30 Oct Connors Newsletter – October 2019
50 years in the making, this is the first of a four-part series that tells the story of Connors Investor Services as Jim Connors and his team grew and nurtured the firm from a research publication, The Connors Report, to an investment advisory firm managing in excess of $900M in October 2019.
If I push myself, I can make good things happen.
Dead of winter, 1973. Jim Connors left his office in Reading, Pennsylvania, to meet with an investment company in Lincoln, Nebraska, that was looking to cancel its subscription to The Connors Report. To add insult to injury, the tell-tale sign of a collapsed lung hit Jim as soon as his plane landed in Nebraska.
“Any sensible person would have driven straight to the hospital, but we needed that account,” said Jim in a recent interview. “We had our meeting, negotiated the services, and Connors kept the account. But I told my wife, Anna, to be ready to take me to the hospital as soon as I was home.” Jim finished the story with a chuckle in his voice.
CONNORS: ROOTED IN RESEARCH AND PUBLICATION
Before starting Connors Investor Services, Jim had a career to be proud of with Carpenter Steel (now Carpenter Technology, a well-regarded specialty steel manufacturer). He had quickly risen through the ranks and was an assistant vice president before starting his company in 1969. Unlike most investment firms, investment management was only a small portion of the Connors business model.
While the company managed a few portfolios, Connors primarily pursued research on small company stocks and sold its expertise to individuals and brokerage firms around the country. Jim circulated six publications a year with about 1,200 subscribers. As its publications became validated and recognized on a national basis, Connors received requests for exclusive research from larger, notable national investment firms.
Jim found his firm’s distinguished niche in options after reading Beat the Market: A Scientific Stock Market System by Edward Thorp, originally published in 1967. One of the earliest explorations of hedging in the equity market, Thorp’s work recommended selling expiring warrants against stock holdings, like a covered call position. Jim implemented the concept immediately and was so active in options research and trading that he attended the opening of the Chicago Board Options Exchange (CBOE) in 1973.
LUDEN’S AND CONNORS: AN UNLIKELY CONNECTION
The firm’s work in the options realm needed a new tool, and thanks to Jim’s early days as a computer programmer, he knew just how to make the data possible. However, this was the early 1970s, and not many major companies had a computer, let alone small businesses and households. Jim found a connection to the mainframe computer owned by the Luden’s factory plant (yes, as in “Luden’s Cough Drops”) in downtown Reading, which he was allowed to use on Friday evenings after the plant closed.
“It was on the top floor of the plant, and it seemed like you could see the city of Reading for miles in every direction,” recalled Peter Connors, Jim’s son, and current president of Connors Investor Services.
The CBOE sent the closing prices on a magnetic strip via Bieber Bus, which used to have terminals in New York City and Reading. Jim and his sons would pick up the tape, head to Luden’s, and run Jim’s program to identify opportunities that would be highlighted in the Connors Option Service, another publication offered by Connors Investor Services.
“We couldn’t leave until it was right. Unlike computers today, fixing a small programing error back then could mean hours of more work. The calculations were just the beginning – we also ‘Xeroxed’ the reports and prepared them for mailing,” continued Peter. “It was one of my earliest lessons in hard work and self-discipline.”
- Connors offices.
- Robert Cagliola, Brian McCoy and Robert Hahn.
- Front Row: Jen Spinka, Trudy Zerbe and Sue Perfetto.
Back Row: Maria Hill, Kate Moyer, Connie Boyer, Brendan McElroy.
- Front Row: Trudy Zerbe, Steve Silverman and Jim Connors.
Back Row: Peter Connors, Bob Leayman and Ron Seher.
- Anna Connors, Cathy Bolig and Jim Connors.
- Front Row: Steve Silverman, Tom Platt and Deb Covell.
Back Row: Steve Pottieger, Peter Connors, Mike Noon.
Connors discontinued publishing its Connors Option Service in 1977 after recognizing its investment management client base had increased, needing more attention and focus. By this time, the firm had solidified its role in options trading and was recognized across the U.S. as an experienced manager for portfolios with stock options. At one point, Connors had more clients in Texas than in Pennsylvania!
