William J. O'Neil owns a stock-research service, a huge market database, a trading operation and now a mutual fund. But he'd much rather talk about his newspaper.
O'Neil created Investor's Business Daily in 1984 because he believed the Wall Street Journal's stock tables were useless for serious investors.
While the Journal and other standard newspaper tables show a stock's dividend yield and price-to-earnings ratio, O'Neil insists that those figures have no bearing if you're trying to pick winning stocks.
What's important, he says, is a stock's strength relative to the rest of the market, whether its trading volume is rising or falling, and the popularity of its industry with investors at that moment. All of those items fit into his stock tables, along with prices.
The rest of the paper is largely charts and graphs, most of which--with the stock listings--win vast praise from investment experts.
"If you're a hard-core investor, and you're not interested in corporate news, it's much better than the Wall Street Journal," says John Markese, director of the American Assn. of Individual Investors in Chicago.
But success has been slow in coming for O'Neil's paper, published Monday through Friday (price: 75 cents). Circulation stagnated around 100,000 from 1988 until recently. With just six printing plants nationwide, O'Neil still can't get the paper to all subscribers on the same day, even in key cities such as Atlanta.
In recent months, however, he says sales have been rocketing--apparently helped by a surge of individual investors into the stock market. Audited figures showed an average daily paid circulation of 127,415 in the six months ended March 31, and O'Neil says the current figure tops 155,000. He figures that he needs 235,000 to break even.
Advertising too has been picking up, though O'Neil remains frustrated that more mainstream advertisers haven't followed discount brokerages and other investment services into the paper, considering what he regards as stellar demographics: 62% of his subscribers are in "top management," his surveys show.
While it's clear that his market data sells the paper, O'Neil also has steered Editor Wes Mann and his 30 editorial employees over the past year to improve the relevance of the news stories. The daily stock market story once led the paper, but now the top spot is given over to a long takeout on a major national issue. Management, economy and technology topics also are frequent features.
Yet as both a newspaper publisher and an investment manager, O'Neil faces a significant potential conflict of interest: What's to stop his paper from recommending stocks that he wants to go up?
Though housed in the same West L.A. building, O'Neil insists that there is no regular communication between the paper and the rest of his company. He talks with Mann briefly perhaps twice a week, he says, but only on broad topics. Reporters are forbidden from seeing new stock ideas from the research side. Says Mann: "What they're recommending, I don't have the vaguest idea."
Still, Mann himself invests by O'Neil's general stock-picking guidelines, as do other editorial staffers. So it's inevitable that featured companies and stocks in the paper are there because they meet broad O'Neil criteria.
Nonetheless, O'Neil maintains that he has no interest in day-to-day story topics. Only the big picture is important, he says, and he fervently believes that his paper now is on track to steal away hundreds of thousands of readers from the Wall Street Journal in this decade.
"We'll ultimately have a circulation of 500,000 to 1 million," he boasts. As for the Journal--which he refers to as "that old turkey"--O'Neil predicts a fall from 1.8 million now to between 1 million and 1.5 million.