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With Investor Phil Town

InvestED: Ep. 176- Special Guest: L.J. Rittenhouse on Investing Between the Lines

Diving deep into our first InvestEd Book Club title, Investing Between the Lines, Danielle interviews author L.J. Rittenhouse. We explore what brought Rittenhouse to begin analyzing companies based on CEO communications and we’ll talk about what exactly we should be looking for when reading shareholder letters.

In Episode 176 You’ll Learn:

Who is L.J. Rittenhouse?

    • Author of Investing Between the Lines, Rittenhouse began studying CEO writings and discovering patterns that indicated the quality of the business.
    • Rittenhouse created this book with the idea that it be easily accessible so that smaller investors could utilize the same techniques when evaluating a business.
    • Rittenhouse is on a first-name basis with investors like Warren Buffett.
      • Buffett recognized Rittenhouse for her important work in discovering the predictive power of CEO writings and their candor.
    • Rittenhouse focused on solving client problems by trying to understand companies beyond their numbers.
    • Rittenhouse believes that by examining CEO communications we can determine whether or not a company will do well or not.
      • Communicating this way is the most cost-effective method for driving value.

Investing Between the Lines by L.J. Rittenhouse

    • Why is analyzing communications so important?
      • CEOs represent the company as a whole, as well as its goals.
      • Even letters written with the assistance of more advanced writers represent the CEO and their company.
      • Roughly 60% of the valuation of the company can come from its CEO.
    • Proposes 7 systems comprised of 7 chapters to utilize when analyzing a company based on its CEO’s writings.
    • These 7 systems are made up of 120-140 topics:
      1. Strategy
      2. Vision
      3. Leadership
      4. Accountability
      5. Shareholder Relations
      6. Capital stewardship
      7. System of Candor – commitments and actions

Danielle recommends:

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On the InvestED podcast, Phil and his daughter Danielle shine a light on the successful investing strategies that gurus like Warren Buffett have used for 80 years. Listen in for a great stock market education on basics, learn how to invest on your own, and follow along with real-time examples and investing tips from week to week.

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