Philly Deals: ‘Jackass' investing, not quite the Bogle way

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Posted: July 11, 2012

The recent top seller on Amazon.com's "investing — mutual funds" booklist is by an industry veteran from suburban Philadelphia. Not Vanguard Group founder and best-selling author John C. Bogle; the latest edition of his Common Sense on Mutual Funds ranks just fourth.

Number One is "Jackass Investing: Don't do it, profit from it," by Michael Dever, who works from a 250-year-old gristmill in Thornton (his architect brother Tom installed the trading room, offices and creektop glass floor) near Chadds Ford.

Since publishing last year and featuring on Pimm Fox's Bloomberg TV show this past spring, Dever says he's boosted Kindle sales to 1,000 a month — "ahead of Jack Bogle's book, which gives me pleasure."

Dever draws on his 30-year career as a hedge fund manager and Internet entrepreneur — plus a little inspiration from Bam Margera, West Chester-bred promoter of the Jackass daredevil-on-a-budget TV and movie franchise. "Never met him, but his Mom lives around the corner," Dever told me. He originally called the book Exploiting the Myths, but switched to the punchier title, because "I was inspired by the Jackass guys in that their whole concept was to take unnecessary risks. They got rewarded for doing that," while investors mostly don't, and that's the point, Dever said.

Dever makes bold claims in his promotional videos: "I make my money by betting against the people who believe in the myths. You can make more money with less risk." What's that mean? For example: "There's no magic ‘risk premium'" for owning stocks. Sorting price data, he finds "two dominant return drivers: earnings growth; and the premiums people are willing to pay," which vary over time. "For example, there are periods when GE earnings rose — and the stock dropped." That's because "institutional investors make the same emotional decisions as sports fans." Otherwise, U.S. and European pros would own the same stocks.

How, then, to balance investors' "irrational" preferences? Among other steps, Dever recommends proprietary data that may be out of reach for small investors.

Besides his portfolios, Dever built Spree.com, an early e-commerce site, and sold InterenetSeer.com Corp. for "several" million to Landmark Communications in 2007. After raising $10 million from James River Capital and other investors last year, Dever is back in the futures business, claiming 7 percent returns and $7 million in additional capital since inception. Why? "I like markets! The behavior, the trading. The entrepreneurial edge."

Serving small business

Main Line electronic-payments pioneer Bipin Shah's Universal Payment Solutions Acquisition Corp. has agreed to buy Allentown-based AD Computer Corp. and Payroll Tax Filing Services Inc.; Visa-Mastercard processor Jet Pay L.L.C. of Dallas, and Electronic Merchant Systems of Cleveland, for a total of up to $179 million in cash and stock, in an effort to build a one-stop payment-services company targeting small businesses and their low-wage workers.

"I've always wanted to service small businesses," says Shah, of Rosemont. He made previous fortunes building electronic payment networks MAC Card (now First Data Corp.'s BuyPass), Genpass (now part of U.S. Bank) and Gensar (Chase Paymentech).

"Nobody" currently offers a "one-stop shop" to small firms and their "low-income workers, who are being ripped off by check cashing agencies and Western Union," Shah told me. "Paychecks, gift cards, sending money home to Mexico or India by Western Union, getting a money order to pay a telephone bill — think of all the fees they are currently paying … We'll supply them with a single piece of plastic they can use electronically. This will be like the MAC network, so they can get money everywhere."

Publicly-traded Universal, which raised more than $70 million in a share sale and has borrowed $60 million from banks, will pay $104 million in cash for the three companies, plus $38 million in newly issued shares, with up to $25 million in additional payments if the businesses meets targets. Universal projects sales of around $79 million this year, rising to $131 million in 2014, and profits doubling to over $20 million. The companies employ around 400, with more hires in the works, pending Securities and Exchange Commission approvals.

Contact Joseph N. DiStefano at 215-854-5194, JoeD@phillynews.com or @PhillyJoeD on Twitter.

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