In this episode, host Tano Santos sits down with Richard Brekka, founder and managing partner of Second Alpha, to examine the lesser-known world of secondary investing in private technology companies. With decades of experience—from venture capital to secondary transactions—Richard shares his journey through private equity at Chase and CIBC, his role in building and reviving companies like Gomez Inc., and how that led him to identify a unique investment niche. He explains the mechanics of sourcing deals in illiquid markets, using data and AI to surface hidden gems, and the psychology of getting deals done. The discussion also explores valuations, exits, and policy implications of private market access for 401(k) investors, plus the impact of AI on business fundamentals and much more!

Key Topics:

● Richard's early exposure to entrepreneurship and finance (3:29)

● Lessons from Arthur Laffer and University of Chicago MBA experience (6:15)

● Early career in private equity at Chase and learning value investing (8:12)

● Starting Dolphin Equity Partners after CIBC and early challenges (14:06)

● The rise and fall—and rebirth—of Gomez Inc. (17:18)

● Discovering secondary investing through Gomez's cap table (23:58)

● The founding and investment strategy of Second Alpha (26:29)

● Understanding the structure and dynamics of the secondary market (30:21)

● How Second Alpha sources deals and builds its data pipeline (35:49)

● The process of deal execution and managing rights of refusal (41:11)

● Case study: Prove Identity and growth through secondaries (52:29)

● Thoughts on liquidity, valuation, and 401(k) access to private markets (55:35)

● AI's impact on private companies and investment strategies (59:19)

● Book and podcast recommendations (1:01:34)

● And much more!

Mentioned in this Episode:

● Second Alpha

● Chase

● CIBC

● Gomez Inc.

● Prove Identity

● TouchCommerce

● Arthur Laffer

● Acquired (podcast)

● Warren Buffett – Berkshire Hathaway Annual Letters

● Berkshire Hathaway Annual Shareholder Letters

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Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Amit Wadhwaney, founding partner and portfolio manager at Moerus Capital Management, joins hosts Tano Santos and Michael Mauboussin to trace his unorthodox journey from Bombay to Concordia to founding a value investing firm focused on the balance sheet. Along the way, he discusses his early exposure to Marty Whitman, lessons from Third Avenue's international expansion, and what led him to start Moerus.

Amit outlines the core of his investment approach—asset-based valuation, downside protection, and long-term holding periods—and explains why macro factors are typically disqualifiers, not drivers, in his process. He shares insights into portfolio construction, the role of currency risk, and how Moerus identified undervalued opportunities in places like Argentina, Japan, and the gold sector.

Key Topics:

● Growing up in India and finding investing through chemical engineering and economics (3:04)

● Discovering Marty Whitman via an obscure academic book on value investing (5:05)

● Lessons from selling real estate during Quebec's post-referendum panic (9:23)

● Joining MJ Whitman and watching Third Avenue evolve (11:12)

● Pioneering international value investing at Third Avenue (17:05)

● Founding Moerus Capital: philosophy, culture, and investment constraints (24:38)

● Moerus's asset-based investment framework (28:48)

● Managing macro risk and volatility through conservatism, not forecasts (30:41)

● Risk management: internal, external, and business model-related risks (33:00)

● Portfolio construction, position sizing, and concentration limits (46:39)

● Currency exposure and when to hedge (49:12)

● Case studies: Grupo Galicia and Despegar during Argentina's political shift (51:15)

● What keeps Amit up at night: industrial policy, broken immigration, and political gridlock (1:00:52)

● What Amit is reading—and what the Norton Simon Museum can teach investors (1:03:39)

● And much more!

Mentioned in this Episode:

● Moerus Capital Management

● Third Avenue Management

● MJ Whitman

● Marty Whitman

● Grupo Financiero Galicia

● Despegar.com

● Wheaton Precious Metals

● Major Drilling Group

● Dundee Corporation

● UniCredit

● LATAM Airlines

● Journal of Economic Literature

● Shubik and Whitman's The Aggressive Conservative Investor

Thanks for Listening!

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In the third episode of Season 10, hosts Tano Santos and Michael Mauboussin speak with James Bessen, Executive Director of the Technology and Policy Research Initiative at Boston University. Delving into the intricacies of technological advancement and market dynamics, Bessen shares his insights on the evolving landscape of competition and innovation. The discussion highlights the impact of proprietary software on industry disruption, exploring the significant shift from mass production to mass customization facilitated by technology. This episode not only provides a deep dive into the challenges and opportunities presented by the digital age but also prompts a reflection on the future of value investing in a tech-dominated world and so much more!

Key Topics:

• Welcome to Season 10 of Value Investing with Legends (0:20)
• Exploring the concept of barriers to entry in value investing (1:05)
• James Bessen discusses technology's economic impact (3:15)
• Analysis of the decline in economic disruption despite technological growth (5:10)
• Impact of proprietary software on industry stability and market concentration (6:35)
• Historical perspective on technology's influence on the economy (8:25)
• The role of proprietary software in shaping competitive dynamics (10:30)
• The transition from mass production to mass customization in retail (12:05)
• Walmart's evolution and strategy in retail sector dynamics (14:20)
• Discussion on the concept of skill premium and technological advancements (24:55)
• Artificial intelligence's influence on market dynamics and job skills (26:10)
• Examining the pace and implications of innovation diffusion (31:00)
• Regulatory challenges and tech dominance in the market (34:10)
• Concentration of innovation and its economic implications (36:20)
• James' book recommendations (43:10)
• And much more!

Mentioned in this Episode:

• The New Goliaths: How Corporations Use Software to Dominate Industries, Kill Innovation, and Undermine Regulation by James Bessen
• Learning by Doing: The Real Connection between Innovation, Wages, and Wealth by James Bessen
• The Great Reversal: How America Gave Up on Free Markets by Thomas Philippon
• The Lever of Riches: Technological Creativity and Economic Progress by Joel Mokyr
• Worldly Philosopher: The Odyssey of Albert O. Hirschman by Jeremy Adelman

Thanks for Listening!

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In this episode, Tano Santos sits down with Jan Hummel, CIO of Paradigm Capital, revisiting his investment strategies and exploring the nuanced dimensions of risk management in the evolving European asset landscape. Jan discusses the foundational investment philosophy of Paradigm Capital, emphasizing risk minimization and the strategic deployment of assets across Europe. Key discussions pivot around the firm's selective investment criteria, focusing on companies in the small to mid-cap space and the significance of geographical and cultural nuances in their investment decisions. This conversation offers listeners insights into the subtleties of value investing, portfolio construction, the implications of geopolitical and economic dynamics on market opportunities, and so much more!

Key Topics:

• Introduction and background of Jan Hummel (0:37)
• Fundamental tenets of investment philosophy at Paradigm Capital (1:25)
• The impact of European market dynamics on investment strategies (7:25)
• Sourcing and valuing investment opportunities (9:47)
• Specific approaches to risk management and hedging strategies (22:23)
• Portfolio sizing and the decision-making process behind exiting investments (26:00)
• The role of geographical focus in Paradigm's investment strategy (29:12)
• Valuation techniques and practical applications in portfolio management (32:03)
• Trends and challenges in the European asset management industry (36:48)
• Macro-economic factors influencing market conditions and investment decisions (40:30)
• Prospects for growth and opportunities in the European financial landscape (45:17)
• Jan's book recommendations (46:06)
• And much more!

Mentioned in this Episode:

• The Fiscal Theory of the Price Level by John Cochrane
• Paradigm Capital
• Columbia Business School

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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In this heartfelt episode, we pay tribute to Charlie Munger, the visionary vice chairman of Berkshire Hathaway who recently passed away. Joining us is Todd Combs, an investment officer at Berkshire Hathaway and a close acquaintance of Munger. Todd shares personal anecdotes and insights into Munger's profound influence on the investment world and his unique approach to life and business. From his early meetings with Munger to the invaluable lessons on value investing and rational thinking, Todd provides an intimate look into the wisdom of one of the greatest investors of our time.

Key Topics:

• Celebrating Charlie Munger's contributions and legacy (01:20)
• Todd's initial encounters with Munger (02:15)
• The intellectual journey and partnership between Munger and Buffett (08:57)
• Munger's approach to life, investing, and the importance of mental models (11:22)
• Behavioral economics insights shared by Munger (13:00)
• The practical applications of Munger's wisdom in business and investing (16:17)
• Munger's lasting impact (24:59)
• And much more!

Mentioned in this Episode:

• Poor Charlie's Almanack: The Essential Wit and Wisdom of Charles T. Munger by Charles T. Munger 
• Thinking, Fast and Slow by Daniel Kahneman 

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Today's discussion with Kim Lew, President and CEO of the Columbia Investment Management Company, traverses her unique journey from her roots in the Bronx to managing a prominent Ivy League endowment. Kim shares her insights on navigating the intricate world of investment management, particularly in risk management and asset allocation. With a career marked by pivotal roles at entities like the Ford Foundation and Carnegie Corporation, her expertise brings a nuanced understanding of the interplay between market dynamics and organizational strategy. This episode explores how adaptability, intellectual curiosity, and understanding global trends shape successful investment approaches.

Key Topics:

• Kim's early career and transition to finance (2:59)
• Role at Chemical Bank and career progression (5:05)
• Experience at Prudential Capital and Ford Foundation (9:27)
• Shift to Carnegie Corporation and Columbia Investment Management (18:07)
• Challenges of managing a larger endowment (20:13)
• Aligning endowment goals with university values and ESG considerations (22:08)
• Comprehensive approach to risk management (26:54)
• Asset allocation and balancing public vs. private markets (34:06)
• The concept of future-proofing investment strategies (41:19)
• Organizational behavior in asset management (48:54)
• Importance of intellectual curiosity in team members (55:11)
• Kim's book recommendations (1:01:01)
• And much more!

Mentioned in this Episode:

• Columbia Finance
• The Worlds I See: Curiosity, Exploration, and Discovery at the Dawn of AI by Fei-Fei Li
• Quit: The Power of Knowing When to Walk Away by Annie Duke
• Hidden Potential: The Science of Achieving Greater Things

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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In the complex world of financial markets and economic fluctuations, John Armitage, a seasoned investment maestro, sits down with us today. As the chief strategist behind the success of Egerton Capital, Armitage brings his profound insights into navigating the complexities of portfolio management and the subtle art of risk-taking in fluctuating markets. His expertise, honed through years of experience, sheds light on the critical impact of macroeconomic shifts and the pitfalls that stock pickers often encounter amidst outdated corporate data. This episode delves into passive investing, dissecting the crucial role of competitive dynamics in sectors like European aviation and examining the transformative impact of a growing talent pool on the traditional realms of asset management. Armitage also ventures into the ethical crossroads, intertwining moral integrity, societal upheaval, and the revolutionary wave of artificial intelligence. We uncover his focus on growth, governance, and quality, underpinned by a meticulous decision-making process at Egerton Capital, his literary pursuits, pondering over the influence of literature on his investment philosophy, and so much more!

Key Topics:

• Overview of Egerton Capital (1:42)
• Transitioning from broad ideas to specific investments and the role of specialization (8:29)
• Egerton Capital's approach to researching new investment opportunities (12:58)
• Understanding market signals and opposing investment perspectives (15:46)
• John's approach to portfolio building and decision-making in investing (20:00)
• Client importance, portfolio building, and decision-making in investing (23:37)
• Luck, being in the right place at the right time, and mentorship (28:07)
• Managing portfolio volatility and the frequency of financial crises (30:54)
• John's positive outlook on reinsurance space and companies like Ryanair and Meta (35:31)
• The future of stock picking and asset management (41:19)
• What worries John and excites him about the future (43:09)
• John's book recommendations (45:29)
• And much more!

Mentioned in this Episode:

• Egerton Capital
• The Golden Mole and Other Living Treasure by Katherine Rundell
• Super-Infinite - The Transformations of John Donne by Katherine Rundell
• The Fall of Robespierre: 24 Hours in Revolutionary Paris by Colin Jones
• The Sword and the Shield by Christopher Andrew and Vasilli Mitrokhin

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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In the intricate dance of market movements and economic trends, it takes a discerning eye to discern patterns and make strategic decisions. Enter Nicolai Tangen, the astute CEO of Norges Bank Investment Management, who joins hosts Michael Mauboussin and Tano Santos on Value Investing with Legends. A connoisseur of art history and asset management, Nicolai offers a rare blend of expertise, drawing parallels between the seemingly disparate worlds of art and investment. His approach, marked by a blend of rigorous analysis and intuitive pattern recognition, reveals the underpinnings of a global economy shrouded in paranoia and driven by innovation. In this episode, Nicolai unfolds his journey from being an art student to leading one of the most prominent investment funds, highlighting how understanding historical context informs risk appetite. He brings to the forefront the role of AI in transforming investment strategies and the delicate balance of managing a substantial portfolio while maintaining a contrarian stance. Tune in to learn about the psychological aspects of risk assessment, the implications of AI on future investment strategies, the value of contrarian thinking in an ever-changing market, and so much more!

Key Topics:

• Nicolai's journey from Russian military studies to financial expertise at Wharton (2:45)
• Nicolai's foundational career experiences with John Armitage at Egerton Capital (4:04)
• The refreshing and insightful sabbatical Nicolai took to study art history (6:42)
• AKO Capital's strategy: selecting high-quality stocks for robust growth and solid returns (9:17)
• Investing success through deep reading, contemplative analysis, and rare decisive action (10:34)
• The critical role of pattern recognition in navigating financial uncertainties (13:51)
• Post-mortem analysis as a vital component of investment strategy refinement (15:41)
• The importance of contrarian perspectives in investment strategy and team development (19:09)
• Delving into CEOs' insights on market trends and the underestimated influence of corporate culture (23:04)
• Adapting from selecting individual assets to managing broad asset classes with team collaboration (26:48)
• Proactive engagement in corporate governance through ESG-focused voting practices (30:33)
• The inescapable responsibility of managing a globally influential investment fund (33:08)
• Balancing the promising prospects of AI with the imperative of managing social risks (35:36)
• Defining fund success beyond returns: robust processes and a motivated, fulfilled team (38:07)
• What keeps Nicolai up at night and excited about the future (40:40)
• Nicolai's book recommendations (43:24)
• And much more!

