Founder’s Corner – March 2020 Article

February 16, 2020

Structure and Discipline Lead to Superior Returns – Marc A. Gineris

Having guided Incyte’s own investing together with our investment partners’ capital to consistently superior returns over the past twenty years, I am in a position, as are many managers who have delivered strong investment returns, to reflect upon elements of investment success.  In our experience, success has come from a particular structure, combined with unwavering, almost unnatural discipline, as I review below.

The financial goal of investing is to deliver consistently superior returns or “alpha” as known in the investment community.  If your tombstone is engraved with an IRR experience that far exceeds the market, and you have also done much to better yourself, your fellow citizen, your family, and the community at large, you can likely consider the journey a success.

To achieve superior returns, the structure of the investment firm and its approach is paramount.  Conventional thinking dictates that your investing should diversify holdings, consistently deploy capital, regardless of the valuation levels, and regularly harvest returns.  These concepts, however, can be in our experience anathema to consistently superior returns.  The more one pursues them, the more likely the returns will revert to the mean or be average.  Warren Buffett has been a virtual mentor and, having met him on several occasions, and read all the books written about him (he has yet to write a book), I view him to be a financial genius.  Yet his strength as an investor also evidences high concentration in his investing and an unyielding value and hold discipline.  He is famous for stating that there are no called strikes in investing.  This also applies to imposed capital deployment requirements.  When you are at the plate, you wait for the pitch that you want, the one you know how to hit, and then you swing, for the fences.   If you have to stand at the plate, waiting and waiting, and even go to the movies (another famous Buffett saying), so be it.  Creating more deals to diversify, even in a high price environment, is believed to improve the chance of good returns and of minimized losses on one big deal.  However, the better philosophy is to make better decisions, with discipline and knowledge in what you know, not to dilute your best ideas to the average or overpay to maintain deal flow. At Incyte, our highest return deals have consistently been our largest investments and we have no set rate of capital deployment.  Ideally, you do not want capital burning a hole in your pocket.

In harvesting an investment, it is no different.  A company that creates extraordinary free cash flow annually does not have to spend capital to grow, or have to be sold or go public. It is naturally the “third” exit, as professionals say. It is a superior hold. Selling the winners to post IRR’s and raise the next round of funding does not assist in creating alpha.  (It does serve to increase the size of the firm, however, and the attendant management fees paid to the managers).  Consequently, many good cash flow companies are sold off too early, or overlooked entirely by investors today, believed to be old school and obsolete in preference to “change the world”, sexy ventures and the desire to raise more capital.  

Certainly, some early ventures indeed lead to home runs, and to almost celebrity status among early investors. In practice, in fact, the discipline to place risk mitigation ahead of possible returns phenomenal does not make the front page of the news or garner wide, adoring social following. Risk/reward in today’s environment increasing favors the desire for the reward over the mitigation of the risk.  

Yet, over the long run, in our experience, this bias in structure serves to undermine alpha. We have found that the long, dutiful ability to avoid the greed and the fear of the day, in an almost non-human-nature manner, provides a structure with the real possibility of achieving superior returns ten, twenty or even thirty years running.  It is not easy to “do nothing” when prices become frothy, and may remain so for months and even years.  But this philosophy creates the conviction and financial dry powder to be bold when the opportunities do appear, when the pitch is right over the plate.

American Messaging Services, LLC Acquires the Paging Assets of Critical Alert Systems, LLC

February 1, 2017

LEWISVILLE, TX – February 1, 2017 – American Messaging Services, LLC (“American Messaging”) is pleased to announce it has acquired the paging assets of Critical Alert Systems, LLC and its affiliated entities (“Critical Alert”).

The transaction brings together the paging assets of two of the most respected critical messaging companies in the United States. Together, the companies serve approximately 800,000 critical messaging subscribers providing the most dependable networks and customer service in the critical messaging industry. Both companies excel at service delivery making the combination of Critical Alert’s paging assets together with those of American Messaging a natural fit. “Rest assured that service delivery is, and will always be, our singular focus.” said J. Roy Pottle, Chairman and Chief Executive Officer of American Messaging.

Edward “Ted” McNaught Jr., CEO of Critical Alert said, “We have known and respected American Messaging and its management for many years and are confident the company’s focus on customer service, coupled with its’ broad product suite, will serve Customers well. While difficult, this strategic decision enables us to focus on our Nurse Call solutions and software business.”

Pottle closed by saying “Our first priority is to provide dependable critical messaging services to all customers however we are also pleased to offer Critical Alert’s paging customers our broad suite of services designed specifically to enhance the traditional paging experience by adding convenience and redundancy through software and mobile applications.”

