deep and stick with the same sector for many years; having a mentor who knows the space and can highlight past anecdotes, scenarios, and share their wisdom is invaluable.

Have you served as a mentor to a young associate?

I was a mentor to our assistant while at a long-only buy-side shop in 2008 and I encouraged her (okay, I pushed her) to attend business school. I gave her strong recommendations based on her work ethic, and she currently is an investor relations analyst at CBS. We still meet up and discuss the industry. I have offered assistance to many other people seeking advice on getting into the industry and finding the right role within finance.

I would love to continue to mentor more people and help them establish a set of steps to find ideas and create a portfolio based on high conviction stocks.

What single piece of advice would you give to a young associate just starting their career?

Don’t be afraid to ask for more. Ask for higher wages, ask for more opportunities, ask for more promotions, ask to sit in on more meetings, ask to participate  on more management and analyst phone calls. Ask for more whenever you can. The more experience you have in all facets of  finding short term, long term long and short stocks the better your insight on stock picking will become.

What’s the most surprising way your mentor helped you?

Bill was semi-retired when I reached out to him to consider launching Tidal Bore Capital with me as the first consumer staples focused long/short fund. Bill agreed, and we worked hard to create Tidal Bore Capital. He is currently retired, but we still communicate several times a week to talk stock ideas and our sector.

The fact that he is still available to me and continues to teach and mentor me even in retirement is surprising. At the same time, I couldn’t imagine doing any of this without his input or expertise.

Connect with Sandy Chin on Linkedin and Twitter.