Alex Lieblong On Successes, Failures & Regulatory Winds (Exec Q&A)

A 35-year investment veteran, Alex Lieblong worked for Merrill Lynch Pierce Fenner & Smith Inc. before joining PaineWebber Inc. and opening its Little Rock office in 1987. He launched his own investment firm in 1997 and founded his Key Colony investments fund in 1998.

He serves as a member of the board of directors of Home BancShares Inc. of Conway; its subsidiary lender, First State Bank of Conway; Deltic Timber Corp. of El Dorado; Lodgian Inc. of Atlanta, one of the nation's largest independent owners and operators of full-service hotels; and Ballard Petroleum Holdings LLC of Billings, Mont., a privately held energy company.

What's the most common mistake you see investors make?

Listening to too many talking heads. These are the "guys who know everything," and very few of them know anything. Many of them are investing for the next 30 days. If someone doesn't have a five-year investment window, they wouldn't like my style of investing.

You're a noted contrarian investor. What against-the-flow investing opportunities are catching your eye these days?

Life insurers and some banks. But there is risk in everything. I try to identify companies with proven ability that have been on the down swing.

Does the advice to older investors to move away from equities and into bonds and other generally more secure investment vehicles still apply?

It looks dangerous to move into bonds at this point because of the interest rate risk, but that has been true for two years.

What regulatory weather pattern do you see coming for Wall Street? The financial/banking sector? What needs to happen?

It is the same thing every 15 years: trying to regulate excess human nature. Government has a way of trying to do the right thing, but their timing is off.

You've enjoyed a prosperous investment career. What was your biggest success? Biggest failure?

Some of the biggest successes include Valley National Corp. of Phoenix, Coast Financial Savings Inc. of Los Angeles, Mirant Corp. of Atlanta, Sanderson Farms Inc. of Laurel, Miss., TCBY Enterprises Inc. of Little Rock and Environmental Systems Co. of Little Rock. Valley National was acquired in 1993 by Banc One Corp. of Columbus, Ohio, in a $1.2 billion stock swap valued at 2.3 times book. Coast sold in 1998 to H.F Ahmanson & Co. of Irwindale, Calif., in a $901 million stock swap valued at 1.9 times book. Even before the Coast deal was completed, Washington Mutual Inc. of Seattle struck a deal to buy Ahmanson in a $9.9 billion stock swap valued at 3.8 times book. After exiting Chapter 11 in 2006, Mirant merged in 2010 with RRI Energy Inc. of Houston in a $1.6 billion stock swap to create GenOn Energy Inc. Sanderson Farms Inc. of Laurel, Miss., is the fourth-largest chicken producer in the nation. We got in at $6 in 2001, got out at $40 in 2004.

At one time, TCBY shares traded as high as $60 a share in 1986. I got in at $8 and got out at $54.

Ensco was a little known publicly traded hazardous waste transportation and disposal company when I came across it. I invested at $4 per share before the company was even traded on the pink sheets. Later, it was listed on OTC, NASDAQ and eventually the New York Stock Exchange. When it reached $19 per share I borrowed against my shares and doubled up. When it went to $40, I sold enough to pay the bank loan back. When I finally sold, the adjusted cost basis of my shares were somewhere north of $80. If my family would've known how close we were to the edge at the time, they would've been a lot more nervous.

There are too many failures to list. The obvious failure is that we all should have bought Wal-Mart, Apple and Google in the beginning.