About Critical Alert Systems, LLC
Critical Alert offers the most advanced, reliable and secure Nurse Call system on the market today. Its’ software-driven solutions, clinical workflow expertise, hardware products and integrated partner offerings enable hospitals to improve patient satisfaction, enhance outcomes and drive down costs. The Company’s focus on clinical productivity, innovative use of technology, and patient safety leads to quieter, more efficient units, improved outcomes for patients, and better utilization of nursing resources. The Company was specifically created to be a single-source provider for hospitals and healthcare facilities in need of advanced nurse call and communications technologies. Unlike our competitors, our product development process embraced the power of software from its inception. This enables us to design hardware-agnostic solutions focused on built-in integration, flexibility and advanced performance.

About American Messaging Services, LLC
American Messaging and its subsidiaries provide critical messaging services throughout the United States. Using proprietary and third party wireless messaging networks together with its’ suite of mobile and desktop applications, it simultaneously delivers critical messages to pagers, smart phones, tablets and personal computers. American Messaging also constructs and operates dedicated messaging networks that operate in conjunction with other third party networks, including its’ proprietary paging networks, providing redundancy and more rapid message delivery. Message delivery and review are easily initiated, monitored, and archived using the Company’s mobile and desktop applications or through customer supporting software that is included as part of its’ overall service offering.

American Messaging is the second largest wireless messaging or critical messaging company in the United States delivering more than 5 million critical messages per day. American Messaging provides service to approximately 800,000 critical messaging subscribers, including more than 1,300 major healthcare customers across the United States. Our mission is to be the best, most trusted provider of critical messaging services in the United States – to be the “Dependable Choice”.

For more information visit

Media Contact
Jenna Richardson
Vice President, Marketing and Product Development

Why Paging Remains a Critical Aspect of Healthcare Communications -Marc A. Gineris, Incyte Managing Partner

November 30, 2016

DALLAS, TX – November 30, 2016 – Delivery of lifesaving techniques and systems has been accomplished throughout history through cost saving and highly effective technologies and inventions. Since its introduction, paging, and its unique network characteristics, has represented the most reliable, most timely, yet most cost effective way of delivering a critical alert for code and urgent messages in a healthcare setting. In this way, paging represents a logical enduring paradigm, much like other examples that exist in our daily life.

As an example of other lifesaving inventions and technologies that remain as relevant and important today as they were the first day they were introduced, we have to look no further than the automobile industry. In the late 1940’s and the early 1950’s, automakers Saab and Volvo began introducing seat belts as a safety feature, initially as an option and then as standard equipment. Among U.S. manufacturers, Nash in 1949 and Ford in 1955, similarly offered seat belts as a safety option. After initial designs patented by Saab engineers Roger Griswold and Hugh DeHaven, in the early 1950’s, it was Volvo automobile engineer Nils Bohlin, who, in 1959, ultimately invented the three-point safety belt – the basic design essentially still in use today. Since its introduction, this single safety feature has saved millions of lives.

In support of the premise that paging remains logically relevant and vital despite significant and ongoing R&D spending on alternative communication technologies today, the automobile paradigm is instructive. The typical automobile today incorporates significant advanced safety features that have been introduced since the advent of the three-point safety belt in 1959. These technologies include front and side air bags, active head restraints, crumple zones, shock absorbing bumpers, antilock brakes, traction control, electronic stability control, and, more recently, radar collision warning systems. These safety technologies have involved research and development spending in the billions of dollars and their total portion of the purchase price of a typical automobile today can exceed twenty percent of the total automobile cost. However, it is widely acknowledged that the single most important piece of safety equipment on an automobile remains the seat belt. In 2016, the cost of seat belts on a typical passenger car was under $1,000 and changes to its basic design have been modest.

While communications and automobiles are admittedly vastly different industries, both examples highlight that R&D spending and advanced technologies applications are not always well correlated to assessing the vital importance, continued value and outstanding performance of an original device or feature for safety – or a lifesaving result. In healthcare communications, as in automobile safety, technology advances are best applied in conjunction with paging rather than as a replacement for its superior, existing capabilities. Simply put, paging remains the most cost effective, most proven way to deliver a critical, life saving alert. Those that argue that it is old technology, obsolete and should be replaced should be reminded of how reliable its unique, simulcast network remains. Put another way, when I am asked by someone when paging will go away, I respond by asking when they believe that seat belts will be replaced in their family car despite millions of dollars in ongoing R&D spending annually for automobile safety.

