In the financial world, where experience often takes center stage, an impressive exception has emerged. At just 16 years old, high school student Blake Zilberman has embarked on a remarkable journey, establishing and operating Zorik Capital Management LLC, a hedge fund that has raised nearly $500,000 in assets under management from third-party investors.
Zilberman’s journey into the world of finance commenced at age eleven, fueled by a curiosity about market trends and a knack for dissecting the complexities of finance.
“I recall sitting in my fifth-grade bedroom, reading Seeking Alpha and Barrons articles and watching investing-themed YouTube videos, while Bloomberg TV played in the background. To claim that I understood all of the concepts would be a stretch, but I was truly passionate about learning all I could on the topic.”
Over the years, Zilberman refined his investment acumen, crediting influential books such as The Intelligent Investor, The Dhandho Investor, Margin of Safety, and One Up on Wall Street as his guiding stars.
While Zorik’s performance over the last year, like many other hedge funds, has trailed behind a market driven by a few high-performing stocks, Zilberman has demonstrated strong performance over the past several years. Since his journey’s inception in 2017, he has consistently delivered annual returns north of 30%, chiefly by investing in a concentrated portfolio of ‘value stocks.’ These returns outshine the broader financial indices and most other hedge funds by a substantial margin.
As word of Zilberman’s investment prowess spread among friends and family, he began receiving requests to start a fund.
“I realized that I reached a point where I could actually make a strong pitch to potential investors thanks to the distinct elements of my strategy and the robust long-term returns I had achieved.”
The strategy Zilberman crafted is described on his firm’s website as ‘Ben Graham, but modernized.’ This approach revolves around identifying undervalued businesses trading at substantial discounts to future free cash flows, with a focus on a company’s ability to compound earnings at high rates over the long term.
These businesses undergo meticulous screening using Zilberman’s proprietary metric, GROICw (growth-adjusted returns on invested capital to WACC). The formula, detailed more extensively on the firm’s website, identifies companies that produce growth that adds value to their businesses.
“We believe that if a business can reinvest its free cash flows at high rates and maximize value creation, long-term stock returns should be robust. Therefore, we aim to identify companies which can do this.”
Another distinguishing facet of the fund is Zilberman’s age, setting him apart from most Wall Street analysts, many decades his senior.
“As a teenager attending high school every day, I have valuable insights from my peers into future trends that Wall Street may not yet have on its radar.”
One of Zorik’s recent investments is in an undisclosed apparel company that consistently generates strong free cash flows and outperforms rivals in profitability metrics. Yet, Wall Street perceives the brand as ‘outdated.’
“Interestingly, in high school, I’ve noticed everyone adopting this brand. It’s now deemed as ‘cool’ to wear.”
Through effectively communicating these strategies and showcasing his impressive returns, Zilberman has managed to attract nearly $500,000 in investments from third-party investors. He holds a strong belief that his success in the markets will continue to flourish in the future.