Mentioned in this Episode:

• Norges Bank
• AKO Capital
• Egerton Capital
• Adam Grant - Think Again: The Power of Knowing What You Don't Know
• Angela Duckworth - Grit: The Power of Passion and Perseverance
• Amy Edmonson - Teaming: How Organizations Learn, Innovate, and Compete in the Knowledge Economy
• Annie Duke - Quit: The Power of Knowing When to Walk Away 

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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John Rogers isn't just a successful investor; he's an industry titan. As the founder of a reputable investment firm, he's made a name for himself with his contrarian value investing strategies. But he's not just a practitioner; he's an educator, avidly reading and contributing to seminal works in investment literature. John's journey began with an early fascination for finance from his youthful days. A Princeton alumnus, he entered the turbulent waters of the stock market and turned a calamity—the infamous crash of 1987—into a career-defining opportunity. In today's episode, John joins us to discuss his formative experiences, the philosophical underpinning of his investment strategy, and the importance of thinking long-term. We also delve into his roles on various corporate boards, where he weighs in on 401k plans, corporate governance, the pivotal role of diversity in creating equal opportunities for minority businesses, and so much more!

Key Topics:

• An overview of John's professional background (2:15)
• John's journey from William Blair to founding Ariel Investments (07:42)
• The 1987 market crash as a turning point for Ariel's value investing approach (10:04)
• John's philosophy on patient, research-heavy, value-based investing (13:07)
• How longevity in markets solidified John's faith in efficiency (19:15)
• The mechanics of idea generation at Ariel Investments (23:30)
• Ariel's methodology for dissecting investment errors (29:53)
• Drawing teamwork and pressure-handling lessons from Coach Carril (35:20)
• How board experience informs his investing (37:47)
• John's focus on value investing and cautious approach to buybacks (42:20)
• Why John is optimistic about The Sphere in Las Vegas and Adelum (46:18)
• John's fulfillment from social engagement and its business impact (50:18)
• What keeps John up at night and excited about the future (55:48)
• John's book recommendations (57:41)
• And much more!

Mentioned in this Episode:

• Turn Every Page: The Adventures of Robert Caro and Robert Gottlieb
• Jonathan Eig | King: A Life
• Morgan Housel | The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Navigating the investment world is an enormous task, especially when looking at company numbers and the people running them. That's why we're thrilled to have Sheldon Stone on the show. Sheldon was the first in his family to go to college, attending the highly respected Bowdoin College. He was part of a remarkable class of 225 students, an experience that shaped his unique perspective on life and career. Hailing from New Jersey, Sheldon Stone has had a fascinating career journey. His time at Bowdoin wasn't just about hitting the books; it also laid the groundwork for his expertise in bonds and financial markets. In today's episode, hosts Michael Mauboussin and Tano Santos sit down with Sheldon to dig into the nuts and bolts of investing. Sheldon shares his path from studying government in college to becoming a seasoned Chief Investment Officer. We dive deep into critical considerations like balancing liquidity and safeguarding investments, understanding the growing high-yield market, and why intangible assets like brands and patents are making financial waves. Sheldon, Michael, and Tano will explore Sheldon's unique educational background, the trade-offs in investment strategies, the rise of the high-yield market, the role intangibles play in today's financial world, and so much more!

Key Topics:

• An overview of Sheldon's professional background (3:13)
• 40-year partnership with Howard Marks: mutual dynamics and shared intellect (8:38)
• Early high-yield bond market inefficiencies and technological limitations (11:23)
• How equity holders' approach affects creditor relations and company ease-of-work (18:57)
• Company growth via flexibility over ratings and the role of private equity (20:38)
• Operating in 300-550 basis point spreads; equity investment opportunities (24:18)
• Importance of new issues for returns; market appetite and deal quality (26:25)
• Role of equity market signals in bond investments; sector focus (28:34)
• Credit scoring matrix: eight critical factors for buy/sell decisions (31:17)
• Asset recovery rates: tangible vs intangible; market sentiment effects (39:25)
• Impact of rising rates on leveraged loans; stability measures (46:55)
• Challenges with interpreting delinquency rates; sector diversification strategies (50:30)
• Characteristics of influential investment committees: camaraderie and vital CIO (52:04)
• Teaching at Columbia; credit analysis as a career path for students (54:12)
• What keeps Sheldon up at night and excited about the future (57:14)
• Sheldon's book and theatre recommendations (59:00)
• And much more!

Mentioned in this Episode:

• Charlie Ellis Book | Winning The Loser's Game
• Howard Marks' Books
• The Most Important Thing: Uncommon Sense for The Thoughtful Investor
• Mastering the Market Cycle: Getting the Odds on Your Side

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Navigating the complex world of wealth creation and financial history can be daunting. That's why our guest, Ray Dalio, places a strong emphasis on understanding the evolution of wealth, the current economic landscape, and the patterns that govern financial markets.

As an iconic investor and author, Ray offers a wealth of knowledge backed by years of experience in the finance industry. He has written the seminal book, "Principles for Navigating Big Debt Crisis," which serves as a crucial resource for anyone interested in understanding historical financial crises.

Ray is a legendary investor and the founder of Bridgewater Associates, one of the largest hedge funds in the world. He has extensive experience with debt crises, having navigated them multiple times in his career. In addition to his achievements in finance, he is the author of several highly acclaimed books that have garnered him a massive following both inside and outside of the financial community. 

In this episode, Ray, Michael, and Tano discuss a range of topics from the evolution of wealth throughout history to the rise of populism in the modern world. They delve into the role of capital markets in wealth creation, the importance of understanding risk-return trade-offs, and much more. Ray also shares his unique perspectives on the challenges faced by countries like China and talks about the importance of deleveraging in today's economic climate.

Join us as we dive deep into these captivating topics with one of the most brilliant minds in the finance industry. Stay tuned for an enriching conversation that promises to offer valuable insights and much more!

Key Topics:

• An overview of Ray's background (2:56)
• Ray's early foray into commodities (5:18)
• Shifting from micro to macro via commodities (6:59)
• Founding and pivoting Bridgewater (8:37)
• Alpha and beta separation in investing (11:29)
• Client portfolio customization, beating traditional methods  (14:04)
• Decision systemization for diverse returns (16:13)
• Navigating 2008 with debt dynamics knowledge (21:42)
• Transition from assets to future earnings (26:00)
• Market links to economic boom, risks of future promises (31:48)
• Growth's double-edged sword: innovation vs. debt and conflict (33:15)
• US-China war likelihood in the next decade (39:34)
• China's trio of challenges: Debt, demographics, economic model  (46:37)
• Advocacy for bipartisan societal reform (54:06)
• Ray's book recommendations (58:28)
• And much more!

Mentioned in this Episode:

• Bridgewater Associates
• Principles for Navigating Big Debt Crises | Ray Dalio
• Principles for Dealing with the Changing World Order: Why Nations Succeed or Fail | Ray Dalio
• Henry Kissinger's Books
• The Age of AI: And Our Human Future
• Leadership: Six Studies in World Strategy
• Diplomacy
• Crisis: The Anatomy of Two Major Foreign Policy Crises

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Today's conversation is a special one. I'm delighted to share my fireside chat with Markel Corporation's Tom Gayner from our 26th Annual CSIMA Conference. With decades of industry experience, Tom joined us to share insights into how Markel has differentiated itself from others in the insurance industry and the investment approach and philosophies that facilitate its continued growth.

Thomas "Tom" Gayner is the Co-Chief Executive Officer of Markel Corporation. He oversees investing activities for the company, as well as the Markel Ventures' diverse industrial and service businesses. Tom joined Markel in 1990 to form Markel Gayner Asset Management which provided equity investment counsel for Markel Corporation and outside clients.

In this episode, Tom and I discuss how he went from analyzing Markel to joining the team after its IPO, Markel's three-engine business model, how Markel Ventures originated, why it's essential to create an environment that's supportive of the way you'd like to operate, and so much more!

Key Topics:

• Tom's journey to joining Markel (1:28)

• Markel's three-engine architecture of insurance, investments, and Markel  Ventures (5:00)

• How AMF Bakery Equipment became Markel Ventures' first investment (9:18)

• The four lenses for assessing equity investments (13:33)

• Markel's nuanced approach to portfolio management (20:44)

• Learning to improve your investment decision-making process (24:14)

• Why Tom calls financial statements a donut truth (28:01)

• Translating the language of GAAP accounting to real economic meaning (29:48)

• Assessing a company's debt levels (33:31)

• How interest rates massively impact human behavior (35:05)

• And much more!

Mentioned in this Episode:

• Markel Corporation Annual Reports

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Bill Ackman, founder and CEO of Pershing Square Capital Management, joins hosts Michael Mauboussin and Tano Santos to trace the arc of his investing journey—from his early days in real estate finance to founding Gotham Partners and eventually building Pershing Square into a $30 billion firm. Bill discusses formative moments that shaped his thinking, including his controversial early short of MBIA, the painful lessons of the Valeant episode, and the transformation brought about by adopting a permanent capital structure. He also unpacks his investment philosophy, the importance of durability and moats, and his team's approach to risk, activism, and concentrated investing. Along the way, Bill offers thoughts on AI, higher education, and what excites—and concerns—him about the future — and much more! 

Key Topics: 
 

● Bill's near-death experience and early independence (2:19) 

● Skills learned at Harvard and lessons from rowing and sales (3:50) 

● Real estate foundation and Gotham Partners launch (6:44) 

● Early credit derivative bet and discovery of MBIA issues (12:23) 

● Formation and lessons from Pershing Square (19:02) 

● The three eras of Pershing Square and the importance of permanent capital (21:03) 

● Bill's investment philosophy and focus on durable moats (27:31) 

● Thoughts on capital-light, network-effect businesses (33:58) 

● How Pershing Square handles portfolio concentration and risk (36:30) 

● Impact of AI and the resilience of activist investing (40:17) 

● Student pitch trends and what makes a strong investment case (43:25) 

● What Pershing looks for when hiring investment professionals (47:29) 

● What worries and excites Bill today (51:34) 

● Recommended reading and X as a research tool (54:34) 

● And much more! 

Mentioned in this Episode: 

● Pershing Square Capital Management 

● Gotham Partners 

● MBIA Inc. 

● Farmer Mac 

● Herbalife 

● Valeant Pharmaceuticals 

● General Growth Properties 

● Hilton Worldwide 

● Uber Technologies 

● Universal Music Group 

● Brookfield Asset Management 

● The Financial History of Berkshire Hathaway by Adam Mead 

● The Compounders: Lessons from 50+ Stories of Business Growth by Travis Wiedower 

Thanks for Listening! 

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu. 

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more! 

When evaluating a company, getting a clear picture of all the relevant factors can be challenging. That's why today's guest, Scott Hendrickson, heavily emphasizes management quality and companies where diligence can provide a high level of conviction.

As a Columbia Business School graduate and adjunct professor, Scott is both a practitioner and a teacher. He has been an integral part of the investing program for almost a decade.

Scott Hendrickson is a Partner and the Co-Founder of Permian Investment Partners, a $1.2 billion management-focused global long/short investment fund. Before co-founding Permian, Scott worked as an Investment Analyst at Brahman Capital. Prior to Brahman, Scott worked as an Associate at Industrial Growth Partners, a middle-market-focused private equity fund. Scott started his career as an Analyst in Merrill Lynch's Investment Banking Program. Scott graduated from Emory University with a BBA in Finance in 2000 and Columbia Business School with an MBA in 2007. Scott serves on the Columbia Business School adjunct faculty, teaching Applied Value Investing since 2014.  

In this episode, Scott, Tano, and I discuss Scott's journey to a career in investing, why Permian has management as their core focus, the three main business quality metrics they employ, risk management for short interests, characteristics of transformational acquisitions, how teaching has expanded Scott's perspective, and so much more!

Key Topics:

• How Scott's interest in investing evolved from his love for music (1:57)

• Scott's learnings from his time at Brahman Capital (5:35)

• Criteria Permian seeks in longs and shorts (7:01)

• Why Permian has management as a core focus (8:08)

• How the quality of Permian's LPs has become an advantage (10:53)

• Permian's approach to screening (12:49)

• The three main business quality metrics employed (15:38)

• Permian's portfolio construction and power rank system (17:20)

• Breaking down the four short frameworks (22:01)

• Risk management for short interests (24:46)

• Factoring in the macro view (26:31)

• How Permian applies value-added research (30:00)

• What it means to be "diligence-able" and why that matters (33:38)

• Characteristics of transformational acquisitions (37:22)

• Differentiating between structural and fixable costs (39:41)

• What's behind the long-term underperformance of European stock markets (42:35)

• How teaching has expanded Scott's perspective (44:54)

• Scott's recommendations for investors to improve the odds that they will be successful over time (46:26)

• What keeps Scott up at night and excited about the future (47:23)

• Scott's book recommendations (50:16)

• And much more!

Mentioned in this Episode:

• William N. Thorndike's Book | The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success

• Jim Rogers' Books

• • Investment Biker: Around the World with Jim Rogers

  • Adventure Capitalist: The Ultimate Road Trip

• Hernando De Soto's Book | The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else

• Joel Greenblatt's Book | You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits

• Seth A. Klarman's Book | Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

With the constant evolution of the asset management industry, investors need to stay a step ahead to justify earning an active management fee. With over 40 years of experience in the industry, this is a lesson that today's guest, Bill Nygren of Harris Associates, instills in the younger analysts he mentors.

Bill is a true legend of value investing and an investor you can turn to whenever the market is uncertain. He radiates fundamental ideas and has an expansive perspective on the comings and goings of the market and the economy at large. 

Bill is the Chief Investment Officer for US equities at Harris Associates, which he joined in 1983, and a vice president of the Oakmark Funds. He has been a manager of the Oakmark Select Fund since 1996, Oakmark Fund since 2000, and the Oakmark Global Select Fund since 2006. Bill served as the firm's director of research from 1990 to 1998. He has received many accolades during his investment career, including being named Morningstar's Domestic Stock Manager of the Year for 2001, and he holds an M.S. in Finance from the University of Wisconsin's Applied Security Analysis Program (1981) and a B.S. in accounting from the University of Minnesota (1980).

In this episode, Bill, Michael, and I discuss why Bill was drawn to value investing, why generalist analysts transition more easily to portfolio manager than specialists, his approach to idea generation and portfolio construction, pivoting in times of crisis and great distress, recession insights from over 40 years of experience, and so much more!