American Messaging Services, LLC Adds Five Regional Paging Companies

October 8, 2015

LEWISVILLE, TX – October 8, 2015 – American Messaging Services, LLC, the largest privately held paging and critical messaging company in the United States, today announced its recently completed the acquisition of five regional paging companies. In addition to extending its coverage footprint in the United States, the move ensures that existing customers of these smaller, independent carriers will continue to have their paging and critical messaging needs handled with the first class care and professionalism to which they are accustomed.

American Messaging is proud to welcome the customers of the following acquired companies:

C-Spire, Southeastern US
PageOne Pacific NW, Portland, Oregon
PageOne, Morgantown, West Virginia
Password Inc., Tacoma, Washington
TelCom Wireless, Green Bay, Wisconsin

The acquisition of the five companies follows the previously announced purchase of additional smaller carriers, whose owners similarly had decided to retire or exit the industry and wanted to ensure their customers are well taken care of.

“We enjoyed working with each entity to construct transactions that provide incremental value for both parties. We’re particularly excited that our new customers will benefit from the ongoing investments American Messaging is making to improve paging network reliability along with new secure healthcare communication technology.”

American Messaging
American Messaging, the Dependable Choice, delivers more than 5 million critical messages per day. American Messaging provides service to approximately 800,000 customers, including more than 1,400 major healthcare and first responder clients across the United States.

For more information visit

Media Contact:
Jenna Richardson
Vice President of Marketing and Product Development (623) 581-0740

American Messaging

September 27, 2012

American Messaging Services

American Messaging Services, LLC, formerly Verizon Messaging and AirTouch, and SBC and Ameritech Paging, and based in Lewisville, Texas, is the largest private and second largest overall paging and critical, secure messaging solutions company in the United States.

Its nationwide one-way networks provide coverage in 98 of the top 100 major metropolitan areas and in 48 states. Its services include a broad range of on-network critical messaging offerings, as well as integrated and encrypted smartphone, tablet and personal computer secure messaging integrated solutions to major hospital groups in the U.S. and to certain corporate and government accounts.

Investment History: In November 2005, Incyte, together with its investment partner, Colchester Capital, and its management CEO partner, J. Roy Pottle, completed the acquisition of SBC Communications’ paging business. In June 2006, American Messaging completed the acquisition of the paging operations of Verizon Wireless. Over the past decade, American Messaging has been highly acquisitive and has entered into over thirty strategic operating and purchase agreements with the principal owners of major paging companies including Network Services, SkyTel Corp., Morris Communications, ProPage, Cook Telecom, Aquis Communications, and most recently in February 2017, Critical Alert Systems. Incyte continues to work with management on major corporate events and initiatives. Since the formation of American Messaging over 18 years ago, Incyte Capital Partner Marc A. Gineris has served on the Board of American Messaging and as a General Partner of American Messaging Services, L.P., its principal shareholder.

Visit American Messaging Services website

Why Paging is Superior to Cell Phones in a Hospital Setting


April 25, 2012

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PageNet Offers Enhanced Message Distribution

May 30, 2010

“PageNet is Canada’s leading paging services and messaging supplier. With a team of dedicated professionals focusing on all facets of the development, enhancement and support of our nationwide network and our customer’s messaging solutions, PageNet is committed to providing the ‘Best Network, Best Coverage, Best Price,'” says Rob Graham Senior Vice President Business Development, CTO. “PageNet utilizes the most advanced single frequency FLEX and ReFLEX technology-based network with mission critical grade digital control systems and high speed satellite linked network facilities, across Canada. PageNet continues to offer TAP access as well as the enhanced SNPP protocol.”

Benefits of SNPP Protocol

SMS is quicker, more efficient, more reliable and a cheaper way of sending messages than via a modem or SMTP (e-mail). When TAP (dial-up connection) is gone, Real Estate Companies can eliminate modems, time spent configuring modems, and extra phone lines (don’t forget to cancel dedicated lines). Result – save time and money and provide better service. Speed and latency experienced delays become a thing of the past:

  • A typical SNPP message is delivered to a handset within 10 seconds of being sent
  • A typical TAP / SMTP (email) message sometimes takes 10+ minutes (up to 4 hours with e-mail)

Why “Alignment” is the Rodney Dangerfield Feature of Private Equity (PE) – It Gets Little Respect, by Marc A. Gineris, Incyte Capital Managing Partner

May 29, 2010

DALLAS, TX – January 15, 2017 – Limited Partners (LP’s) in private equity often talk of requiring alignment with their General Partners (GP’s). General Partners similarly are quick to claim strong alignment with LP’s through their fund structures and reputations. In reality, however, authentic alignment among LP’s, GP’s and Management is rarely fully achieved in PE funds today and the argument rages on with little true advances on the theme.

