Thursday, March 29, 2012

Clayton Christensen’s investments

Today, I went to listen to Clayton Christensen’s talk on Growth -- part of special "Power of 10" PARC Forum series featuring 10 speakers on 10 aspects of innovation. He charmed the audience with his self-deprecating sense of humor.

Besides teaching at Harvard, he writes the books. The 2011 "Innovator's Dilemma" received the Global Business Book Award. Importantly, Clayton co-founded four successful companies: CPS Technologies, a materials science firm; Innosight, a management consulting firm; Rose Park Advisors, an investment management company; and The Innosight Institute, which extends his research on health care and education.

Somewhere in the beginning of his talk, Clayton mentioned the astronomical returns brought by disruptive companies in 10 years. I found a few companies in which Clayton's hedge fund Rose Park Advisors invested, according to his interview in December 2011.
athenahealth (NAS: ATHN)
Provides medical software to doctors' offices. The company is becoming a one-stop shop for all of the e-needs of doctors, especially when it comes to insurance filings.

Cree (NAS: CREE)
Manufactures LEDs. 
LEDs last longer and use less energy than traditional light bulbs.
New Oriental Education (NYS: EDU)
Online education in China.
New Oriental is changing the education paradigm in the world's largest nation.

NxStage Medical (NAS: NXTM)
Makes portable dialysis machines.
Dialysis patients don't need to go to the hospital for treatment, which is both more convenient and -- usually -- more sanitary. (NYS: CRM)
Cloud-based software solutions for businesses
Instead of buying expensive software and paying for installation, companies can simply use the programs available on Salesforce's servers.

I don't know when the hedge fund led by hid son Matthew added those companies to the portfolio, or, perhaps, sold already. The returns on all of them for the past 3-5 years is much higher than S&P 500 returns. Whether those companies are the lucky ones among many more unlucky ones, I don't know either.


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