Key Topics:

• Welcome Bill to the show (1:09)
• Bill's lifelong fascination with the line between gambling and investing (2:17)
• Why Bill was drawn to value investing (4:51)
• The importance of working at a firm that shares your investment philosophy (6:26)
• Why generalist analysts transition more easily to portfolio manager than industry specialists (9:36)
• Dealing with industry intricacies as a generalist analyst (14:05)
• Harris Associates' approach to idea generation (15:55)
• What it's like to be an analyst at Harris Associates (18:31)
• Why Harris uses multiple techniques to define value (24:25)
• Looking at management's attitude towards capital redeployment (26:33)
• Harris' maintenance process and error recognition methods (30:08)
• Bill's thoughts on the news of Microsoft's massive investment into OpenAI(32:53)
• Pivoting in times of crisis and great distress (36:38)
• Capital One as a case study of a stock that represents a good investment opportunity today (41:25)
• Recession insights from over 40 years of industry experience (44:02)
• Thinking about the effect of the current interest rate environment (48:35)
• Criteria for portfolio construction and position sizing (49:52)
• The evolving opportunity set (53:21)
• Identifying anomalies in GAAP accounting (55:44)
• The things that keep Bill up at night and excited about the future (59:31)
• Bill's book recommendations (1:02:04)
• And much more!

Mentioned in this Episode:

• Harris Associates
• Oakmark Funds
• Michael Dell's Book | Play Nice But Win: A CEO's Journey from Founder to Leader
• John Mack's Book | Up Close and All In: Life Lessons from a Wall Street Warrior
• Joe Maddon & Tom Verducci's Book | The Book of Joe: Trying Not to Suck at Baseball and Life

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

One of the most exciting things in our industry is finding young investment managers who are incredibly bright, hard-working, and well-trained in the investment process. Our guest today, Angela Aldrich, fits that bill perfectly.

Angela is the co-founder of Bayberry Capital Partners, a hedge fund with a half-billion dollars in assets based in New York. Before starting Bayberry Capital Partners, she worked at John Griffin's Blue Ridge Capital, which shut down in 2017 after a glorious 21-year run during which it returned its investors an average return of 15.3% annually. Angela graduated from Duke University with a degree in economics and received an MBA from Stanford University Graduate School of Business. Before joining Blue Ridge, Angela worked at Goldman Sachs, BDT Capital Partners, and Scout Capital Management.

In this episode, Angelo, Tano, and I discuss her path to a career in investing, what it was like to be mentored by John Griffin, Angela's key learnings from her transition from analyst to portfolio manager, Bayberry's investment philosophy and approach to search, portfolio construction and sizing, how to find opportunities in volatility, case studies of companies which demonstrate Bayberry's organizational principles in action, and so much more!

This podcast is not an offer to sell or the solicitation of an offer to purchase any securities, nor is it an offer of any advisory services. This podcast is for informational and educational purposes only, and intended to provide general market commentary. The discussion of any individual investments discussed in this podcast is for informational purposes only, and any such investments are not representative of all of the investments held, or that may in the future be held, by any fund, account or investment vehicle managed by Bayberry Capital Partners LP. Nothing in this podcast, including any discussion of past results, is a guarantee of similar or future outcomes.

Key Topics:

• Welcome Angela to the show (2:12)
• How Angela found her way to a career in investing (3:09)
• The transformational experience of working with John Griffin, founder of Blue Ridge Capital Management (5:53)
• Navigating the transition from analyst to portfolio manager (9:13)
• Portfolio construction as a form of risk management (11:20)
• Finding opportunities in periods of crisis and high volatility (15:00)
• The investment philosophy and organizational principles that drive results at Bayberry Capital (18:25)
• Bayberry's approach to recognizing surprisingly high business quality (22:04)
• Signposts of suitable candidates for the short side (25:39)
• Unlocking value from an investment thesis (27:22)
• How to avoid thesis creep (30:26)
• The central importance of identifying the right key investment factors (33:23)
• Portfolio sizing principles at Bayberry (36:21)
• Why WillScot Mobile Mini Holdings became Bayberry's largest long (39:36)
• How Bayberry goes about valuing businesses (48:27)
• Why Bayberry became interested in Burford Capital (50:38)
• What keeps Angela worried and excited about markets in the future (1:01:14)
• Angela's book recommendations (1:02:32)
• And much more!

Mentioned in this Episode:

• Carol S. Dweck's Book | Mindset: The New Psychology of Success
• Sudhir Venkatesh's Book | Gang Leader for a Day: A Rogue Sociologist Takes to the Streets

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

Over the past several decades, asset management has transformed from a small industry with a few experts competing against a majority of amateurs in the market to a market saturated with well-equipped and highly resourced experts competing against each other.

When I think about my pantheon of all-time great investment thinkers and writers, our guest today stands out as one of the industry's legends. Charley Ellis has played the most significant role in how I think about the investment industry, and I can't think of anyone better to talk about the industry's evolution.

Dr. Charles D. Ellis is the founder and former managing partner of Greenwich Associates, an international consultancy where he advised large institutional investors, foundations, and government organizations in more than 130 financial markets across the globe. Through that lens, he has been a keen observer of what works in organizations and markets for the last half-century. For nine years, Charley was chair of the Investment Committee at Yale, his alma mater, where he worked closely with its legendary Chief Investment Officer, David Swensen. He also served as a director of the Vanguard Group from 2001 to 2009. Charlie is a Harvard Business School graduate and has taught advanced investing courses at both Yale and Harvard. The CFA Institute recognized him as one of the twelve leading contributors to the investment profession, and along the way, Charlie has published nineteen books.

In this episode, Tano, Charley, and I discuss what inspired him to found Greenwich Associates, what goes into identifying the right questions to ask, how the industry has shifted from a winner's game to a loser's game, the massive changes in the asset management industry since the founding of Greenwich Associates, lessons from the Yale endowment model, Charley's book recommendations, and so much more!

Key Topics:

• Welcome Charley to the show (1:13)
• How Charley's early experience at Donaldson, Lufkin & Jenrette inspired the concept for Greenwich Associates (3:07)
• Structuring research and gathering the right kinds of questions (7:51)
• How Charley developed a passion for sharing insights with the public at large (10:00)
• The dual roles of academia and the industry itself in the evolution of the asset management industry (11:46)
• Simon Ramo and The Loser's Game (13:33)
• Massive changes in the asset management industry since Charley founded Greenwich Associates (19:07)
• Why it was much easier for active managers to beat the market in the early days of the industry (25:03)
• Understanding the relentless pace of competition (29:35)
• The importance of actively determining the right investment strategy for you (32:44)
• Charley's perspective on the legacy of Vanguard's Jack Bogle (37:26)
• Why Charley cites John Neff as the best active manager of his time (43:27)
• David Swenson's capacity for innovative thinking (46:51)
• Lessons from the Yale endowment model (51:02)
• Highlights from Charley's book, Capital (58:38)
• Essential elements of creating and perpetuating a great culture (1:00:06)
• Why the willingness to address problems head-on is crucial in sustaining excellence (1:02:30)
• Charlie's excitement about our education system (1:06:19)
• Which overlooked issue does Charlie wish garnered more attention? (1:07:07)
• Charley's book recommendations (1:12:09)
• And much more!

Mentioned in this Episode:

• Charley Ellis' Books
  • Figuring It Out: Sixty Years of Answering Investors' Most Important Questions
  • Inside Vanguard: Leadership Secrets From the Company That Continues to Rewrite the Rules of the Investing Business
  • Winning the Loser's Game: Timeless Strategies for Successful Investing
  • Capital: The Story of Long-Term Investment Excellence
  • What It Takes: Seven Secrets of Success from the World's Greatest Professional Firms
• Charley Ellis' Articles
  • The Loser's Game
  • In Defense of Active Investing
• Burton G. Malkiel's Book | A Random Walk Down Wall Street: The Best Investment Guide That Money Can Buy
• Neil deGrasse Tyson's Book | Astrophysics for People in a Hurry

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

Success comes from value creation. 

For a strategic initiative to create value, it must increase willingness to pay or decrease willingness to sell. Otherwise, the resources expended will not flow into profitability.

Today's discussion is one I was looking forward to because we're focusing on value-based strategy frameworks and using strategic analysis to understand whether a company has a competitive advantage. Joining us to explore this topic is someone who has taken a fundamentally sound framework and brought it to life with excellent insights and vivid examples, Felix Oberholzer-Gee.

Felix Oberholzer-Gee is the Andreas Andresen Professor of Business Administration in the Strategy Unit at Harvard Business School. A member of the faculty since 2003, Felix has won numerous awards for excellence in teaching, including the Harvard Business School Class of 2006 Faculty Teaching Award for best teacher in the core curriculum and the 2002 Helen Kardon Moss Anvil Award for best teacher in the Wharton MBA program. He teaches competitive strategy in executive education programs such as the Program for Leadership Development, the Senior Executive Program for China, and a program for media executives titled Effective Strategies for Media Companies. His course, Strategies Beyond the Market, is a popular elective class for second-year MBA students. Felix is the author of numerous books, and his latest book, Better, Simpler Strategy, will be a major subject of today's conversation.

In this episode, Felix, Tano, and I discuss how Felix defines his strategy framework, why willingness to pay and willingness to sell should be at the core of every strategy conversation, the value of ROIC as a metric of success, how Felix thinks about driving competitive advantages, value capture versus value creation, how to think about complements and substitutes, the potential for innovation and productivity growth, and so much more!

Key Topics:

• Welcome Felix to the show (2:03)
• Why a Ph.D. for career advancement unexpectedly led to Felix's transition into academia (2:24)
• How case writing guides Felix's interests and research focus (4:20)
• Defining a value-based strategy framework (6:25)
• Why should every conversation start with "Are we increasing willingness to pay or are we decreasing willingness to sell?" (10:08)
• Why Felix chose return on invested capital (ROIC) as a primary metric (12:40)
• Looking at ROIC distribution over the long term (14:22)
• Focusing on creating a competitive advantage inside of your industry segment (18:25)
• The significant issues strategists have with P&L statements (21:31)
• Value capture versus value creation (24:56)
• Determining willingness to pay (28:21)
• Harnessing network effects to increase willingness to pay (29:19)
• When to be worried about new entrants (33:18)
• Types of relationships between complementors (36:59)
• Understanding complements and value creation (40:26)
• Identifying complements and subtitutes (43:27)
• The effect of different management practices on productivity and willingness to sell (50:53)
• Tying willingness to pay and willingness to sell to strategy maps (56:01)
• Case study: Best Buy (58:09)
• The potential for innovation and productivity growth (1:02:09)
• Why Felix is obsessed with the differences between how we think about products and services versus jobs (1:04:50)
• Felix's book recommendations (1:08:18)
• And much more!

Mentioned in this Episode:

• Felix Oberholzer-Gee's Book | Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance
• Youngme Moon's Book | Different: Escaping the Competitive Herd
• Frances Frei & Anne Morriss' Book | Uncommon Service: How to Win by Putting Customers at the Core of Your Business

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

To be a good value investor, you must be a good credit analyst.

Over the years, I learned so much from the many investors I've met through Heilbrunn. I've shamelessly incorporated these ideas and insights into my lecture notes and the curriculum. Today's guest is one such person.

Mitch Julis has had a disproportionately large impact on both my thinking and the program design. Now he joins me for a conversation about the rich interactions between the nature of the firm's business operation and the liability side of the balance sheet.

Mitchell R. Julis is the Co-Founder, Co-Chairman, and Co-Chief Executive Officer of Canyon Partners, LLC. Mitch is a graduate of the Woodrow Wilson School at Princeton University, Harvard Law School, and Harvard Business School. He received an honorary doctorate from Yeshiva University of New York in 2011. Before forming Canyon, Mitch directed a group of professionals responsible for a distressed and special situation securities portfolio at Drexel Burnham Lambert. He was a bankruptcy and creditors' rights attorney at Wachtell, Lipton, Rosen & Katz in New York.

In this episode, Mitch and I discuss his journey from Bronx to Beverly Hills, the juxtaposition of accounting and accountability, why increasing spending power can undermine our federal system of competition, the four P's of understanding governance, Mitch's accidental entry into restructuring and bankruptcy law, arbitrage opportunities that arise in distressed situations, his approach to risk assessment, and so much more!

Key Topics:

• Welcome Mitch to the show (0:39)
• Mitch's rich childhood in the Bronx (3:14)
• The journey to Princeton and Mitch's goal to go to the Woodrow Wilson School of Public and International Affairs (9:35)
• The juxtaposition of accounting and accountability (15:47)
• Why increasing spending power can undermine our federal system of competition (18:09)
• How the four P's of understanding governance play out in real-world situations (23:58)
• Mitch's accidental entry into restructuring and bankruptcy law (29:31)
• Challenging the Countryman definition of executory contract at Harvard Law (33:12)
• Mitch's unexpected career moves (35:39)
• How Mitch's time at Drexel shifted his thinking about financial markets (38:30)
• Exploring arbitrage opportunities that arise in distressed situations (42:05)
• Using accounting to its maximum potential when modeling the evolution of the balance sheet (49:09)
• Insights from Canyon's statement of changes in net financial obligations (50:09)
• Chapter 11 escape holes and loopholes created by the private equity world (54:49)
• Mitch's approach to risk assessment (57:08)
• How the next financial crisis will play out (1:03:50)
• What keeps Mitch up at night with worry? (1:11:08)
• Mitch's movie recommendations (1:15:14)
• Embracing a continuous learning mindset with humility (1:18:29)
• And much more!

Mentioned in this Episode:

• Canyon Partners
• Richard E. Neustadt's Book | Presidential Power and the Modern Presidents: The Politics of Leadership from Roosevelt to Reagan
• Philip Hamburger's Book | Purchasing Submission: Conditions, Power, and Freedom
• Freddie Gershon's Book | Sweetie Baby Cookie Honey: A Novel
• Sujeet Indap & Max Frumes'Book | The Caesars Palace Coup: How a Billionaire Brawl Over the Famous Casino Exposed the Corruption of the Private Equity Industry
• The Offer on Paramount Plus
• Rabbi Benjamin Blech's Article | Bernie & The Godfather
• Spirited on Apple TV

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

"Right next to the really cheap junk, there are some really cheap gems."

Welcome to a new season of the Value Investing with Legends podcast!

We're delighted to welcome our first guests for the season, Andrew Wellington and Dan Kaskawits from Lyrical Asset Management. In 2008, Andrew started the firm with three core pillars of investing: value, quality, and analyzability. That approach leads them to focus on building concentrated portfolios that generate great returns through the core principles of value investing with a long-term time horizon.

