By DAVID MOON, Moon Capital Management,
November 4, 2007
Some sociologists believe that our names are important. I don't know; I've never given it much thought. I've always felt like a David, even though I'm not sure exactly how that's supposed to feel. If my name had been Warren or Geoff or Dick, maybe my life would have been different; I don't know. I do prefer David to Les. I've always wanted to meet someone named Les Moore.
Investors are fascinated with the names of things. Companies certainly think so. In January 2003, Phillip Morris, the evil tobacco company under a constant barrage of lawsuits, changed its name to Altria.
We joked at the time that the purpose of the name change was to make it difficult for the plaintiffs' lawyers to find the company in order to serve legal papers. Besides, a name like Altria sounds altruistic ' a selfless concern for others.
Since its name change, the stock of Phillip Morris' I mean the Mother Theresa Company ' has returned 180 percent.
GTE changed its name to Verizon in 2000. Perhaps it should have stuck with GTE. The stock is still below its 2000 high.
Verizon did spin off its yellow pages subsidiary into a separate publicly traded company, calling the new entity Idearc. I can't even pronounce the Idearc. I would have thought that the name might have included something with a little descriptiveness in it, like maybe 'Verizon Yellow Pages.' Dumb me. The stock increased 40 percent in the first 6 months after leaving its mother's nest. I did own the stock, so maybe I'm not that dumb.
ValuJet was a rare airline success story until March 1996 when one of its planes plunged into the Florida Everglades. When customers decided to blame shoddy maintenance for the disaster, the company's recovery plan included a lot of paint and a name change to AirTran.
I wonder how popular the new Hardin Valley High School in west Knoxville would be if, instead, they had named it The Other Farragut High School?
Before its demise, we used to joke about the recurring name changes at the East Tennessee company that owned a 360-degree bubble photography technology and was commonly known as IPIX. First, it was officially Telerobotics. Then Interactive Pictures. Then Internet Pictures Corp. Then IPIX. Somewhere in there I think it may have been Omniview and IPIX Security.
If a man wants to buy a dog, don't try to sell him a goat. The large mutual fund companies and investment consultants have learned that lesson. It's been pounded into your head that you should own some growth funds and some value funds. But the value funds at one company often sport higher price-to-earnings ratios than someone else's growth funds.
Well-respected value investor Bill Miller, manager of the Legg Mason Value Trust, includes Google and Amazon.com among his five largest holdings. His average P/E ratio is greater than that of the Legg Mason Partners Large Cap Growth fund.
The Large Cap Growth fund owns longtime value-manager favorites Berkshire Hathaway and Wrigley. So maybe it should really be named a value fund. But it also owns Amazon.com. So maybe it really should be called a growth fund. But then you'd have two Legg Mason growth funds.
Maybe they should call one of them Idearc.
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).