Gary Klein

Gary Klein is a celebrated American value investing practitioner and finance professor at Tulane University's Freeman School of Business. He is best known as the visionary founder and director of Burkenroad Reports, a pioneering student-led equity research program. Unlike many of his peers on Wall Street, Klein deliberately shuns the limelight and the well-trodden paths of large-cap investing. Instead, he has carved out a unique and highly successful niche by focusing on what he calls “stocks under a rock”—small, publicly traded companies located in the Southern United States that are largely ignored by the mainstream investment community. His approach is a masterclass in grassroots research, demonstrating that immense value can be uncovered by simply rolling up your sleeves, getting to know local businesses, and looking where no one else is bothering to. Klein's work provides a powerful, real-world blueprint for how individual investors can gain an edge by leveraging local knowledge and diligent investigation.

Imagine an army of bright, energetic student analysts fanning out across the American South, visiting factories, interviewing CEOs, and poring over financial statements. That's the magic of Burkenroad Reports. Founded by Klein in 1993, this program turns business school education on its head. Instead of just studying theory, students produce institutional-quality research reports on a portfolio of about 40 under-followed small-cap stocks. These reports are then made available to the public and institutional clients for free. The program creates a win-win-win situation:

• Students get invaluable hands-on experience.
• Companies get much-needed analyst coverage.
• Investors gain access to high-quality, boots-on-the-ground research on companies that would otherwise fly completely under the radar.

It's a testament to Klein's belief that deep value is often found far from the bustling hubs of finance.

Klein's investment philosophy is beautifully simple and geographically constrained. He focuses almost exclusively on companies headquartered in a six-state region: Louisiana, Texas, Mississippi, Alabama, Georgia, and Florida. Why? Because this hyper-local focus provides a significant informational advantage.

• Familiarity Breeds Insight: Klein and his students can easily drive to a company’s headquarters, talk to management face-to-face, and get a real feel for the business operations. This is the art of scuttlebutt, a research technique famously championed by Philip Fisher.
• Lack of Competition: Big-shot analysts in New York or London rarely cover a small bank in rural Alabama or a niche manufacturer in Mississippi. This lack of coverage means the stocks are more likely to be mispriced by the market, creating opportunities for diligent value investors.
• Focus on Fundamentals: At its core, the strategy is about finding good businesses at fair prices. Klein looks for companies with a strong balance sheet, a defensible competitive advantage (a “moat”), and honest, capable management teams. He's not looking for the next hot tech stock; he's looking for durable, profitable businesses.

Gary Klein’s career offers a treasure trove of wisdom for the individual investor. You don't need a fancy computer terminal or a corner office to succeed; you just need curiosity, diligence, and a willingness to think independently.

• Look in Your Own Backyard: This is perhaps Klein’s most powerful lesson. You, as a local resident, employee, or consumer, may have unique insights into the businesses in your own community. As the legendary investor Peter Lynch advised, “invest in what you know.” Is there a local bank that provides outstanding service? A regional company that's constantly expanding? Start your research there.
• Embrace Being Small: Don't be intimidated by the giant investment funds. Your size is an advantage. You can invest in smaller companies that big funds can't, as the position size would be too small to “move the needle” for them. This is your playground, and it's where many of the market's best bargains are found.
• Do the Legwork: Value isn't going to be served to you on a silver platter. Klein’s success is built on hard work and primary research. Read annual reports, listen to earnings calls, and if possible, visit the company or test its products. This deeper level of understanding is what separates successful investors from speculators.
• Think Long-Term: The “stocks under a rock” approach is the polar opposite of day trading. It’s about finding a wonderful business and holding it, allowing your investment to compound over time. Patience is not just a virtue in this strategy; it's a requirement. This is the essence of long-term investing.