Andrew Wellington is the Chief Investment Officer of Lyrical and has more than two decades of experience in the asset management industry. After spending five years in management consulting, in 1996, Andrew joined Pzena Investment Management as a founding member and its first research analyst. Five years later, after honing his skills as an equity analyst and value investor, Andrew joined Neuberger Berman in 2001, where he went on to run their institutional mid-cap value product. After Neuberger, Andrew spent two years in activist investing at New Mountain Capital. Andrew graduated summa cum laude and as the top graduating senior from the University of Pennsylvania's Management & Technology Program in 1990, earning a Bachelor of Science in Economics from the Wharton School and a Bachelor of Science in Engineering from the School of Engineering.

Dan Kaskawits joined Lyrical in January 2018 as a Senior Research Analyst. Dan has over 15 years of experience investing in public equities. Before Lyrical, he served as an Analyst at Elm Ridge Capital from January 2011 to December 2017 and as an Associate at Citi Investment Research from October 2003 to June 2009. Dan graduated from Tulane University and received an MBA from Columbia Business School. Dan has earned the right to use the Chartered Financial Analyst designation.

In this episode, Andrew, Dan, and I discuss how they got started in the asset management industry, lessons they learned from value investing legends, why Andrew founded Lyrical Asset Management, what makes a successful international value strategy, Lyrical's approach to search, how they operationalize their core pillars, why it's advantageous to be a generalist, their top book recommendations, and so much more!

Lyrical Asset Management LP's participation in this interview does not convey any offering or the solicitation of any offer to invest in the strategies discussed. Moreover, the information contained in this interview is not provided by Lyrical in a fiduciary capacity and does not constitute investment advice. Positions held by Lyrical portfolios are subject to change without notice; Lyrical bears no responsibility to update any opinions or information expressed herein. A list of all Lyrical recommendations is available upon request. Please see lyricalam.com/notes for a discussion of certain material risks of an investment in Lyrical's strategies.

Key Topics:

• Welcome Andrew and Dan to the show (00:56)
• How Andrew got into asset management from management consulting (3:09)
• Dan's journey to Columbia Business School and his asset management career (5:29)
• Invaluable lessons from Joel Greenblatt and Rich Pzena in being an equity analyst and a value investor (8:25)
• Learning to be a value investor at Elm Ridge (11:05)
• The restrictions that come from career concerns and what makes Lyrical Asset Management different (16:04)
• Crucial elements of a successful international value strategy (19:43)
• Lyrical's approach to search and the use of screens (23:33)
• Defining quality and analyzability and how Lyrical operationalizes them (29:20)
• Computing ROIC with significant intangibles (36:12)
• Ashtead Technology is a quintessential example of Lyrical's investment philosophy (42:43)
• Often overlooked benefits of counter-cyclical cashflow (46:59)
• The generalist's advantage (50:04)
• Dimensions of popularity (52:52)
• Why Lyrical offers clients the opportunity to invest in value ETFs (54:55)
• How the FAANG stocks influenced the outsized return of growth vs. value stocks in the past 10 to 15 years (59:14)
• Lyrical's value-focused impact strategy (1:02:27)
• Andrew's philosophy: "Don't predict; prepare." (1:06:19)
• Dan and Andrew's book recommendations (1:08:44)
• And much more!

Mentioned in this Episode:

• Lyrical Asset Management
• Value Investing with Legends Podcast | Allison Fisch - Unlocking Value in Emerging Markets
• Annie Duke's Book | Quit: The Power of Knowing When to Walk Away
• Benjamin Graham's Book | The Intelligent Investor Rev Ed.: The Definitive Book on Value Investing
• Bruce C. Greenwald's Book | Competition Demystified: A Radically Simplified Approach to Business Strategy
• James Montier's Book | Value Investing: Tools and Techniques for Intelligent Investment
• Michael Mauboussin's Books
• Annie Duke's Book | Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts
• Walter Isaacson's Book | The Code Breaker: Jennifer Doudna, Gene Editing, and the Future of the Human Race
• Walter Isaacson's Book | Steve Jobs
• Ryan Holiday's Book | Stillness Is the Key

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

"We look for exceptional small and mid cap companies with the wherewithal to become exceptional large companies."

This is at the core of the investment philosophy of today's guest, Columbia Business School alum Amy Zhang. Amy is Executive Vice President and Portfolio Manager of the Alger Small Cap Focus, Alger Mid Cap Focus, Alger Mid Cap 40, and Alger Small Cap Growth Strategies. She joined Alger in 2015 and has 27 years of investment experience, including over a decade at Brown Capital Management as a Partner, Managing Director, and Senior Portfolio Manager of its Brown Capital Small Company Strategy.

Amy has received multiple accolades, including being named one of the "Best Female PMs to Invest with Now" by Morningstar in 2022 and one of the "Top 20 Female Portfolio Managers" by Citywire in 2021, 2019, and 2018.

In this episode, Amy, Michael, and I discuss Amy's unconventional background and studies, why she made the move to managing small cap growth portfolios, how to think about small cap investments, the key metrics she looks for when assessing potential companies, her classification system of motorboats and sailboats, opportunities available in the current market, and so much more!

For more information and disclosures please visit www.alger.com

Key Topics:

• Reflections on the 2021/22 academic year (0:51)
• Welcome Amy to the show (1:26)
• How Amy found her way from studying math and physics to starting her investment career (2:44)
• How Amy's decision to apply to Columbia Business School (CBS) led to her first job in finance (5:43)
• Getting broad experiences after graduating from CBS (8:33)
• The valuable training and experiences Amy gained in her early career (10:24)
• Why Amy made the move to managing small cap growth portfolios (12:23)
• How Amy's investment philosophy has evolved (14:23)
• Alger's criteria for small cap (16:30)
• Getting a realistic perspective on the total addressable market (TAM) (19:10)
• Measuring the growth of intangibles inside a firm (23:53)
• Quantitative and qualitative metrics for assessing moats (25:12)
• Why management discussion is essential (26:51)
• Company classification: motorboats vs. sailboats (30:14)
• Why barriers to entry are more significant than first-mover advantage (32:15)
• Making the buy or sell decision (35:05)
• Assumptions that go into the margin of safety (37:37)
• Opportunities offered by the current market turmoil (41:42)
• Not all growth is created equal (45:57)
• How Amy thinks about portfolio construction in today's market (48:02)
• The importance of being benchmark agnostic (50:53)
• What worries and excites Amy most about the next few years in financial markets? (52:50)
• Amy's book recommendations (54:47)
• And much more!

Mentioned in this Episode:

• Philip A. Fisher's Book | Common Stocks and Uncommon Profits and Other Writings
• Seth A. Klarman's Book | Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor
• Michael Mauboussin's Book | More Than You Know: Finding Financial Wisdom in Unconventional Places
• Scott Davis' Book | Lessons from the Titans: What Companies in the New Economy Can Learn from the Great Industrial Giants to Drive Sustainable Success
• Mark Robichaux's Book | Cable Cowboy: John Malone and the Rise of the Modern Cable Business

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

How do you create a portfolio strategy that takes into account both safety and the pursuit of your aspirational goals?

That's what today's guest, Ashvin Chhabra, set out to answer with the Wealth Allocation Framework. Ashvin is President and Chief Investment Officer of Euclidean Capital, a New York-based family office for James H. Simons & Marilyn H. Simons. The Simons Foundation is dedicated to advancing research in mathematics and the basic sciences and is currently one of America's largest private funders in those areas. Prior to his current position, Ashvin was Chief Investment Officer for Merrill Lynch and Chief Investment Officer at the Institute for Advanced Study in Princeton, New Jersey. He's also the author of a terrific book, The Aspirational Investor, which was published in 2015. Ashvin holds a Ph.D. in Applied Physics from Yale University in the field of nonlinear dynamics.

In this episode, Ashvin, Tano, and I discuss Ashvin's background as a theoretical physicist, why he didn't see himself becoming a great trader, how the Wealth Allocation Framework was developed, his frustrations with modern portfolio theory, how he brings behavioral finance into wealth management, how to think about inflation and wealth preservation, and so much more!

Key Topics:

• Welcome Ashvin to the show (1:05)
• The beginnings of Ashvin's dream of becoming a physicist (2:58)
• The deep insights Ashvin was exposed to in his university studies (3:53)
• Benoit Mandelbrot's influence on Ashvin's thinking (5:51)
• Ashvin's transition from theoretical physicist to derivatives trading (9:20)
• Why Ashvin didn't resonate with a career on the trading floor (11:24)
• How the Wealth Allocation Framework was developed (15:54)
• Three main components of the wealth allocation framework (18:11)
• The engine of wealth creation (22:24)
• Why we need to understand models in their specific context (25:05)
• An evolving view of risk (28:46)
• Bringing behavioral finance into wealth management (31:23)
• Ashvin's perspective on the evolution of the endowment model (34:55)
• Diversifying through various ecosystems (38:26)
• How to think about inflation and wealth preservation (41:43)
• Bringing in an element of common sense and humanity (45:26)
• The macro issues that worry Ashvin (47:52)
• The beauty of the non-linear aspects of financial markets (51:13)
• Ashvin's book recommendations (53:03)
• And much more!

Mentioned in this Episode:

• Ashvin B. Chhabra's Book | The Aspirational Investor: Taming the Markets to Achieve Your Life's Goals
• Ashvin B. Chhabra's Paper | Beyond Markowitz: A Comprehensive Wealth Allocation Framework for Individual Investors
• Patrick Bolton, Tano Santos and José Scheinkman's Paper | Cream Skimming in Financial Markets
• Robert A. Caro's Book | Working
• Robert A. Caro's Book | The Power Broker: Robert Moses and the Fall of New York
• Benoit Mandelbrot & Richard L Hudson's Book | The Misbehavior of Markets: A Fractal View of Financial Turbulence
• Benjamin Graham's Book | The Intelligent Investor: The Definitive Book on Value Investing
• Morgan Housel's Book | The Psychology of Money: Timeless lessons on wealth, greed, and happiness
• Amor Towles' Book | A Gentleman in Moscow

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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"The data is the data, and that's it."

As a model user, it's easy to get hyperfocused on quantitative data but reality requires a broader approach.

In the current market environment with uncertainty at every turn, it's an advantage to be able to blend quantitative and qualitative analysis with years of experience observing the interaction between the economy at large and financial markets.

Today we're joined by Wall Street Legend, Abby Joseph Cohen, a student of the market who has seen lots of ups and downs from early in her career.  Abby was most recently Senior Investment Strategist at Goldman Sachs and she is now a full-time member of the faculty at Columbia Business School, where she teaches a very popular course called the Future of the Global Economy.

Abby started her Wall Street career at T. Rowe Price, ultimately landing at Goldman Sachs in 1990. She made her name there as Chief US Portfolio Strategist, was named a Managing Director in 1996, and made Partner in 1998 shortly before the firm went public. Abby is a native New Yorker, attended Cornell University, and received a master's degree in economics from George Washington University.

In this episode, Abby, Tano, and I discuss the unusual route Abby took in her studies when she combined economics with computer science, why she considers herself a reformed quant, the importance of combining quantitative and qualitative data, what we can learn from financial crises of the past, why she doesn't believe we're experiencing the end of globalization, and so much more!

Key Topics:

• Welcome Abby to the show (1:06)
• The unusual path Abby charted for herself in her studies (2:25)
• Why Abby considers herself a reformed quant (4:35)
• When a model stops working (6:23)
• The art of using a model (7:55)
• What happens when many investors are using the same models (9:58)
• How declining interest rates have impacted financial markets in recent decades (13:08)
• The issues that have developed out of the rise of ETFs and index funds (15:03)
• What we can learn from the TMT (technology, media, telecom) sector runup in 1999 and 2000 (18:46)
• The sustainability of companies and how it affects pricing (20:27)
• The evolution of the syllabus for the Future of the Global Economy (23:00)
• Factors that cause a crisis to become a lasting phenomenon (25:19)
• Risks associated with monetary and fiscal policy decisions taken during COVID (27:11)
• Abby's take on the potential end of globalization (31:37)
• The problem with current methods for measuring productivity (36:22)
• The increasing role of the Federal Reserve in stabilizing the world financial system (38:21)
• The anticipated evolution of the energy sector over the next few decades (42:14)
• Abby's single biggest worry (45:44)
• What keeps Abby optimistic about the future (47:17)
• Abby's book recommendations (48:54)
• And much more!

Mentioned in this Episode:

• Madeleine Albright's Book | Fascism: A Warning
• Fiona Hill's Book | There Is Nothing For You Here: Finding Opportunity in the Twenty-First Century
• Amor Towles' Book | The Lincoln Highway: A Novel

Thanks for Listening!

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In this episode, hosts Tano Santos and Michael Mauboussin speak with Kristin Gilbertson, CIO of Access Industries and former CIO of the University of Pennsylvania Endowment. Kristin shares her early interest in economic development and her unique journey through the World Bank, Stanford Management Company, and into managing a major university endowment. She outlines how risk awareness and preparation helped her successfully lead through the 2008 financial crisis and gives detailed insights into asset allocation, manager selection, and the nuances of family office investing. Kristin also discusses career strategies for students interested in the endowment and wealth management space and much more!

Key Topics:

● Kristin's early life and interest in economics (3:33) 

● Influential professors and academic inspirations at Harvard (4:10) 

● Experience at the World Bank and the Young Professionals Program (10:09) 

● Joining Stanford Management Company and portfolio repositioning (15:05) 

● Moving to Penn and addressing portfolio gaps and alumni engagement (18:26) 

● The responsibilities and structure of a university CIO role (22:00) 

● Building Penn's VC exposure and getting into Sequoia (26:20) 

● Kristin's investment philosophy and fixed asset allocations (34:34) 

● Kristin's role at Access Industries and managing a family office (38:16) 

● Differences between endowments and family offices (41:10) 

● Concerns about mega-cap stock valuations and ETF opportunities (46:34) 

● And much more! 

Mentioned in this Episode:

● Pioneering Portfolio Management by David Swensen

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Welcome back to Season 7!

From the move to Manhattanville to the new curriculum for the value investing program at The Heilbrunn Center, there have been many changes since we wrapped our last season at the end of 2021.

Outside of that, a lot has happened in the markets. We've seen significant drawdowns in some growth stocks, conversations are centered around inflation and stagflation, and the geopolitical situation is bleak after the atrocious Russian invasion of Ukraine.

For our upcoming episodes, we're exploring different aspects of how to navigate these difficult times. Joining us today to discuss the international dimension of investing in this situation is our guest, Allison Fisch.