Human nature and investor psychology are believed by many to be far better predictors of investor behavior and investment success than arcane sector themes, complicated fund structures and the like. In practice, fund managers and investors should and do act in their own self-interest. Taken to the extreme, human greed is ultimately enduring. It follows then that the alignment of greed, self-interest and information is the most authentic way to best serve the interests of all parties. Achieving ultimate alignment in this way, however, is deemed of secondary importance, somewhat crude, extreme, pedestrian and ultimately unwarranted in the current private equity environment. And thus the lack of true respect for alignment reigns on.

The approaches to alignment listed below indicate the most and the least effective ways of achieving authentic alignment among LP’s, GP’s and Management. While it is admittedly difficult to pursue the “most” effective approach listed in all cases due to fund charter constraints, unique requirements or prior practices among managers and investors alike, the closer one comes to the most effective practice, the more likely alignment will be a major factor in determining “alpha” or superior returns to the market – and in achieving harmonious LP, GP and Management relations.


General Partners invest their own
capital in size (10 percent or more)

Limited Partners do not impose a
five year or other investment horizon on
investment realizations

General Partners endeavor to keep
structures simple and easy to understand
rather than complicated

Management is expected to invest
its own capital – can be assisted
by loans, modest grants, incentives

General Partners decide in collaboration
with Management on when to exit

Dilutive events to Limited Partners and
Management are pursued with care
and strong communication


General Partners use carry and fees
as their investments, not new capital

Limited Partners expect returns
within five years or a set time period

Funds and securities structures are
complicated and therefore considered
sophisticated – but not transparent

Management invests its experience and
time, but not its own capital – ultimately
creating an incentive to take outsized risks

General Partners decide rather than
Management on when to exit

General Partners routinely pursue
dilutive events in the normal course

American Messaging Services, LLC acquires Aquis Communications, Inc.

May 28, 2010

LEWISVILLE, TX – January 8, 2014 – American Messaging Services, LLC (“American Messaging”) is pleased to announce it has acquired the operating assets of Aquis Communications, Inc. (“Aquis”), a subsidiary of ComSoft Corporation.

The transaction brings together two of the most respected critical messaging companies in the United States. J. Roy Pottle, Chairman & Chief Executive Officer of American Messaging said “this transaction adds to our considerable presence in the eastern United States by adding over 60,000 subscribers and several very substantial customer relationships. The transaction also adds considerable network coverage in several states that will ultimately benefit existing and prospective customers alike.”

Richard Gdovic, President and CEO of ComServe Corporation said, “Customers should know there will be little to no change in service as our primary goal is to make certain the acquisition has minimal impact on service delivery. American Messaging has an excellent reputation and is known for its singular focus on service.”

From a technology perspective, American Messaging and its subsidiaries provide critical messaging services throughout the United States. Using proprietary and third party wireless messaging networks together with its suite of mobile and desktop applications it simultaneously delivers critical messages to pagers, smart phones, tablets and personal computers. It also constructs and operates dedicated messaging networks for individual customers that operate in conjunction with other third party networks, including its proprietary messaging networks, providing redundancy and more rapid message delivery. Message delivery and review is easily initiated, monitored and archived using the Company’s mobile and desktop applications or through customer supporting software that is included as part of its overall service offering. Pottle closed by saying “We look forward to introducing these services to Aquis customers.”

About Aquis

Headquartered in Yorktown, Virginia, Aquis Communications is a subsidiary of ComSoft Corporation. Aquis has been servicing the Healthcare, government, public safety, industrial and educational industries for over 30 years. Aquis Communications is a leading provider of critical communications systems, emergency management systems and telecom expense management.

About American Messaging

American Messaging is one of the largest critical messaging companies in the United States delivering more than 5 million critical messages per day. American Messaging provides service to approximately 900,000 customers, including more than 650 major healthcare and first responder clients across the United States.

For more information visit

Media Contact: Jenna Richardson, Vice President of Marketing
And Product Development, (623) 581-0740

Protecting Our Children – An easy step we can all agree on

May 15, 2010

Recently the Washington Post published a story saying that more than 300 college presidents “have signed a letter urging Congress to enact new gun controls in the aftermath of December’s elementary school massacre in Connecticut.” Other university presidents have declined to sign the letter reflecting the broader fact that gun control remains a complicated and divisive issue, and that’s simply not going to change anytime soon. Yet in the meantime, one thing we can all agree on is that our schools do need to be safer, even as the protracted gun control debate may never end.

In that regard, there is one major step forward that can be taken immediately. The time has come to recognize that our mass emergency alert systems, such as those employed by nearly every major college and university in the United States, have been built on the wrong technical platform, and one that time and time again has proven to fail in this task.

