Johnson & Johnson: A favorite stock of Runnymede Capital

BY WARREN BOROSON

NEWJERSEYNEWSROOM.COM

BOROSON ON MONEY

By coincidence, five investors with the same New York City firm wound up as clients of Runnymede Capital, a money management firm in Mendham. The Forlorn Five didn't know one another. All they had in common was that they had lost around 50 percent of their money in 2008 — and they wanted better guidance, more personal guidance.

Someone to warn them against having all of their money in the stock market.

Andy Wang, 38, of Runnymede (left in the photo) thinks that boutique companies like his have an advantage going forward: They can offer personal, customized advice to their clients.

Runnymede has only 50 or so clients — the minimum investment is usually $1 million — but the assets under management have been soaring. From $80 million six years ago to $250 million today.

Runnymede is a pure money management company — no selling annuities, life insurance, tax shelters, CDOs, and such. Just money management.

Andy and his brother, Chris, 34 (right in photo), are growth investors — but they look for growth stocks that are reasonably priced, called the GARP approach (Growth at a Reasonable Price). They are on the lookout for stocks whose earnings and revenues have been steadily growing (12-15 percent a year), companies not choking with debt, and with management that seems to know what it's doing. (When they talk with management, they want to know what's likely to fuel the company's growth in the years to come, not what might happen in the next quarter.)

"We look for the best opportunities," says Andy, a cheerful, outgoing fellow. "The best management, the best valuation sheets, the best growth prospects." Not glamorous stocks with what he calls "office water-cooler stories."

While Runnymede's managers screen some 10,000 stocks, they wind up with only 30 or 40. I am overjoyed to report that one of their favorites has long been Johnson & Johnson, which I happen to own shares of.

They learned the fundamentals of investing from their father, Samson, a Yale graduate who obtained his MBA from Columbia. (Center in photo.) He was director of research at the Bank of New York for 10 years, then for 10 years president of Beacon Capital, a subsidiary. He started Runnymede in 1993. But he will go down in history as the investor who bailed out before the crash of 1987. (What I remember about the crash is the announcer on WQXR calmly reporting that the stock market had declined 508 points — and my sniggering and thinking, "What an ignoramus, thinking that the market could lose 508 points!" I confidently waited for a retraction — which never came.)

When I interviewed the brothers a few years ago, they were skeptical of Chinese stocks. Now they are optimistic — and their portfolios are slanted toward China. "We expect a lot of growth there in the next decade," said Andy.

Chris points out that McDonald's opened a Hamburger University in China last month, and it now has 1,100 outlets there — all owned by McDonald's, not by franchisees. And while in the United States, consumer spending accounts for 70 percent of gross domestic product, in China, it's only 37 percent. So there's plenty of room to grow.

Says Chris, China "is positioned for staggering growth over the next decade and beyond."

Runnymede, the brothers also point out, has reliable contacts in China. "We know and understand Chinese culture. We have traveled to Asia many times, and talked with government officials, investment bankers, academia, and company managements." Their father, by the way, was born in mainland China, lived in Taiwan, and speaks fluent Mandarin.

The Chinese are not only numerous, the brothers point out, but amazingly hard-workers. I remember reading about the devastating eruption of Mount Krakatoa, in 1883, and learning that while the deadly lava spilled down the mountain, destroying everything in its path, the industrious Chinese workers continued working.

What about India? "It's not as open, but also has lots of potential," says Chris.

Andy was educated at Trinity College in 1994, and was an analyst at Thomson Financial Services. Chris was educated at the University of Richmond, and was an analyst and assistant portfolio manager at TIAA-CREF.

Runnymede's fees: 1¼ percent, varying according to assets under management. Runnymede is where the magna carta was signed in 1215 in England.

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