Allison is Principal and Portfolio Manager at one of the great names in value, Pzena Investment Management. Pzena was founded in 1995 by Richard Pzena as a value-oriented investment management company and now has more than $50 billion of assets under management. Allison joined Pzena in 2001 after starting her career as a business analyst at McKinsey & Company. She earned a B.A. summa cum laude in Psychology and a minor in Drama from Dartmouth College where she was a member of the Phi Beta Kappa and Psi Chi national honor societies.

In this episode, Allison and I discuss how starting in management consulting created a great foundation for her investing career, how she developed her investing philosophy, why she's excited about opportunities for value in emerging markets, her approach to idea sourcing, risk management, and portfolio construction in emerging markets, and so much more!

Key Topics:

• Welcome Allison to the show (1:27)
• Where Allison's interest in investment management started (2:46)
• The skills that often make management consultants great portfolio managers (4:01)
• Managing the transition from McKinsey to asset management (6:21)
• Being a generalist versus a specialist (8:39)
• How Allison developed her investment philosophy (11:27)
• Allison's journey from analyst to co-portfolio manager at Pzena (12:55)
• Pzena's idea sourcing strategy (15:52)
• Getting to the underlying value of businesses across geographies (17:39)
• Portfolio construction in emerging markets (21:49)
• Why value works better in emerging markets (27:27)
• How Allison thinks about policy and currency risk in emerging markets (30:52)
• Managing geopolitical risks in times of crisis (34:25)
• How to approach reentry into historically unstable markets (38:47)
• Integrating ESG into your investment philosophy (41:24)
• Huge opportunities for value investors (44:15)
• What Allison is reading right now (46:17)
• And much more!

Mentioned in this Episode:

• Pzena Investment Management

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Time arbitrage is one of the biggest behavioral advantages an investor can have.

Joining us today to talk about what it means to be an engaged, long-term shareholder is Munib Islam. Munib is someone who has experienced investing from many different angles, from a traditional long-short hedge fund to sitting on corporate boards and seeing the process of approving corporate performance from the inside.

Munib Islam is the Founder and Managing Partner of LTS One Management, an investment partnership created earlier this year with funding from Jorge Paulo Lemann, Marcel Telles, and Carlos Alberto Sicupira. Before starting LTS One, Munib was a longtime partner and briefly Co-Chief Investment Officer of Third Point, a New York-based hedge fund with over $15 billion of assets under management. Before joining Third Point, Munib worked as an associate at Oak Hill Capital and Lazard. He received a BA in Economics magna cum laude from Dartmouth College and an MBA from the Graduate School of Business at Stanford University.

In this episode, Munib, Tano, and Micheal discuss Munib's introduction to a career investing, similarities and differences between working in private equity and public markets, why Munib was excited to bring capital to European markets, the value of cognitive diversity, Munib's investment philosophy, the challenges of activism, and so much more!

Key Topics:

• How Munib was initially drawn into the world of investing (3:06)
• Munib's early career in the investing world (4:32)
• Where Munib developed his investing foundation (6:27)
• Learning about the experiential aspects of an investing career (7:27)
• The overlap at the analyst level for private equity and public markets (8:58)
• Key differences between working in private equity and public markets (10:27)
• Munib's journey from analyst to co-portfolio manager at Third Point (12:48)
• Why Munib was well-positioned to find opportunities in the European markets (14:39)
• Challenges of attracting investment in Europe in the wake of the financial crisis (15:47)
• The main goals behind the founding of LTS One (18:31)
• Firms with risk-management DNA versus stock-picking DNA (21:00)
• Developing a robust risk management approach (22:24)
• Munib's evolving approach to hiring (23:58)
• Focusing on capital allocation improvement with a soft twist of operational improvement (26:42)
• What investors can learn from academia (28:07)
• Munib's investing philosophy (31:33)
• Finding ideas where you can change a company's trajectory (33:30)
• The actionability aspect of activism (36:05)
• The value of time arbitrage (39:19)
• Crucial elements for successful long-term orientation (43:36)
• The benefit of highly concentrated activist strategy (46:22)
• Why Munib looks for good businesses with questionable leadership (48:26)
• What operational excellence looks like (50:27)
• Common pitfalls in capital allocation (51:37)
• Munib's approach to portfolio optimization (53:43)
• How Third Point identified Baxter as a good investment opportunity (55:56)
• Third Point's strategy for Baxter (58:11)
• Munib's biggest lessons from his first board experience at Baxter (1:00:58)
• Highlights from Third Point's investments in Sony (1:02:50)
• LTS One's investment in Cellnex Telecom (1:05:50)
• Why it's an exciting time to invest in International Flavors & Fragrances (1:10:43)
• Munib's worries about the current market environment (1:11:09)
• Munib's current focus (1:12:36)
• Why Munib believes in reading widely across disciplines (1:13:25)
• And much more!

Mentioned in this Episode:

• Robert Hagstrom's Book | Investing: The Last Liberal Art
• The Nomad Investment Partnership Letters To Partners
• Daniel Coyle's Book | The Culture Code: The Secrets of Highly Successful Groups

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Activist investing is the new frontier for value investors, allowing them to be the agents of their own returns.

Today we're continuing our examination of the activist style of investing by exploring the intersection of two important trends in the money management industry: activism and environmental, social, and governance investing.

Impactive Capital's Lauren Taylor Wolfe joins us to share her perspective and Impactive's unique approach to creatively incorporating environmental, social and governance (ESG) into activism.

Lauren is co-founder and Managing Partner of Impactive Capital, an activist investment management firm that currently has more than 1.5 billion in assets under management.  Prior to founding Impactive, she spent 10 years at Blue Harbour Group where she was a Managing Director and Investing Partner. Lauren earned her M.B.A. from The Wharton School at University of Pennsylvania and a B.S. magna cum laude from Cornell University. 

In this episode, Lauren, Michael and I discuss her non-linear journey to investing, what she learned from working in different industries, how she became interested in activist investing, what Impactive is doing to improve diversity in the industry, and so much more!

Key Topics:

• Lauren's first business endeavors (2:05)
• Lauren's work experiences after graduation (3:13)
• Why Lauren was drawn to value investing early in her career (6:16)
• How TurboChef raised Lauren's interest in activist investing (8:57)
• Why many executives struggle with capital allocation (11:49)
• Impactive's focus on business quality and time horizon (14:13)
• The evolution of activist investing (16:25)
• Impactive's approach to working with management (18:21)
• Idea screening and ESG considerations (20:33)
• How Impactive values businesses (21:24)
• Thinking about business resilience (25:13)
• Portfolio construction and sizing (26:40)
• Lauren's thoughts on luck and skill (30:22)
• Creating a diverse workforce in investment management and our support industries (32:08)
• Impactive's approach to idea sourcing and prioritization (34:30)
• HD Supply's business background (37:39)
• HD Supply's move from Home Depot to private equity and back (40:49)
• KBR's transformation into a high quality business (46:16)
• The opportunities Impactive identified with KBR (49:30)
• Lauren's perspective on meme stocks and SPACs  (52:41)
• Opportunities and risks on the horizon (54:47)
• Books that Lauren is reading (57:01)
• And much more!

Mentioned in this Episode:

• Impactive Capital
• William Thorndike's Book | The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success
• Robert G. Kirby's Article | The Coffee Can Portfolio
• Annie Duke's Book | How to Decide: Simple Tools for Making Better Choices
• Scott Page's Book | The Diversity Bonus: How Great Teams Pay Off in the Knowledge Economy
• Scott Page's Book | The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies
• Bill Gates' Book | How to Avoid a Climate Disaster: The Solutions We Have and the Breakthroughs We Need
• Kazuo Ishiguro's Book | Klara and the Sun
• Ted Koppel's Book | Lights Out: A Cyberattack, A Nation Unprepared, Surviving the Aftermath

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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In a world of plentiful capital and compressed yields, activism and being the agent of one's returns is a way forward.

Transformational activism in particular is centered around a deep commitment and trusting relationship between the investor and the company. This multi-dimensional approach forgoes short-term solutions like financial engineering and instead focuses on working with great leaders to put together the right people, resources, and strategies for long-term results.

Few firms exemplify the value creation associated with shareholder engagement and activism better than ValueAct and today I'm joined by Mason Morfit, Chief Executive Officer and Chief Investment Officer of ValueAct Capital.

Mason Morfit is a Partner, the Chief Executive Officer and Chief Investment Officer of ValueAct Capital, a governance-oriented investment fund with over $14 billion in assets under management. ValueAct has a very highly concentrated portfolio and one of its partners has served on the Boards of Directors of 44 public companies over the life of this great activist fund. Mason himself has served as a director of Microsoft Corporation, Valeant, Bard, Immucor, and many other companies.

In this episode, Mason and I discuss why he became interested in the psychological aspect of economics, how the activist investor landscape has shifted, the difference between transactional and transformational activism, the value of a learn-teach relationship, and so much more!

Key Topics:

• The advantages of Mason's experience growing up as an outsider (2:30)
• What drew Mason to studying economics and psychology (3:48)
• Working in the health care group at Credit Suisse First Boston in the late 90s (5:37)
• Mason's introduction to activist investing (7:24)
• Activist investing in the time of the imperial CEO (9:42)
• How corporate scandals and Sarbanes-Oxley changed the landscape for ValueAct (10:44)
• 20 years of network and relationship building (12:54)
• The immense value of documentation and knowledge sharing (13:50)
• Defending against self-attribution bias (15:24)
• The inherent problems with a public company board (17:48)
• ValueAct's role in mitigating against bureaucratic biases (18:24)
• Integrating the work of board committees (19:37)
• Psychological paradigms that emerge based on corporate history (22:18)
• Shifting paradigms that no longer work (24:14)
• Differentiating between transactional and transformational activism (28:15)
• Finding opportunities in interesting times (30:36)
• ValueAct's mission (31:38)
• The key ingredients of ValueAct's successes (34:37)
• Creating a learn-teach relationship (35:46)
• How the learn-teach relationship helps with organizational diagnosis (37:44)
• Creating an environment that empowers truth (39:38)
• The changing Japanese corporate governance landscape (41:25)
• Olympus as a case study of ValueAct's expansion into Japan (43:31)
• ValueAct's unique approach to investing in the Japanese market (47:45)
• Why activism today is more relevant than ever before (49:53)
• Shifting opportunities for an activist investor (51:51)
• Creating 21st century global champions (54:04)
• The disproportionate reward of disruptors at the expense of incumbents (55:27)
• Mason's book recommendations (57:14)
• And much more!

Mentioned in this Episode:

• ValueAct Capital
• John Irving's Book | The World According to Garp
• Kazuo Ishiguro's Book | The Remains of the Day
• Sir Lawrence Freedman's Book | Strategy: A History

Thanks for Listening!

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Not satisfied with the lack of value most student-run investment clubs offered to students, Tom Russo designed a better way.

Through the 5x5x5 Russo Student Investment Fund, he set out to prove the teaching value of a long-term fund rather than the conventional short-term activity that the existing systems favored.

Each year, students submit their ideas for new investments with five ideas ultimately being selected and held in their entirety for five years. At the end of those five years, the inflation-adjusted original amount is invested back into the fund and any other gains are used to support scholarships for traditionally under-represented members of the class.

Today I'm joined by Tom Russo himself to discuss this year's picks for the 5x5x5 fund with three of the students who pitched them. I continue to be impressed with the sophistication of the insights made by the students and the professional discussions that arise for each pitch.

In this episode, Tom, Rainbow, Andreas, Ryan, and I discuss why they were initially attracted to the companies they pitched, the competitive advantages and under-appreciated opportunities that exist, key factors that appealed to each of them for their selected companies, and so much more!

Key Topics:

• The problem with most student-run investment clubs (1:18)
• How the 5x5x5 Russo Student Investment Fund started (2:22)
• Goals of the program (4:04)
• Performance of the Fund's international holdings (7:01)
• How personal experience drew Rainbow's interest in Atlassian (9:45)
• Atlassian's self-reinforcing competitive advantage (10:45)
• What makes Atlassian an extraordinary investment (12:10)
• Managing the risk of industry consolidation (15:59)
• Rainbow's initial research focus on Atlassian partners (18:05)
• Understanding the magnitude of investment and return on investment (19:32)
• The types of companies we like to invest in (22:54)
• What initially attracted Andreas to Vestas Wind Systems (24:36)
• Key facts about Vestas (25:39)
• The main elements that make Vestas an attractive investment (27:41)
• How Vestas' margins are impacted by the effects of Wright's Law (30:54)
• Why Andreas isn't concerned about the intermittent nature of wind power (33:06)
• Mitigating the core risks associated with Vestas (35:03)
• Understanding the real return on capital committed (36:47)
• Why Ryan became interested in Gruma (39:49)
• Key facts about Gruma (40:34)
• The investment opportunity Ryan sees in Gruma (43:44)
• Ryan's confidence in the founding family and management (47:01)
• The value of the Gruma brand and steady leadership (48:34)
• Underappreciated insights into Gruma (50:36)
• How Gruma handles distribution (53:40)
• Ryan's assessment of Gruma's Europe business (55:01)
• And much more!

Mentioned in this Episode:

• 5x5x5 Student Investment Fund
  • Rainbow Chik's Write-Up of Atlassian
  • Andreas Helland's Write-Up of Vestas Wind Systems
  • Ryan Albert's Write-Up of Gruma, S.A.B. de C.V.

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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A year and a half into the pandemic, a lot has changed in the investment landscape.

Individual investors have been empowered, economies reacted in unpredictable ways, and we still have no clear idea of what is to come. At the same time, when we take a retrospective look, we can find parallels between the trends, behaviors, and reactions of today and events in the past. Today we're joined by one of the great conversationalists in the community, Chris Davis, to share his perspective on investing in a time of COVID and his outlook for the future.

Chris Davis is the Chairman of Davis Advisors, where he oversees approximately $30 billion of client assets for both individuals and institutions worldwide. Chris joined Davis Advisors in 1989 as a financial analyst and has been a portfolio manager of the firm's flagship fund, the Davis New York Venture Fund since 1995. That fund has a very long history, having been founded more than a half-century ago. An investment of $10,000 at the fund's inception would be worth $3.6 million as of June 30, 2021, versus 1.9 million for the S&P 500. Chris studied Moral Philosophy and Practical Theology at the University of St. Andrews in Scotland and is on the board of directors at the Coca Cola Company and Graham Holdings.

In this episode, Chris, Tano, and I discuss how the pandemic compares to past crises, Davis Advisors' approach to triage as we entered the pandemic, why the banking industry offers more certainty to investors than other financials, the impact of low interest rates, the advantages US companies hold have over European companies, and so much more!

