Patrick O’Shaughnessy: Special: Invest Like the Best on Acquired

Patrick traces O’Shaughnessy Asset Management to a deceptively simple research question: which stock attributes have tended to precede strong returns? His father’s early Dogs of the Dow work tested a rule that bought the ten highest-yielding Dow stocks and held them for a year. Its reported outperformance was not presented as a universal formula; Patrick emphasizes the discipline of following a defined process and the lower purchase price. The work also depended on unglamorous data collection, including hand-assembled records from microfiche reaching back to the 1920s. That history helps explain why Patrick resists reducing quantitative investing to one factor such as value: the more durable capability is finding, cleaning, and testing information systematically.

The family’s investment research was paired with a habit of communicating ideas in public. Patrick’s father’s book Invest Like the Best distilled famous managers’ behavior into rules; Patrick later borrowed the title for interviews designed to extract portable lessons from operators and investors. The continuity is not a claim that the two projects are identical. One translated investment behavior into a replicable process, while the podcast uses conversation to surface ideas that other people can carry into their own work. In both cases, open research and teaching are treated as part of the work rather than as promotion added afterward.

Netfolio illustrates the gap between a sound product intuition and the conditions required to support it. In the late 1990s, the team tried to build a consumer-facing robo-adviser that could make active strategies available online. Patrick describes the idea as an early version of what later companies such as Wealthfront and Motif would pursue, but the business arrived during the dot-com boom-and-bust cycle. Its product surface exposed the firm’s quantitative research, yet the more ambitious vision of customizable portfolios never fully materialized. Patrick’s account is a reminder that being directionally right about a product does not guarantee that timing, distribution, and operating capacity will cooperate.

OSAM’s independence from Bear Stearns began in July 2007, months before Bear’s 2008 collapse. The separation required unusual coordination: some portfolio managers worked for both organizations so that client portfolios and their records could continue without interruption. Patrick joined as the first employee and helped transfer thousands of accounts and billions of dollars in assets. The episode frames a spinout less as a clean corporate transaction than as the practical work of preserving trust and continuity while creating a new company.