Anyone else might feel intimidated sitting next to finance stalwarts like Pete Najarian, Melissa Lee, Joseph Terranova and Guy Adami, but Karen Finerman makes it look downright fun. Though her trading philosophy differs strikingly from her colleagues' on "Fast Money," a high-intensity market roundup broadcast by CNBC from Times Square each weekday, Finerman is very much at home. During commercial breaks between segments, she's not averse to rocking out to Aerosmith, Van Halen and Manfred Mann, nor is she opposed to, on occasion, sharing a fist pound with Adami.
Finerman, who grew to prominence managing Metropolitan Capital Advisors, a New York-based hedge fund, never expected to become a TV personality. Aside from venerating Barbara Walters, ("I loved that she was in a man's world," Finerman said), it was finance, not journalism, that first attracted her attention.
"I wanted to make my own money," she explains after taping "Fast Money" on a Thursday evening in June. Pursuing that objective, however, required more than the undergraduate degree she earned from the Wharton School of the University of Pennsylvania. For her, like many women, career success began with getting out of her own way.
"It's that women are not comfortable being their own advocate, that they don’t like to tout their own success, they don't feel comfortable speaking up for themselves," she said. "This is obviously a generalization, but it is a mistake that I know I've made multiple times."
The trick, Finerman explained, is to act, plan and believe as if you can and will succeed. Unfortunately, for many women -- herself included -- putting this philosophy into practice is a challenge.
"People wait to feel confident before they do something," she explained. "You don't get that confidence by waiting. You've got to do it, even when you’re not. That's how you become confident."
Finerman's recent book, "Finerman's Rules: Secrets I'd Only Tell My Daughters About Business and Life," recounts a number of instances where bold and even contrarian thinking produced rewards.
Early in her career, she entered the challenging field of risk arbitrage, starting at First City Capital and later at DLJ Securities Corp., making bold (but educated) trading recommendations along the way.
In 1988, for example, she suggested her firm invest in Federated Department Stores (now Macy's Inc.), the conglomerate behind Bloomingdale's and Macy's. "Federated was a unique property," she writes in "Finerman's Rules," "and I intuitively knew there would always be someone out there, some ego-driven investor -- always a man, in my experience -- who needs to own these big, flashy, famous iconic properties." Finerman's company decided to invest. Months later, in what Fortune would later call "the biggest, looniest deal ever," Canadian financier Robert Campeau bought Federated for $6.6 billion. Finerman's firm made millions.
When Finerman co-founded Metropolitan Capital with Jeffrey Schwartz in 1992, she brought this trading philosophy -- value investing -- along.
"Value stocks are something where the story might be a little bit broken or it's out of favor, and the market doesn't get excited by it," she explained. "Yet, we really believe there's a lot of inherent value there."
This strategy sometimes means she’ll stand aside, willing to risk missing the occasional long-term success story, in order to avoid the near certainty that many novelty stocks flame out. In this regard, her approach echoes the "margin of safety" wisdom of Benjamin Graham and David Dodd's 1934 classic "Security Analysis."
"It's possible I don't get it. That's really possible, for sure," she said of the most recent wave of technology company IPOs and acquisitions. "It's really possible, too, that there are some crazy valuations. Not everything is going to be a Facebook -- you could be a MySpace, Friendster."
With her acute focus on the fundamentals, it's no surprise that Finerman is a student of Charles Mackay, author of "Extraordinary Popular Delusions and the Madness of Crowds." Nor would it come as a surprise that Finerman was similarly skeptical during the dotcom bubble, helping her firm steer clear of major losses.
"It was the emperor's new clothes," Finerman said, recalling the heady days of the dotcom boom. "I remember a company announcing that they had signed a communications equipment agreement with AT&T. The stock spiked up ridiculously. In fact, what they were signing up was, they bought AT&T equipment to use as phones in their office. Really. This is true. That's just ridiculous."
Her reticence to participate in growth opportunities, however, does have consequences.
"I am going to miss out on being an early investor in one of those really go-go names," she said. "I'm just not going to be able to do it. It's not my thing. I'm also not going to be buying ridiculous.com at the top."
At the same time, she's not averse to buying something that is unpopular. "Sometimes, when everybody hates a stock, even when they come out with bad news, the expectations are already so low that again we come to that risk-reward equation," she said. "If it's already so low and so hated, maybe it's not going to go down very much. Sentiment can change. I've seen that happen so many times."
This risk-averse investment philosophy is common among women in the investment world. Between 2000 and 2009, hedge funds run by women fared much better than the average (male-dominated) fund. According to a study by Hedge Fund Research, a hedge fund analysis company, women-run funds declined just 9.61 percent compared with an industry average of 19.03 percent.
While not alone in her opinions, Finerman's approach certainly sets her apart among her peers at "Fast Money." For her, there's no need to echo support for the hot money stock du jour. Instead, with witty repartee and a laser-like value discipline, Finerman has set course, similar to legendary investor Carl Icahn before her, on what he once called a "quest for value." This journey, like her clothing style, is classic.