Key Topics:

• The two types of crises Chris has seen over his career (1:53)
• COVID in the context of past crises (3:48)
• Davis Advisors' approach to analyzing the long-term impact of COVID (7:48)
• How Davis assessed key companies and industries as we entered the pandemic (9:38)
• Structural changes in the banking industry in the past decade (13:39)
• Why investments in banking come with a higher degree of certainty (15:18)
• The inherent uncertainty associated with insurers (17:21)
• Long-term dangers of the aggressive consumer bailout (19:36)
• How Chris saw history repeating itself in the past year (21:30)
• The biggest change in market structure (23:13)
• What active managers need to understand about dispersion (26:05)
• Factors that feed dispersion between Europe and the US (30:10)
• How Chris views his European investments (33:31)
• Two components of valuing a business (37:04)
• Amazon as a modern-day Standard Oil (39:14)
• Why successor CEOs should focus on preservation and protection (43:04)
• The impact of low interest rates (46:24)
• How banks have performed in the face of a significant headwind (49:03)
• The high adaptability shown by banks (50:36)
• Key differences between US and international banks (53:11)
• The numerous disruptors that the banking system has absorbed (56:16)
• How inertia and regulation protect banks from disruption (58:41)
• Chris' thoughts on the growth of the payments industry (1:00:27)
• Viewing Bitcoin as a digital version of gold (1:04:29)
• Why Chris' opinion on Bitcoin has shifted (1:07:35)
• Chris' big takeaway from 2020/2021 (1:10:08)
• The impact of China becoming the largest consumer economy (1:11:15)
• Why state and federal government finances keep Chris up at night (1:13:16)
• Chris' top book recommendations (1:15:10)
• And much more!

Mentioned in this Episode:

• Davis Advisors
• Davis New York Venture Fund
• Walter Isaacson's Book | The Code Breaker: Jennifer Doudna, Gene Editing, and the Future of the Human Race
• Morgan Housel's Book | The Psychology of Money
• John Tierney & Roy F. Baumeister's Book | The Power of Bad: How the Negativity Effect Rules Us and How We Can Rule It
• Benjamin Labatut's Book | When We Cease to Understand the World

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Since our first podcast in the spring of 2019, we've built a wonderful audience around the world, and now have a terrific collection of interviews with remarkable investors.

I have loved the opportunity to host these interviews myself but from the very beginning, I felt that you would benefit from having another voice to challenge the guests and bring a different point of view to the podcast. That time has finally come.

As we start this new season, I couldn't think of a better person to join me as co-host than Michael Mauboussin, Head of Consilient Research at Counterpoint Global. Michael is a colleague, a friend, and someone I admire enormously for his passion and ability to match academic research with the practical considerations of investing.

On our first episode together we're delighted to welcome Chase Sheridan and Will Pan of one of the great names in value investing, Ruane, Cunniff & Goldfarb. 

Chase Sheridan joined Ruane, Cunniff & Goldfarb in June 2006 upon his graduation from Columbia Business School. Prior to attending Columbia, Chase was a senior vice president at Citadel Investment Group, a hedge fund based in Chicago and a partner at Q.E.D. Capital, an arbitrage firm based in Chicago. After interning with the firm in 2009, Will Pan was set on a career path with Ruane, Cunniff & Goldfarb. He joined the firm in 2010 after graduating from Harvard College. 

On this episode, Chase, Will, Michael, and I discuss Ruane, Cunniff & Goldfarb's history and connection to Warren Buffett, why the Hyperion found was started, the team dynamic between Chase and Will as co-managers of the fund, their approach to idea sourcing and portfolio construction, and so much more!

Key Topics:

• The history of Ruane, Cunniff & Goldfarb (RCG) (3:40)
• Chase's unusual path to RCG (6:37)
• How Chase became interested in value investing (8:36)
• Will's journey to RCG (10:18)
• The core of the RCG investment approach (13:52)
• Hyperion's maniacal focus on the intrinsic earnings power of a business (15:59)
• The relationship between RCG and Hyperion (17:26)
• The main difference between Hyperion and Sequoia (18:15)
• Why the RCG team considers themselves analysts first (19:45)
• The founding of Hyperion (21:30)
• Chase and Will's co-manager dynamic (23:18)
• Benefits of team management of a fund (25:30)
• Analyzing your trade ledger and thesis memos (26:52)
• RCG's writing and research culture (28:25)
• Hyperion's ideal investment characteristics (30:31)
• Idea sourcing at Hyperion (32:36)
• How Hyperion tackles due diligence (35:04)
• Focusing on intrinsic earnings power (38:56)
• The art of portfolio construction (41:46)
• Running scenarios on potential investments (44:05)
• The problem with portfolio managers emulating their idols (45:11)
• Understanding roll-ups (47:15)
• Why the vertical software industry is well-suited to consolidation (49:27)
• Where Constellation Software focuses on making their return (51:59)
• Constellation Software's framework for defensive acquisitions (54:15)
• What you need to know about Constellation Software (56:49)
• Mark Leonard's unique approach to acquisitions (58:53)
• An overview of Eurofins (1:01:17)
• Why consolidation makes sense for the testing industry (1:03:13)
• Gilles Martin's playbook for acquisitions (1:04:15)
• Why Hyperion became interested in Eurofins (1:07:42)
• The advantages of Eurofins having a founder CEO (1:08:56)
• The importance of leverage to Eurofins' growth (1:10:24)
• Will's recommended reading (1:12:43)
• What noise means for investors (1:14:14)
• Chase's recommended reading (1:15:15)
• And much more!

Mentioned in this Episode:

• Ruane, Cunniff & Goldfarb
• Constellation Software
• Eurofins Scientific
• Daniel Kahneman, Olivier Sibony & Cass R. Sunstein's Book | Noise: A Flaw in Human Judgment
• Steve Brusatte's Book | The Rise and Fall of the Dinosaurs: A New History of a Lost World
• Walter Isaacson's Book | The Code Breaker: Jennifer Doudna, Gene Editing, and the Future of the Human Race
• Jeff Hawkins' Book | A Thousand Brains: A New Theory of Intelligence
• Edgar Wachenheim's Book | Common Stocks and Common Sense: The Strategies, Analyses, Decisions, and Emotions of a Particularly Successful Value Investor
• Jordan Ellenberg's Book | How Not to Be Wrong: The Power of Mathematical Thinking
• Chip Heath & Dan Heath's Book | Switch: How to Change Things When Change Is Hard
• Jeff Bezos' Book | Invent and Wander: The Collected Writings of Jeff Bezos
• Mark Leonard's President Letters
• David Sklansky's Book | Getting the Best of It
• Bryce Carlson's Book | Blackjack for Blood: The Card-Counters' Bible and Complete Winning Guide
• Ralph Vince's Book | The Mathematics of Money Management: Risk Analysis Techniques for Traders

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Listeners of this podcast will know that I believe one of the most dynamic areas of investing is that of activism. In the true spirit of value investing, there's a crop of activist investors who are now embracing their role in engaging management in various ways, whether to improve operational performance, address governance issues, or simply to encourage better capital allocation and distribution policies.

Today we're exploring this topic further with Anne-Sophie d'Andlau. Anne-Sophie co-founded CIAM with her partner, Catherine Berjal, in 2010. Since then they have led several groundbreaking activist campaigns in Europe, capturing the attention of the financial press everywhere.

Anne-Sophie is a Partner and Deputy CEO at CIAM and she is responsible for the fund's strategy and development. CIAM, which stands for Charity Investment Asset Management, donates 25% of its annual performance fees to charities dedicated to improving children's health and education across the world. Before founding CIAM, Anne-Sophie worked at Systeia Capital Management from 2001 to 2008, first as Head of Research for the Event Driven and M&A strategies, then taking on a portfolio management role from 2003 to 2008.

On this episode, Anne-Sophie and I talk about how she started her career in finance, how CIAM evolved into active investment, why Europe is well-suited for a new wave of activist investors, CIAM's approach to idea sourcing, analysis, and risk management, what Anne-Sophie hopes to see for the future of activism in Europe, and so much more!

Key Topics:

• The story of the first activist investor, Ben Graham (1:45)
• Introducing Anne-Sophie (4:24)
• How Anne-Sophie's interest in finance led to a front-row seat to late 90s IPOs (5:43)
• Participating in the launch of the first hedge fund in France (7:05)
• Why CIAM evolved into activism (9:50)
• Factors driving the new wave of activism in Europe (11:28)
• Moving away from the negative connotation of activism (13:21)
• The lack of recognition of activism as an asset class in Europe (15:23)
• Anne-Sophie's hope for change in the mindset of European institutional investors (17:09)
• CIAM's approach to consulting with management and shareholders (19:08)
• Understanding why there's so much room for activism in Europe (21:01)
• Similarities and differences between European markets (22:00)
• Why CIAM chose the countries they operate within (23:32)
• The benefits of a UK office (25:13)
• CIAM's decision against actively investing in Italy (26:39)
• CIAM's method of idea sourcing (27:41)
• Examining Euro Disney as a case study of what good activism can do (28:38)
• Initial problems identified by CIAM at Euro Disney (31:51)
• CIAM's campaigns as minority shareholders at Euro Disney (33:31)
• CIAM's approach to information collection (35:46)
• The non-activist side of CIAM (36:56)
• How CIAM balances internal skillsets with outside advice and experts (38:28)
• Why AGM season is a key moment for activist investors (40:46)
• Investor relationships with proxy advisors in Europe (41:43)
• CIAM's risk management strategy (42:38)
• Looking to the future of activism in Europe (45:01)
• How activism creates positive change (47:11)
• And much more!

Mentioned in this Episode:

• CIAM

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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One of our goals with this podcast is to get to know new markets, new situations, and new investors who bring dynamism to all markets. A great example of this is the new generation of activist investors in Europe.

Students of mine have heard me say for some time that Europe has been ripe for activism. I believe that with structural changes in European capital markets, combined with the state of global markets, a new wave of activism is happening and will be quite transformative.

My guests today, Florian Schuhbauer and Klaus Roehrig of Active Ownership Corporation (AOC), are one of the most exciting names in the current European activist scene. They have been making headlines with groundbreaking campaigns and change they are bringing to European Capital Markets. AOC has built a remarkable record over the last five years, beating the Europe ex UK Small Cap benchmark by a factor of almost three since inception.

AOC is an independent, partner-managed investment company acquiring significant minority stakes in publicly listed, undervalued small- and mid-size companies in German-speaking countries and Scandinavia. AOC follows an active ownership approach and fosters value creation through operational, strategic, and structural improvements.

Florian Schuhbauer is a founding partner of AOC and has more than 20 years of relevant experience. Prior to establishing AOC, Florian was a Partner at Triton Partners where he built up the Public Equity practice. Klaus Roehrig is also a founding partner of AOC and has more than 20 years of relevant investing experience. Before founding AOC, he was at Elliott Associates, responsible for the funds' investments in the German-speaking countries.

On this episode, Florian, Klaus, and I discuss their early careers and the unusual paths they took before founding AOC, the mentorship they received along the way, the key pillars of their investment strategy, AOC's holistic, team approach to their companies, how they manage liquidity differently from other firms, and so much more!

Key Topics:

• Florian's early career in banking (3:46)
• Learning experiences from Florian's SaaS startup (4:24)
• How Florian found himself in a 9 to 5 position he didn't want (5:45)
• Why Florian made the move to private equity (7:17)
• Applying a private equity value creation model to public equity (8:32)
• Klaus' early interest in business and business builders (10:14)
• The accidental advertising agency (11:03)
• How Klaus became interested in investment banking (12:44)
• Why Klaus developed a focus on risk early in his career (14:25)
• Klaus' move to the hedge fund industry (16:08)
• Mentorship from great investors at Elliott Management Corporation (18:26)
• Florian and Klaus' decision to start AOC (20:42)
• The two pillars of AOC's investment strategy (22:10)
• Using an activist approach as a tactic rather than their strategy (23:44)
• The huge agency issue caused by a lack of active owners (25:33)
• How an underdeveloped shareholder culture created opportunities for AOC (27:18)
• Working with management teams for investment ideas (30:23)
• Idea sourcing from AOC's library of investment cases (32:01)
• The types of companies AOC considers for investing (33:12)
• Building a broad knowledge base as a generalist (34:54)
• Why AOC values a team approach with their companies (37:34)
• Union and employee representation on the board (39:34)
• AOC's holistic approach to their investments (42:27)
• How AOC became interested in STADA (43:37)
• Why board seats were crucial for AOC's strategy for STADA (48:13)
• The proxy fight that erupted from a broken contract with STADA (50:04)
• Internal issues between STRADA's board members (51:24)
• Bringing the supervisory board and shareholders into alignment (53:31)
• Starting from scratch with STADA's board (55:41)
• Breaking new ground as dissident shareholders in Germany (57:17)
• Taking STADA private within 18 months (1:00:39)
• AOC's unique approach to liquidity (1:03:45)
• Managing liquidity on the asset side (1:07:50)
• Time arbitrage opportunities with locked-up capital (1:08:30)
• Florian's perspective on the next five years for AOC (1:11:23)
• Klaus' view on the next five years for AOC (1:14:58)
• Opportunities for activism in Europe (1:16:29)
• And much more!

Mentioned in this Episode:

• Active Ownership Corporation
• Value Investing with Legends | Jan Hummel – The Rare Advantage of Real-World Experience

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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The value investing in legends class is one of the highlights of the Heilbrunn year. It's filled with special moments, including the annual visit from our guest today, Elizabeth Lilly.

Beth embodies the principles and practices of value investing like very few people do. She makes investing look easy and her lecture always captures the pure essence of value investing.

Elizabeth Lilly is Chief Investment Officer and Executive Vice President for The Pohlad Companies, LLC where she oversees the public and private investments for the Pohlad family. Beth began her career with Goldman Sachs in 1985 and shortly after moved to Greenwich, Connecticut to work as an analyst in Fund American Companies in 1988. In 1997, she co-founded Woodland Partners in Minneapolis which focused on investing in small capitalization equities.

In 2002, Woodland Partners was acquired by GAMCO Investors where she went on to serve as a Senior Vice President and Portfolio Manager of the $1.4 billion Teton Westwood Mighty Mites Fund and as a member of the value portfolio management team. In 2017, Beth founded Crocus Hill Partners to focus on investments in small and micro capitalization equities but a year later she left to join the investment arm of the Pohlad family in an opportunity that was impossible to pass on. Beth is a graduate of Hobart/William Smith College and a dear friend of the Heilbrunn Center. 

