More Than Instinct Alone

A methodical Hamilton Lewis checks out the market before investing

Call it intuition. Chalk it up to clairvoyance. However you explain it, money manager
Hamilton Lewis (888-373-2082) has a knack for homing in on the best spot to be at the best possible time–an ability he counts on today to select stocks on their way up.

The first time the talent came in handy for Lewis, however, had nothing to do with share prices. Almost 20 years ago, at age 21, Lewis fled a civil war that engulfed his homeland of Liberia and arrived in New York with $400 in his pocket. Lewis knew enough to call a family friend in Houston on a lark, and hopped on an Amtrak train to visit. Less than a week later, the 6 ft. 8 in. Lewis landed a basketball scholarship to Houston Baptist University, which he helped lead to a 27-4 season and a NGAA tourney berth in 1984. After graduating, Lewis stayed in Houston, working first for several brokerage firms before finally starting his own outfit, Hamilton Lewis Capital Management, which now supervises $40 million in funds for individuals (the minimum he’ll manage is $100,000) and small corporations.

Since his arrival on American shores in the ’80s, Lewis has done quite a bit of stock market research to supplement his uncanny sense of timing. Picking the right stock at the precise time is key to Lewis’ approach, but it starts first with a look at the overall market to find which industry sectors are outperforming the stock market.

“I try to buy stocks in the top-performing industry group, but I want to catch the trend on the way up. You might say I want to be in the church of ‘What’s Happening Now’ not the church of ‘What Happened Last Year,’” he says. To plug in early, Lewis checks industry indices and focuses on groups that are doing better than the overall stock market during the last three months to half a year. It’s a step you can mimic by looking in Barron’s and examining the publication’s breakdown of industry-byindustry stock market performance.

Lewis labels himself a contrarian investor–the sort of stock picker who looks for companies that have fallen from the market’s graces but have a lot of potential. “I think that if a company’s stock price has fallen from a certain level, it stands a very good chance of returning to that same point, unless something is very, very wrong,” he says. Once he’s selected an industry or sector that looks promising, he checks to see which stocks have fallen the most from their 52-week high, or the highest price that stock might have attained during the previous year.

Not that he’s willing to go completely out on a limb. The Houston-based money manager also wants a sense that the overall stock market is starting to reconsider a company. He then checks on the average trading volume–another stat listed in Baron’s. Heavy volume means a lot of people or institutions are starting to get back into a stock.

Growth stocks, companies that are in hot

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