Van’s Note: Van Bryan here, Jeff Brown’s longtime managing editor. Over the past few weeks, we’ve been sharing insights from one of our colleagues, Jason Bodner.
Jason – as some readers know – spent nearly two decades working on Wall Street. Jason was a partner and head of equity derivatives for Cantor Fitzgerald. During his career, Jason executed institutional trades sometimes valued for hundreds of millions or even billions of dollars.
He used that experience to craft a “stock picking machine” that identifies big money flow in and out of stocks.
Jason uses this proprietary algorithm to identify what he calls “outlier stocks” on the verge of sharp moves higher. And open recommendations in Jason’s model portfolio now show returns as high as 252%, 410%, and even 783%.
Recently, Jason’s work caught Jeff’s attention. And whenever an analyst earns Jeff Brown’s endorsement, it pays to listen.
Jason and I sat down to discuss his background and his strategy for finding these “outlier investments.” Over the next few days, we’ll share excerpts from that conversation.
And be sure you sign up for Jeff and Jason’s newest investment presentation. They’re calling it The Outlier Investment Summit. Jeff and Jason will share an important announcement that will impact every reader of Brownstone Research. You can go here to sign up.
Van Bryan: Jason, thanks for taking the time to meet with me.
Jason Bodner: Of course, happy to do it.
Van: I’ve known Jeff Brown for years. And I’ve never seen him make an endorsement for an analyst like he has recently for you. So, I knew I had to speak with you. We’re going to talk about your strategy for identifying what you call “outlier investments.”
But you’re a new editor for many of our readers. So, I’d first like to ask about your background.
Jason: Sure, sounds great.
Van: I’ve heard people refer to you as a Wall Street “legend.” But the reality is you’re a humble guy. And you never intended to end up on Wall Street. I have that right?
Jason: (Laughs) Legend, huh? Well, I don’t know about that. But humble? I’d say yes – that’s right. I think most people have this image of the typical Wall Street guy. They imagine somebody who came from a privileged background. Maybe their family worked in finance. Ivy League schools. And that person naturally lands on Wall Street.
That wasn’t me.
My sister and I grew up with a single mom who was a schoolteacher. We were broke for years. I had patches on the knees of my pants. And there were years where we couldn’t afford a turkey on Thanksgiving.
It was a struggle. But that experience taught me to appreciate the real value of money.
And we also moved around a lot. We never stayed in one place for long. By the time I was 12, I had been in a different school every year. It just worked out that way.
Van: Humble beginnings…
Jason: Exactly. Very humble beginnings. And I didn’t even mention the thick bifocal glasses I endured (laughs).
Eventually, I ended up living in New Jersey. That was my “stable” home for years. I went to high school there. I ran cross country. And I started my first business with a friend at 17.
We started a car detailing business. We’d wash the cars, wax them, clean the air vents with Q-Tips. It took three hours, but we’d charge $80 per car. For a young kid, that was a lot of money. It was my first experience with entrepreneurship.
After high school, I attended Skidmore College. I majored in business. I met the woman I’d eventually marry, and I graduated with honors.
Van: And then came the career on Wall Street?
Jason: Actually, no. Most people are surprised to hear this, but my passion was music. Growing up, I always wanted to compose the soundtracks for documentaries for places like National Geographic or the Discovery Channel.
And through a combination of luck and perseverance, I eventually broke through. I worked in that industry for years. I even co-composed and conducted a ballet that was performed at Lincoln Center in New York.
And the crazy part was that I couldn’t even read music! I composed this score using a series of lines and colors.
Van: Wow… that’s incredible.
Jason: It was a phenomenal experience. I conducted four nights at Lincoln Center. There were thousands of people. It was standing room only.
But at the end of it all, after nine months of work, do you know how much I was paid?
I made a whopping $1,500… before taxes.
Van: Ouch…
Jason: Exactly. Cringeworthy. So, I decided right then and there that I didn’t want that to be my long-term career.
So, I called a friend and managed to network my way into an entry-level job on Wall Street. And that’s when I started working for Cantor Fitzgerald.
I began working in July of 2001, and I was working on the 104th floor of the north tower of the World Trade Center.
And I was very lucky. A month later, I moved to London to begin working at the offices in the U.K.
And of course, a month after that was the September 11th attacks.
I watched on television as these buildings I had been standing in weeks earlier collapsed. We lost 657 people.
Van: Do you still think about that? Does it stay with you?
Jason: I’ll admit that it does. It’s a strange sense of guilt.
I had worked on a desk with 15 guys. And we lost 14 of them. The only reason the 15th guy made it is because he was taking his kid to school. Most of them were my age. Just guys in their twenties.
I don’t talk about this much, but I used to have this nightmare where I’m standing on a concrete floor. And I feel the floor give out beneath me. And then I just hear floors pancaking on top of each other, until I wake up.
Van: And what did you do then?