On this episode, Elizabeth and I discuss how her passion for investing was ignited from in childhood, the many value investing legends she has had the opportunity to learn from during her career, how she founded her firm before ultimately landing her dream job at Pohland Companies, her approaches to idea sourcing and risk management, and so much more!

Key Topics:

• How Beth's mother and grandparents shaped her passion for investing (3:29)
• Why Beth attributes her research job at Goldman to pure luck (5:21)
• Leaving Goldman Sachs (7:58)
• The legendary Bob Rose (9:40)
• The first turning point in Beth's career (11:16)
• Beth's phenomenal experience at Fund American (12:54)
• Talking investing with Warren Buffett (14:22)
• The fundamentals of investing (16:12)
• Why Beth has a notebook on her at all times (17:38)
• The key elements of a good value investing firm (19:03)
• Beth's focus on small-cap stocks (20:29)
• Beth's introduction to Mario Gabelli (21:06)
• How a value trap is created (22:44)
• Why the management team is the best protection from a value trap (23:21)
• Getting comfortable with the artistic side of investing (25:33)
• Preparing to ask insightful questions (27:23)
• Talking to management as a shareholder (29:37)
• The benefit of constructive activism (31:51)
• Crocs as a case study of a compounder (33:19)
• Beth's approach to valuation (35:06)
• Sourcing ideas with curiosity (36:28)
• Building up a valuable database (38:04)
• The seamless transition after being acquired by GAMCO (39:10)
• How Beth's career at GAMCO increased her interest in the microcap space (40:35)
• Beth's experience managing the Teton Westwood Mighty Mites Fund (42:01)
• Founding Crocus Hill partners in 2017 (44:47)
• Beth's connection to the Pohlad family (45:56)
• Taking the dream job at Pohlad (47:29)
• The similarities between investing in public and private markets (49:25)
• Why Beth is eager to pass on the training she received (52:22)
• How the pandemic has shifted Beth's thinking on businesses (53:54)
• Applying value investing principles to non-traditional value companies (56:27)
• And much more!

Mentioned in this Episode:

• Pohlad Investment Management, LLC
• Benjamin Graham's Book | The Intelligent Investor
• Howard Marks' Memo | Something of Value

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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In this episode, host Michael Mauboussin sits down with Seth Klarman, CEO and portfolio manager of The Baupost Group. One of the most influential practitioners of value investing, Seth shares his formative stories — from arbitraging coins as a kid to launching Baupost in 1982 — and reflects on his decades-long investment philosophy. They explore timeless principles of market inefficiencies, the importance of temperament, specialization versus generalization, the role of patient capital, and the challenges and opportunities ahead for investors in today's world. Seth also opens up about technology trends like AI, the evolving market structure, and the enduring lessons from Graham & Dodd — and much more!

Key Topics:

• Seth's early entrepreneurial ventures and coin arbitrage (2:10)
• Lessons from working at Mutual Shares with Max Heine and Michael Price (4:12)
• Starting Baupost and managing the founding families' wealth (10:53)
• Core principles behind value investing and market inefficiencies (13:06)
• The impact of indexing, ETFs, and passive investing trends (16:42)
• Generalists vs. specialists in investment research (19:06)
• How Baupost evaluates opportunities across asset classes (21:13)
• Why value investing combines a contrarian streak with a calculator (23:51)
• The importance of meeting management teams and assessing intent (26:44)
• Building and educating a long-term oriented client base (29:06)
• Managing behavioral biases and fostering the right temperament (31:21)
• Current market outlook and where Baupost sees value today (34:03)
• How AI is changing research and efficiency at Baupost (36:54)
• Broader applications of the "Moneyball" mindset (40:13)
• The difference between an analyst and a portfolio manager (44:01)
• Seth's views on risk, business ethics, and business education (45:50)
• What worries Seth about the future — and what excites him (48:11)
• Book recommendations from Seth Klarman (51:42)
• And much more!

Mentioned in this Episode:

• Margin of Safety by Seth Klarman
• Security Analysis by Benjamin Graham & David Dodd (Seventh Edition)
• Moneyball by Michael Lewis
• Lost & Found by Kathryn Schulz
• Being Wrong by Kathryn Schulz
• The Light Eaters by Zoë Schlanger

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Any sound investment strategy must include both a tactical and a structural component. The tactical side requires close attention to the firm's financials and prospects, while the structural side puts that analysis in the specific context of the industry as well as the economy at large. Our guest, Anna Nikolayevsky, is here today to share her approach and how her investment strategy has evolved.

Anna Nikolayevsky is the founder and Chief Investment Officer of Axel Capital Management, a fundamentally driven long/short firm investing in equities across a variety of sectors and geographies. Before founding Axel Capital in 2002, Anna was an analyst at Zweig-DiMenna Associates and Goldman Sachs Asset Management. Anna holds a BS from NYU, an MBA from Columbia Business School, and has also received multiple accolades for her investment work, including being the recipient of the Investors Choice Awards for Emerging Fund of 2015. She is a wonderful friend of the Centre and I'm incredibly thankful for all she does here for us at the Business School.

On this episode, Anna and I discuss how her humble childhood ultimately impacted her career choice, starting in the world of trading as a freshman, her rich learning opportunities early in her career, what it was like to start her firm in the early 2000s, why she decided to depart from the traditional hedge fund model, her thoughts on the future of value investing, and so much more!

Key Topics:

• How Anna's childhood influenced her career (3:08)
• Anna's transformative experience at Stuyvesant High School (5:17)
• Anna's start in the world of trading (6:43)
• Why Anna decided to apply to Columbia Business School (8:14)
• Insights from working for Mario Gabelli (9:09)
• Establishing a foundation of independent thought (11:07)
• Learning opportunities as an analyst at Goldman Sachs (12:32)
• Why Anna made the move to a hedge fund (15:16)
• The starting point for Axel Capital Management (16:29)
• Axel Capital's post-bubble success (18:38)
• Rethinking the traditional hedge fund model (19:48)
• The issues Anna identified in the housing market leading up to the global economic crisis (21:33)
• Finding an alternative to the housing market (23:33)
• How to think about your search strategy (25:19)
• Timing and risk management of shorts (26:47)
• Anna's approach to risk management (27:56)
• Thinking about fiscal policy and portfolio construction (29:12)
• Axel Capital's portfolio positioning during the ups and downs of the market since 2018 (30:57)
• The wider effect of highly available capital (33:01)
• How the pandemic has impacted Axel Capital's portfolio structure (34:30)
• Planning your approach to structural shocks (36:45)
• Why Anna is comfortable with a relatively concentrated portfolio (38:46)
• Axel Capital's approach to industry analysis (40:09)
• Decentralization away from Wall Street (41:31)
• The democratization of trading (43:03)
• My thoughts on the long-term impact of the increase in retail investors (44:03)
• And much more!

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Over the last few years, the opportunities for global value investing have improved significantly. Yields are incredibly low across the board, putting pressure on improving operational performance to generate returns. In such an environment, Europe is fertile ground for the value investor. With room for operational improvement in many sectors and a robust institutional environment, it's an ideal market to deploy your activist dollar.

When I decided to bring this topic to the show, I couldn't think of anyone better than David Marcus to have a thorough conversation. David Marcus is Co-Founder, Chief Executive Officer, and Chief Investment Officer of Evermore Global Advisors, LLC, which he co-founded in 2009, and is also portfolio manager of the Evermore Global Value Fund.

Beginning his career in 1988 at Mutual Series Fund, David was mentored by renowned value investor Michael Price and rose to manage the Mutual European Fund and co-manage the Mutual Shares and Mutual Discovery Funds, representing over $14 billion in assets. In 2000, he founded Marcstone Capital Management, LP, a long-short Europe-focused equity manager, largely funded by Swedish financier Jan Stenbeck. After Mr. Stenbeck passed away in 2002, David closed Marcstone, co-founded a family office for the Stenbeck family, and advised on the restructuring of several public and private companies the family controlled. David graduated from Northeastern University in 1988 with a B.S. in Business Administration and a concentration in Finance.

On this episode, David and I discuss his structured approach to learning that he's been committed to since starting his career, his comprehensive approach to investment analysis, why he believes there are huge opportunities in the European markets, how many people are taking the wrong approach when assessing investments in Europe, and so much more!

Key Topics:

• How David always knew investing would be in his future (3:51)
• David's internship experience during the 1987 stock market crash (5:18)
• Getting a shot at a trading desk within a month of working with Michael F. Price (7:37)
• How David's learned what makes a good analyst (9:24)
• Pivoting into European investing (11:11)
• Learning from the Swedish financial crisis of the early 90s (13:14)
• Looking beyond the CEO to the main shareholder (15:41)
• Leveraging your existing knowledge in new areas (16:45)
• When David became the head of Europe across portfolios at Franklin Mutual (19:46)
• David's decision to start Marcstone Capital Management (23:36)
• Transitioning from stock picker to operator (26:32)
• Taking a private equity approach to public companies (29:43)
• The birth of Evermore Global Advisors (30:20)
• The advantage of being a generalist and a specialist (33:27)
• Why you must build your network (34:42)
• Deepening your operational understanding by engaging management (36:11)
• Mischaracterization of the European market (39:25)
• Game-changing opportunities in the European Union (EU) (41:19)
• What key areas David looks at in investments (42:53)
• The fundamental lack of knowledge about European institutions (45:37)
• Long-term thinking and European evolution (49:36)
• Understanding the local rules (51:58)
• Why you need to figure out peoples' motivations (52:27)
• The opportunity behind deconglomeration in Europe (55:20)
• Good managers as an important competitive advantage (57:17)
• Taking advantage of room for operational improvement (59:10)
• Assessing the right time for the right people (1:01:04)
• The confluence of value and growth in Europe (1:02:22)
• Misconceptions about value and growth (1:05:33)
• Finding growth opportunities at value prices (1:06:39)
• Screening with numbers instead of words (1:07:55)
• The benefits of quarterly offsites (1:09:24)
• Getting clear on the reason behind investor activism (1:11:41)
• David's approach to risk management (1:14:14)
• Why David's view on leverage has changed (1:16:29)
• Checking and testing your thesis continuously (1:17:55)
• And much more! 

Mentioned in this Episode:

• Evermore Global Advisors
• Value Investing with Legends Podcast | Leveraging Fundamentals to Remain Relevant with David Samra
• David Marcus' Whitepaper | Europe: Lonely and Lumpy, Yet Extremely Compelling
• European Union Website

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

Many of the guests that I've had on this program are people I've known for years. We approached those conversations as an opportunity to explain together to the audience their methods, philosophies, and approach. Today's conversation with Samantha Greenberg is a bit different. Samantha is someone I've looked forward to meeting for some time now as she would come up constantly in conversations with other investors and I'm happy to get to know her alongside you.

Samantha Greenberg is Portfolio Manager of Technology, Media & Telecom investing at Ashler Capital, a Citadel company. Before joining Ashler Capital, Samantha was Chief Investment Officer of Margate Capital Management which she founded in 2016, a partner and TMT/consumer sector head at Paulson & Co. Inc., and a vice president in the Special Situations Group of Goldman Sachs. Samantha received her MBA from Stanford University's Graduate School of Business and graduated from the Wharton School at the University of Pennsylvania with a BS in Economics.

On this episode, Samantha and I discuss how she developed an interest in the investment industry, why asset management is a particularly good field for women, how her experiences at Goldman and Paulson shaped her investment philosophy, her catalyst-driven approach, why resources are critical to scaling, the benefits of extensive data modeling, and so much more!

Key Topics:

• Samantha's early discovery and passion for the markets (3:26)
• How Samantha's interest in investing continued throughout her school years (4:28)
• The experience that drove Samantha's passion for entrepreneurship (5:52)
• How Samantha's experience as an internet and media analyst shaped her passion for tech (7:58)
• Formative experiences from successive market crises in Samantha's early career (9:24)
• Learning true process diligence (11:52)
• Critical lessons about catalysts from John Paulson (14:19)
• Samantha's experiences at Goldman Sachs and Paulson & Co. in the late 2000s (15:59)
• Why asset management is a great industry for women, despite the current demographics (19:26)
• Comcast as a powerful example of asymmetry from Samantha's time at Paulson (22:55)
• The importance of steady-state valuations (26:28)
• The decision to start Margate Capital (27:58)
• Margate Capital's investment philosophy (29:47)
• Samantha's perspective on idea generation (32:07)
• How access to resources acts as a major barrier to entry for hedge funds (33:27)
• Understanding the rationale behind mispricing (35:58)
• Why a catalytic event is crucial for Samantha (37:24)
• Making decisions about portfolio sizing (38:19)
• Hedging market exposure (40:25)
• Shock testing your portfolio (43:20)
• A case study on value-unlocking catalysts with the Madison Square Garden Company (45:12)
• The leisure industry is one to watch for the future (50:46)
• Why Samantha left Margate Capital for Ashler Capital (52:24)
• How regulatory risk impacts the future of investments in the technology industry (55:47)
• The current tech trends Samantha is keeping an eye on (58:48)
• And much more! 

Mentioned in this Episode:

• Ashler Capital
• Value Investing with Legends | Season 4, Episode 2 - Richard Lawrence - Investing in Superior Businesses 

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

There are several great investors out there who are effectively offering free lessons through their positions, letters, and interviews. What's surprising is that while many people listen to them, hardly anyone puts those lessons into practice.

Today's guest, Mohnish Pabrai, is not one to miss such opportunities and he attributes much of his success to his hunger to learn, improve, and adjust. Mohnish is an author and the Founder and CEO of Pabrai Investment Fund, which he started in 1999 at the peak of the tech bubble. In 1983 he moved to the United States from India, to study computer engineering at South Carolina's Clemson University. After working in research and development, Mohnish launched his own successful IT consulting firm, TransTech, in 1991.

One of the most original investors out there, Mohnish arrived relatively late in his professional career to the world of investing but he has made such an impact ever since. Through Pabrai Investments, Mohnish has built one of those records that is the stuff of legends.

On this episode, Mohnish and I discuss how his early years alongside his entrepreneurial father have shaped him as an investor, why he decided to make the switch to a career in investing, how he was introduced to the world of value investing through the works of Peter Lynch, his growth as an investor since starting Pabrai Investments as a hobby investor, how you can use cloning to your advantage, and so much more!

