Leslie, a member of The Motley Fool online community, recently read a discussion board post and was thoroughly impressed. "Once again, thank you for your wonderful input," she wrote. "You have taught me more [about investing] in two weeks than I have learned in the past two years."
Like most people who have online encounters with the investor who goes by the name Pencils2, Leslie didn't know she was thanking a middle-schooler.
On the surface, 13-year-old David Kretzmann is a normal teen: He lives in his tennis shoes, hates his household chores (especially if they involve the dishwasher), hopes to someday play in the NBA, and keeps a messy room. But it's not your typical teenager's clutter.
Financial foraging
"Oh, gosh, it is a mess," said the Boy Buffett about his bedroom in his parents' California home. "You open the door, look to the right, and find a big pile of unfolded clothes. You'll see a pile of 40 annual reports, prospectuses, and SEC filings that I flip through in my spare time. You'll see a lot of savings account statements, as well as an unmade bed. It's a mess, but it's fun to forage through every morning."
He's put that bedside research to good use, investing his dollars-a-week allowance wisely and enlightening Motley Fool community members day in and day out -- at least until bedtime. Is he wise beyond his years? You bet. Case in point: A Motley Fool representative actually began discussions with David about a job ... before he realized that child-labor laws would get in the way.
"I'm not surprised by how he's jumped into the investing world," said David's dad, Tim, explaining that his son's never been one to do something only halfway -- household chores aside. "When he was 2 or 3 years old, for example, he got into Tigger from Winnie-the-Pooh. First, he watched Tigger, then he started talking like him, then he learned his moves, and then he actually got to be Tigger for Halloween. He couldn't possibly take the Tigger suit off, so we had to get another one so we could wash [the original] once in a while. And we'd show up at all sorts of events with this little guy bouncing around like Tigger. 'Yeah, that's my youngest,' I'd say. 'He's kind of into Tigger, heh-heh.'"
But from Tigger to stock tickers, David's diligence never faded. He has his dad to thank for the latter: "A couple of years ago, when I became a Fool, I wanted desperately to dive in and learn as much as I could about the investing world, but I was continually frustrated by my lack of hours in the day to give to it. I spent some time on the computer, invested in some stocks, and gave it the energy I could. It didn't take long before David was looking over my shoulder, asking questions, and wanting to open his own account. Then, he did what he's always done ... he jumped right in."
Chatting with the Boy Buffett
Despite his relative inexperience in the market (and in life, for that matter), the disciple of Buffett and Lynch has a grasp of stocks that would be the envy of investors much David's senior. The Stock Advisor subscriber and self-described devotee of David and Tom Gardner, the co-advisors of that newsletter service and founders of The Motley Fool, recently sat down with him for an interview.
TMF: What kind of investor would you say you are? Growth? Value? Dividend? Other?
David: I'm a little bit of everything. I am a long-term, buy-and-hold investor for sure. I own a turnaround (Denny's (NASDAQ:DENN)), growth (Hansen (NASDAQ:HANS)), dividend (IndiaFund (NYSE:IFN)), and value (Cendant (NYSE:CD)). Other than that, I make sure I have a diversified portfolio with companies that fit into different strategies.
TMF: What stocks have been your favorites -- and your biggest disappointments?
David: I own 19 companies in all. My best-performing stock is NVIDIA (NASDAQ:NVDA), a Stock Advisor recommendation that has more than doubled for me.
Since I am investing for the long term, I don't have any disappointments yet. If I have a stock five years from now that hasn't done well, I will be disappointed, but not right now.
TMF: How do you decide what would make a good investment?
David: I look at the company and ask myself, "Will people still want this product in five to 20 years?" I love old, experienced businesses as well. For instance, one of my holdings, Makita (NASDAQ:MKTAY), was founded in Japan in 1915. Makita makes small tools (such as saws, sanders, drills) that are high quality and people have wanted for 90 years. Makita has $730 million in cash and only $30 million in debt. I like for a company to have at least 10 times more cash than debt. This provides a margin of safety.
Then I look at management. Another one of my holdings, Hansen, has a CEO who has been in that position since 1990. He has done a terrific job. (Hansen has gone up more than 6,000% during the past six years, making it the top-performing stock in that time frame.) I like a company if its management has been on board for at least three to five years. I check to see the competitive field. If a company has some competition, I look to see if its product is unique enough to help it improve income and earnings.
TMF: What do you hope to do with all of your investing gains? Do you want to retire when you're 22 or pay for your own college tuition or buy a giant house for your family?
David: You know, I haven't really thought about that. Right now, I'm hoping to hold all of my stocks for at least 20 years. I agree with the great investors that buying a share of a stock is not buying a lottery ticket; you are becoming an owner of that company. I want to stay an owner of my companies until I die, if possible. That is what investing is all about, and why I believe in buying what you know. You want to feel very comfortable with your stock holdings. That is absolutely my top priority.
---
In 20 years, he'll only be 33. And while no one can say whether his room will be clean and his dishwasher loaded, there's a strong chance that people will still be thanking him for his investing advice.
David Kretzmann has his own TMF discussion board, Pencils Palace , and is using the Stock Advisor methodology of buying whatever stocks give him the best chance of beating the market, regardless of investing strategy. For a 30-day guest pass to Stock Advisor, including access to all of David and Tom Gardner's recommendations and a chance to chat with David Kretzmann in the Stock Advisor online community, click here.
Roger Friedman does not own shares of any company mentioned in this article. Cendant is an Inside Value recommendation. The Fool has a strictdisclosure policy.