Jason: I knew I had to go back. I volunteered to return to New York to help where I could. I flew back on September 18 on an empty Virgin Airlines plane. I still remember looking out of the widow as we descended into JFK airport and seeing the rubble under the bright lights. It was very surreal.
And then it was all hands on deck.
I was there to help rebuild not just the desk but the entire firm. But my job was in a junior capacity. And I did a few different things. Sometimes I ran errands. I helped facilitate trades. And I even worked on a new order management technology that helped manage bids and offers for large, institutional trades.
I stayed in New York for about four months, but then I moved back to London.
And that’s where I got thrown in the deep end as a broker…
Van: What were your responsibilities?
Jason: My job was to facilitate trades for large, institutional players.
So, our readers are retail investors. And when they want to place a trade, they simply open their online brokerage account, punch in the ticker, and invest a few thousand dollars. It takes maybe two minutes.
But imagine if people like Warren Buffett or Bill Ackman want to take a position.
Very often, they invest hundreds of millions or even billions of dollars. And they can’t invest like that through an online brokerage. They came to people like me. It was my job to make those trades happen.
And that’s what I did.
One of my first trades was for a massive client. The trade was for 30 million shares of a European telecom company. All told, it was about a $60 million trade.
And at the time, that was an incredible amount of money. Certainly more money than I ever thought would pass through my fingers anyway.
But as time went on, it became just another day at the office. I regularly executed trades that were tens of millions of dollars. Occasionally, I traded hundreds of millions or even billions. Not to sound pompous, but eventually, if the trade was less than $5 million, I’d kick it to one of my juniors.
I’m not saying this to brag or anything. It was my job. And I was good at it.
And that was also when I started to have an awakening. I noticed something about how stocks move. It’s something that very few people understand, but it’s been the cornerstone of my success ever since.
Van: What was that?
Jason: Most investors understand that stocks can move higher for fundamental reasons. Maybe a company has incredible earnings. Maybe they launch an exciting new product. Or there’s just a cool story out there. That could send the stock higher. That’s well understood.
But that’s not the only reason why stocks can spike.
Remember, I was executing these massive orders for my clients. And what I started to notice is that the stock would move higher as this massive amount of money flooded in.
It’s really just simple supply and demand. The amount of stock out there stays the same. But when you inject hundreds of millions, or even billions, of dollars of new demand in the form of big money buying, the stock has only one direction to go: up.
This was my “apple falling on the head” moment. This big money literally moves the market.
And here’s the good news. I’ve developed a system to track where this big money is going. It’s been the secret to my readers’ success.
Using this data, we’ve seen returns as high as 252%, 410%, even 783%. And those returns aren’t back-tested trades. Those are real recommendations I’ve made that are in the portfolio right now.
Van: I’d like to talk more about that. But first, I’d like to just cap off your experience working on Wall Street. Most people have this perception that it’s a rowdy industry. What was your experience working in that environment?
Jason: Compared to now? It was the wild west. And when I started, it was a bit of a shock.
I’ll spare you the gory details, but there were some crazy things happening. There was hazing. My first week on the job I’d run out and get lunch for 20 guys at Burger King.
Every other sentence was cursing. I saw phones thrown against a wall and through computer screens. A handful of times, fist fights broke out.
Van: Really?
Jason: It sounds crazy. And to be clear, I never did any of that stuff… Well, maybe I broke a phone. But no fist fights!
But you need to remember, every moment there were several trades on the line worth hundreds of millions, sometimes billions, of dollars. And if the trade fell through? Things got heated fast.
But here’s what I will say about Wall Street…
It’s probably the least misrepresented industry. So many companies in other industries claim to have these noble ambitions. But at the end of the day, all these companies care about is making money. Wall Street makes no bones about it.
Van: Jeff writes about this sometimes when he covers the technology industry. Companies like Google and Facebook claim to have noble goals. They’ve been great investments. But the companies are only there to make money.
Jason: Right. But with Wall Street? At least they’re honest about that. And in a strange way, I respect it.
But I’d make another point to anyone reading this right now. And it’s important we understand this…
Wall Street – as a whole – really does not care about retail investors. I wish that wasn’t the case. But it is.
Investing in great companies is a way to make incredible wealth. But it helps to have somebody “in your corner.” I know that’s what Jeff has done with his work. And I like to think that’s what I’m doing with my research as well.
Van: Thanks for your time, Jason.
Jason: Happy to do it.
Van’s Note: Be sure you tune in tomorrow for the next installment in our conversation with Jason. I’ll ask him how he’s been able to find “outlier stocks” on the verge of sharp moves higher. Be sure you check your inbox for that.
And remember to tune in to Jeff Brown and Jason’s special investing presentation tomorrow at 11:00 a.m. ET. We’re calling it The Outlier Investment Summit. And as I mentioned, Jeff and Jason will reveal a major announcement for Brownstone Research. Go right here.