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If you have a good process and good discipline, the score will take care of itself.”
Patrick Kelly has always had an affinity for sports. He played tennis, basketball, and soccer in high school and went on to play soccer at Georgetown. His interest in teamwork sought to answer one question: Why are some teams consistently successful while others are not? He believes the answer is told eloquently in one of his favorite books, The Score Takes Care of Itself, by Bill Walsh, the legendary coach of the San Francisco 49ers football team. Patrick gives copies of the book to his co-workers because he sees parallels between its teachings and investment management. "If you are staying stagnant in any competitive market, you are going to be left behind," he said. Today Patrick oversees a large team of analysts at Alger, where he is the head of the Capital Appreciation and Spectra strategies. He is still an athlete in body and mind, but these days you are more likely to find him on the golf course.
Did you always know you would end up in business?
My first business was the family paper route followed by a lawn cutting business. In college, my roommate and I wrote and sold macroeconomic study guides. We sold t-shirts as well. Selling study guides and t-shirts door to door was a lot of work. I started investing in college and quickly learned I could make more money investing.
So when did you make the switch to stocks?
My older brother introduced me to the stock market in my sophomore year of college and I began investing some of my personal money. I was one of the founding members of the Georgetown University Student Investment Fund, where we got to manage a portion of the school’s endowment. I very quickly fell in love with trying to figure out what is a good business and what is not, where you want to invest and where you don’t want to invest.
But you had a brief stint as an investment banker after college, before switching to money management?
Yes, I did that for two years. It was a good learning experience. One day I walked over to the Bloomberg screen and read an article about the Alger Spectra Fund and its performance. It seemed like an interesting place to work so I sent in my resume and was interviewed. At the time I had another offer with a top investment bank to join their technology and investment banking group, which was the premier job for someone my age. But there was just something intriguing about Alger I wanted to pursue. I have now been here more than 20 years.
Can you explain the responsibility of being a portfolio manager?
One of our former portfolio managers used to say that managing money for people is a great responsibility. It is one I have always taken very seriously when managing any of our strategies. I have always tried to work extremely hard and perform for our clients to the best of my ability.
You came to Alger in the late 90s during the tech boom and you’ve since spent a lot of time investing in technology companies. What makes technology special?
Technology is driving a tremendous amount of change, which is creating winners and losers across lots of different markets. It’s exciting to be analyzing these dynamic companies but you always have to be cognizant of one thing: what may be a great technology company today may not be a great technology company five or 10 years from now. We are of the belief that we are in the early days of one of the most innovative times in history.
Technology today affects more than just pure technology firms, correct?
That’s right. Every company is having to become a technology company to some extent. Companies are having to digitally transform themselves to remain relevant and competitive within their respective industries. Historically, retailers invested very little in technology and that is now changing.
What got you hooked on the Bill Walsh book, The Score Takes Care of Itself?
I read it on a vacation. The title grabbed me; it is about focusing on process, not the end result. If you have a good process and good discipline, the score will take care of itself. It teaches things that apply equally to investment management and sports teams.
You are something like a coach at Alger. What do you look for in people who work with you?
Probably the biggest thing is a passion for investing. It has to be something you truly enjoy. You also have to like detailed research, digging into businesses and trying to uncover things others have not. This is a competitive business, so you need a competitive fire and spirit to be successful. Also, you are going to make a lot of mistakes, so it is important to be able to learn from them. All great teams need to relentlessly focus on constant improvement.
Do you still play a lot of sports?
My soccer days have ended and my basketball days are coming to an end, so I have transitioned to golf. Golf is somewhat like our business. You are constantly trying to tweak your swing and improve your game. There is also a scorecard, so you know if you have a good or bad round. On top of that I love being out on the course. It helps me unwind. I have two little kids, so I don’t have as much time to play as I once did.
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