Simply put, today’s mass emergency alerts systems have erroneously been built on cellular networks while they need to be based on a one-to-many broadcasting protocol such as paging.

Anyone who experienced the Virginia centered earthquake that shook the entire D.C. area remembers that day quite clearly. Within minutes it was difficult if not impossible to make a phone call and even plain text messages could not be sent or received. Ask any expert who works within the cellular industry if those networks are suitable for mass emergency alerts and they will all tell you that they are not. Even the 911 Commission stated in their summary report, that paging was the only protocol that could be relied upon for this purpose.

As stated in the 911 Commission report: “Almost all aspects of communications continue to be problematic, from initial notification to tactical operations. Cellular telephones were of little value… Radio channels were initially oversaturated… Pagers seemed to be the most reliable means of notification when available and used, but most firefighters are not issued pagers.”

At a time when every second counts in dispensing life saving information, (such as shooters on a campus) the only thing we can count on is that the systems currently being employed will quickly become overloaded and fail.

On the other hand, the best example of why a broadcast based, one-to-many system can never be overloaded occurred this past summer when an estimated 1 billion people simultaneously watched the opening ceremony of the Olympics from London. Needless to say, nobody lost their signal because too many TV sets were tuned in to the same channel.

Today, many colleges and universities have put in place emergency alert systems that may offer ten or more “layers” including everything from loudspeakers, to Facebook and Twitter alerts, to automated e-mails and robo-calls. In a recent survey on emergency management conducted by Campus Safety Magazine, 64% of the responding institutions said that they agreed with the statement that their campus was adequately prepared to respond to an active shooter incident. Their confidence levels were even higher when asked if they agreed that they were prepared to communicate during a weather emergency (92%) or a natural disaster like an earthquake (89%).

I believe the actual number is closer to zero.

Paging technology is still employed today by millions of users in hospitals, first responders, and security forces whose jobs require immediate and foolproof messaging. It’s not news however, to say that pagers have largely disappeared from the lives of most everyone else thanks to the proliferation of amazing cellular products and networks.

Products and networks, by the way, that work great. Great that is for most everything other than mass emergency alerts.

Let me put it this way: when AT&T or Verizon need to communicate with their own people in the field during an emergency, they PAGE them.

There are many examples from even the past few years of dangerous and even deadly occurrences on campuses where students, faculty and staff received emergency alerts hours after the school transmitted messages of the danger. Making matters worse, once the messages are received, they can even come in the wrong order from which they were sent, adding chaos to an already deadly situation.

So if the answer to ensuring immediate delivery of life saving information is so simple, then why is it that few if any campuses are using mobile, one-to-many technology today? There are a couple of reasons:

First, they aren’t required to by law. The federally mandated Clery Act does require colleges and universities to immediately notify their campus of dangerous situations, but “notify” simply means to send the message.

There is no requirement that it be received by the very people whose lives are in danger.

Second, it is fair to say that no self-respecting student is going to walk around with a clunky pager on his or her belt. Fortunately however, thanks to miniaturization, that is no longer an issue. With today’s technology, paging receivers can be implanted into devices that are used every day by students such as a computer thumb drive. These devices will simultaneously receive an emergency message within 20 seconds of transmission whether the school has 1,000 people on campus or 1 million.

We already saw during the Japanese tragedy in the aftermath of the deadly tsunami, that a reported 14 million people used mobile broadcasts to receive potentially life-saving information. While it will be some time before mobile broadcasting is fully deployed in the United States, broadcasting to miniaturized paging devices is already a reality.

At a time when we are all searching for ways to protect our children, and with the full recognition by the White House, the FCC and many members of Congress, that we must find better solutions to mass, emergency alerts, the time has come to employ the only system broadly available today to ensure transmission and receipt of life saving messages. It is time to move from emergency cellular messaging to a one-to-many broadcast technology.

About Allan Horlick

Allan Horlick has spent decades in the broadcasting industry as President of both WRC and WUSA-TV, as the President of CNBC and NBC Europe based in London, and as the Director of Launch Operations for CNBC and NBC Asia based in Hong Kong. Today, Horlick oversees multiple Washington based television talk shows and also consults on a campus safety initiative.

About IntelliGuard Systems

IntelliGuard is an emergency alert system that communicates critical information to unlimited recipients and locations simultaneously in seconds. It was designed to overcome the specific challenge of delivering simultaneous emergency alerts to anyone on a campus, no matter where they’re located.

For information please contact Jenna Richardson, VP, Marketing & Product Development at

IntelliGuard Systems is a brand of American Messaging Services, LLC

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