Thanks to Connors’ growing reputation, the next two decades brought more clients and staff. Additional relationship advisors and administrative staff were hired to handle the increased volume,
with Jim hand-selecting the right team members. The core principles at Connors have always centered around Integrity, Service, and Performance. While every team member has brought a unique set of skills to the firm, each joined the company with a fundamental understanding and commitment to these principles.
“Our best tool to recruit new business has always been word of mouth, even in the early days,” said Jim. “The key to our success is a team of people who are capable and experienced, which allows them to deliver the kind of service that we can be proud of.”
CONNORS TODAY: FIVE DECADES OF
DOING THINGS THE “RIGHT WAY”
Peter Connors was named president of Connors Investor Services in 2001, continuing his father’s legacy of leading with Integrity, Service, and Performance.
The model behind Connors’ business structure is unique for an investment firm. Goals are company-based, not individually-based. Client accounts are still referred to by clients’ names, not account numbers. Although Connors may no longer publish its research, it has team members dedicated to investment product development and implementing refined and practiced approaches to finding well-managed companies to add to portfolios. And, while Peter admits the room is getting more crowded, brainstorming sessions and meetings are inclusive processes meant to ensure that as many team members as possible have a voice in the decisions of the firm, just as it was when there were only five people on the Connors’ staff.
The Connors’ team shares a similar vision for the future of the company. Its core values are best utilized in a smaller setting, and while Connors certainly expects to continue its steady growth, it will be controlled and deliberate, just as it has always been.
TO READING, TOGETHER
Jim Connors of New York met Marlin Miller of Indiana at Harvard Business School in 1954, becoming friends as they both pursued their MBAs. After graduation, Jim came to Reading to work for Carpenter Steel, and Marlin arrived a few years later to work for Glen-Gery Corporation, one of the nation’s largest brick manufacturers.
“I ran into Anna buying a mattress at a local department store,” remembered Marlin of his chance encounter with Jim’s wife. Neither man knew the other had moved to Berks County, and the friendship quickly resumed. Jim and Marlin moved into the same neighborhood, raised their children, and regularly traveled together with their families for decades.
In the early 60s, while employed at Carpenter Steel, Jim began an investment club, and Marlin was one of the original members. As the investment club grew, so did Jim’s interest in researching and selecting stocks for the group. Realizing he may be able to start a new career around investments, Jim asked Marlin for his help in convincing Anna to support him in this initiative.
“I told her I was willing to invest in Jim, and that this was his real passion,” said Marlin. They eventually won Anna over, and Connors Investor Services and The Connors Report were born in 1969. Marlin joined the company in 1972. Together, they focused on business operations, research, and the Connors’ publications.
By 1974, Marlin realized he identified with the CEOs of the businesses they were researching more than with the research itself. He found an opportunity to create his own company, parted ways with Connors as an employee, but remains an active member of the Connors board.
The research component to Connors gave Marlin an advantage as he explored business opportunities. “One of my areas of research was around fast-growing medical products. Compared to my previous construction industry experience that was more cyclical, the medical industry was constant.”
In 1975, Marlin, with three associates, purchased a division of the former Wyomissing Industries that at the time of purchase, was owned by Rockwell Corp. Together, they created Arrow International and transformed the company from producing high precision metal products and machines to sterile medical devices, including catheters that are used in a wide range of surgical settings.
Jim and Marlin, and their families, continue to be friends and colleagues to this day. And Marlin, just as he did when he helped convince Anna 50 years ago, still believes in the Connors’ passion for its work and serving others.
Join us over the next few months as we continue the Connors’ story and celebrate our 50th Anniversary by sharing more about Our Team, Our Strategy and Our Impact.
Important Disclosure Information
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Connors Investor Services, Inc. (“Connors”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from Connors. Please remember to contact Connors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Connors is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. A copy of the Connors’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request .Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your Connors account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Connors accounts; and, (3) a description of each comparative benchmark/index is available upon request.