Key Topics:

• The meaning behind the title of Mohnish's book "The Dhandho Investor" (3:02)
• What Mohnish learned from his father's entrepreneurial ventures (4:20)
• Mohnish's invaluable hands-on business experience as a teenager (8:05)
• How an engineering background offers an advantage as an investor (10:40)
• Mohnish's decision to remain in the US after university (11:51)
• The importance of looking at the big picture (13:03)
• Moving from computer engineering to international marketing (14:36)
• How Mohnish's father changed the path of his career (15:41)
• Why Mohnish decided to start his own company (18:17)
• The early days of TransTech (20:14)
• An introduction to Peter Lynch and Warren Buffet (22:22)
• Testing out the Buffet approach to investing (23:48)
• Transitioning into asset management (27:35)
• The 1999 start of Pabrai Funds as a hobby (30:04)
• Starting out as a traditional value investor (32:46)
• Our aversion to cloning (34:17)
• The significant competitive advantage you can gain by cloning (36:24)
• Understanding the patterns of different investors (39:10)
• Mohnish's approach to idea selection (40:51)
• Reaching clarity before making investment decisions (44:10)
• Examining Fiat Chrysler as a case study for Mohnish's investment process (47:31)
• How Mohnish utilizes guardrails (50:59)
• A value investor's approach to risk management (52:46)
• Finding 50 cent dollar bills (54:29)
• Focusing on compounders (56:55)
• What we can learn from NICE Holdings (59:37)
• What you need to know about "spawning" (1:01:43)
• Why investors need to think like entrepreneurs (1:05:06)
• Why this is an interesting time for value investing (1:07:23)
• How Mohnish thinks about the future of value investing (1:09:41)
• And much more!

Mentioned in this Episode:

• Mohnish Pabrai's Books:
  • Mosaic: Perspectives on Investing
  • The Dhandho Investor: The Low-Risk Value Method to High Returns
• Peter Lynch's Book | One Up On Wall Street: How To Use What You Already Know To Make Money In The Market
• Young Presidents' Organization (YPO)
• Tom Peters' Book | In Search of Excellence: Lessons from America's Best-Run Companies

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

Modern value investing emphasizes investing in resilient franchises and letting the compounding do the work for you. Today's guest, Jan Hummel, is a fantastic expositor of this subject and a friend of the Center who has been part of many of our events over the years.

In 2007, Jan launched the Paradigm Capital Value Fund with Bruce Greenwald, the founder of the Heilbrunn Center and Columbia Business School alumnus, Mario Gabelli. Paradigm's investment philosophy is built around a focus on mispriced securities in the small- and mid-cap space within Europe, deep fundamental research, a concentrated portfolio, and hedging of the portfolio through non-equity investments and derivatives.

I've often mentioned that I think the opportunities in Europe for value investors are enormous and with Paradigm's focus on making investments within the European Union, Jan is the perfect person to explore this topic with us.

On this episode, Jan and I discuss the advantages of real-world experience, combined with deep fundamental research and tenacity. We talk about how Jan's early years in Sweden have shaped his whole life, what it was like to make the move from financial economics to business school, making the transition from 15 years of turnaround recovery to running a fund, the key traits of a great analyst and an entrepreneur, and so much more!

Key Topics:

• How Jan's childhood in Sweden has colored his life (2:37)
• Jan's unconventional experience buying shares at 16 (4:06)
• Studying financial economics at the Stockholm School of Economics and Stanford (6:26)
• The first steps of Jan's finance career as a Junior Analyst (7:33)
• How Jan went from studying under Bruce Greenwald at Harvard to working together (9:16)
• How business school broadened Jan's experience (9:56)
• Jan's unorthodox path in asset management (12:07)
• Why Jan became interested in turnaround restructuring (13:08)
• How Jan's 15 years of business experience has helped him as an investor (14:29)
• The Swedish banking crisis of the early 90s (16:24)
• Competitive dynamics of the 80s and 90s (18:03)
• The powerful combination of deep knowledge and a favorable market environment (19:19)
• Events that led to the launch of Paradigm Capital (20:44)
• The experience of founding a fund right before the 2008 economic crisis (23:09)
• Creating an information edge through research (24:37)
• Advantages of a having concentrated portfolio (26:22)
• Paradigm's layered approach to sizing positions in their portfolio (29:05)
• Why Paradigm is country-agnostic when it comes to portfolio construction (30:57)
• How Paradigm hedges currencies as part of their risk management (31:50)
• Navigating the tricky waters of figuring out when to exit a position (35:48)
• What I like about Paradigm's flexible approach to engaging with management (38:55)
• Why data is always foundation for identifying potential investments (39:59)
• What Jan is looking for in companies' return on capital employed (41:05)
• Why Jan believes we'll see an increase in passive investing in Europe in the future (45:32)
• Opportunities for value investors in Europe (47:04)
• Building strategy around the improvement of operational practices (48:51)
• What makes a great analyst (51:32)
• The tenacity of an entrepreneur (53:01)
• And much more! 

Mentioned in this Episode:

• Value Investing with Legends Podcast | Season 4 Episode 4: The Multi-Faceted Future of Value Investing with Henry Ellenbogen and Anouk Dey

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

The most successful investors combine a profound analytical understanding of financial markets and the economy at large with the ability to act on those ideas. My guest today has these two attributes in spades.

Today's conversation is with Howard Marks, the Co-Founder and Co-Chairman of Oaktree Capital Management, which is one of the largest credit investors in the world and certainly the largest investor in distressed securities. Howard started his career at Citicorp as an equity research analyst and then Director of Research, Vice President, and Senior Portfolio Manager overseeing convertible and high yield debt. After leaving Citicorp, he moved to The TCW Group, where once again, he was responsible for investments in distressed debt, high yield bonds, and convertible securities. In 1995 he and another group of partners from TCW founded Oaktree, where he remains today.

Howard is known for his penetrating mind and his memos are a must-read for any serious student of the market and I can't think of anyone better than him to discuss the many complexities of markets and the economy of today. 

On this episode, Howard and I discuss how he ended up in the high yields space, why running research at Citicorp was a low point in his career, the concept of "efficientization", why Graham and Dodd called bond investing a negative art, why complexity and early adoption are your friends, the dominant challenge for investors today, Howard's prolific writing, and so much more!

Key Topics:

• Howard's early life from working adding machines in an accounting office to studying finance at university (3:30)
• How Howard ended up working at Citicorp for his first job out of school (5:39)
• Why running research at Citicorp was an extremely unsatisfactory role for Howard (7:25)
• Howard's involuntary transition from analyst into the high yield space (9:01)
• The big difference between the market being efficient and being right (11:37)
• The concept of "efficientization" (13:14)
• Two main causes of mistakes in the market? (14:04)
• Howard's holy grail in investing (15:12)
• Why Howard doesn't use macro forecasting in his decision making (17:24)
• The dawn of the high yield bond era (18:55)
• Different approaches to the analysis of equities versus high yield bonds (20:07)
• Why Graham and Dodd called bond investing a negative art (21:03)
• Howard's early days at The TCW Group (23:18)
• Complexity and early adoption as an investor's friends (24:53)
• Why you must work at a firm that is in alignment with your investment philosophy (28:05)
• Howard's love for writing (31:49)
• Using memos to shape the company culture (33:30)
• Why you should analyze your winners (34:47)
• The "I know" school versus the "I don't know" school (36:01)
• The dominant challenge for investors today (38:46)
• What Howard thinks is behind consistently low yields (42:13)
• What surprises me about the politics of populism and financial markets (46:43)
• The rise of populism as a response to the shifting beliefs of the working class (48:16)
• And much more!

Mentioned in this Episode:

• Oaktree Capital Management
• Memos from Howard Marks
• Howard Marks' Book | The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor
• Benjamin Graham & David Dodd's Book | Security Analysis
• Howard Marks' Memos:
• • Us and Them
  • Coming into Focus
  • Mysterious
  • Economic Reality
  • Political Reality
  • Political Reality Meets Economic Reality

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Today's conversation is with Henry Ellenbogen and Anouk Dey from Durable Capital Partners. Henry founded Durable in 2019 and serves as Managing Partner and Chief Investment Officer. Before that, he was a Vice President of T. Rowe Price, T. Rowe Price Group Chief Investment Officer for U.S. Equity Growth, the lead Portfolio Manager for the U.S. Small-Cap Growth Equity Strategy, and the Portfolio Manager for the New Horizons Fund. Anouk is a Partner of Durable who joined the firm at its inception in 2019. Before joining Durable, she was also a Vice President of T. Rowe Price Group, where she was an investment analyst in the U.S. Equity Division, focusing on small-cap growth stocks. Anouk also co-teaches the Compounders Independent Study at Columbia Business School.

My students have heard me say many times that the future of investing must be one that combines exposure to private and public markets and that is flexible in its valuation approach and ideas, and that embraces disruption. That type of investing requires partners that are willing to commit capital for the long haul while being able to withstand the volatility of the market. That's where Durable Capital Partners stands out.

On this episode, Henry, Anouk, and I discuss how Henry developed his investment philosophy, how a liberal arts background gives you an advantage in the investment industry, Henry and Anouk's lessons from their time at T. Rowe Price, Durable's commitment to long-term relationships with the companies they invest in, their unique approach to knowledge acquisition, and so much more!

Key Topics:

• How Henry started his career in investing after exploring different fields (3:41)
• The beginnings of Henry's investment philosophy (6:04)
• Major lessons from Henry's study of the history of technology (8:53)
• The benefits of a liberal arts background (9:41)
• Why crisis is the true test of an investor (11:00)
• The stroke of luck that took Anouk from ski racing to studying international relations (12:38)
• How Anouk got the opportunity to spend her first year as an investor studying compounders (14:44)
• Henry's early role as an analyst at T. Rowe Price (18:18)
• The move from traditional media analyst to managing the T. Rowe Price New Horizons Fund (19:59)
• What you can learn from studying media companies in the early 2000s (21:00)
• Why Henry started looking at private companies as investment opportunities (23:37)
• Creating a systematic approach to investing in private companies (25:38)
• The foundation for building a network of companies with unique access (26:51)
• Advantages for public security analysts over venture capitalists in the private market (29:06)
• What Durable wants to be known for (30:07)
• How Durable's perspective on relationships and long-term commitment are in alignment with entrepreneurs (31:18)
• Durable's approach to knowledge acquisition (34:01)
• Looking at Shopify as a company that has gone from Act 1 and 2 to a potential Act 3 (37:05)
• Durable's approach to analyzing and supporting company leaders (41:24)
• Managing the risk of human capital (45:25)
• The importance of honoring your commitments and managing capital successfully during a crisis (47:46)
• Eliminating the false dichotomies in the investment industry (51:59)
• How you can reduce your learning trajectory around compounders (55:19)
• The advantage of working in collaborative teams at Durable (57:26)
• Idea sourcing as world-class fundamental investors (1:00:01)
• Understanding the good to great thesis (1:01:22)
• The value of deeply human investing (1:04:15)
• Building on the human skillset (1:06:13)
• How passive investing is affecting market volatility (1:08:30)
• And much more!

Mentioned in this Episode:

• Durable Capital Partners

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

Today's conversation is with Rishi Renjen, the Founder and Chief Investment Officer of ROAM Global Management. Before founding ROAM Global, he was a Managing Director and Sector Head at Maverick Capital, a Partner at TPG-Axon Capital, and a Senior Analyst at Glenview Capital. Rishi earned a Bachelor of Science in Economics, with a concentration in Finance, from The Wharton School at the University of Pennsylvania and he is an Adjunct Assistant Professor in the Value Investing Program at Columbia Business School.

Following his interest in finance from a young age, Rishi built up a wealth of experience over the years across in the financial services industry before launching his fund, ROAM Global in 2018. It is a pleasure to welcome Rishi to the show today and, like everyone involved with the Center, he combines his deep understanding of markets, the practice of investing, and fundamental analysis with the ability to convey these ideas clearly to the students.

On this episode, Rishi and I discuss where his deep interest in finance came from, what he learned from his years in investment banking, how his experience in the private equity world offers him an advantage, the core principles Rishi wanted to incorporate into his firm, a dynamic approach to value investing, and so much more!

Key Topics:

• Rishi's early affinity towards business (2:59)
• The advantage of a deep understanding of economics (4:10)
• Why it was important to Rishi to do internships and work in the investment banking world (4:40)
• What Rishi learned from his early years in investment banking (5:53)
• How Rishi's foundation in banking and private equity helps him in difficult economic periods (6:31)
• The similarities between working in private equity and public markets (8:52)
• Why Rishi believes investing is a balance between conviction and price (10:43)
• The evolution of public and private markets in recent years (12:57)
• Why starting his career during a financial crisis was a great opportunity for Rishi (14:56)
• Rishi's focus during his career in private equity (17:04)
• Why the business services sector is so dynamic and transformative (17:56)
• A dynamic approach to value investing (18:29)
• How Rishi developed his global perspective on investing (20:04)
• Lessons learned from the rapid growth of TPG Axon (22:52)
• The core principles Rishi wanted to incorporate into his firm (25:29)
• Defining the ROAM investment framework (27:28)
• How ROAM has navigated the economic shifts due to COVID (30:01)
• How top of the market activity is creating a biased view of the market (32:44)
• Risk management in times of distress (33:37)
• Why it's easy to lose all your money quickly in the current economic climate (37:35)
• Why Rishi is a dedicated short seller (40:55)
• The importance of building a company culture of collective success (44:22)
• The value of a postmortem analysis for successes as well as failures (47:01)
• Rishi's perspective on the future of financial markets (48:57)
• Why I believe there's going to be a lot of opportunity for nimble investors (50:48)
• Agility as a competitive advantage (52:27)
• And much more!

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

With the COVID-19 crisis dominating our spring semester, the focus of the podcast shifted slightly, and we had several conversations with distinguished investors talking about the impact of the crisis on financial markets.

For this season, in addition to the essential lessons about investing and good asset management practices, we are going to explore broader investment experiences and different approaches. Today, I'm particularly delighted to share this conversation with the great value investor, Richard Lawrence who has made a career as a true pioneer, particularly in Asia, where he built a legendary track record.

Richard is the Chairman and Executive Director of the Overlook Investment Group, a firm that invests in publicly listed equities across Asia, and that he founded in 1991. The Overlook Partnership, which Richard founded in 1992, currently has over $6 billion in assets under management, and since inception has achieved an astonishing capital-weighted annual compounded return of almost 14%.

On this episode, Richard and I discuss the advantages of learning asset management in a family office environment, why he decided to move to Hong Kong, the evolving Asian investment landscape, the Overlook investment philosophy, the four components of a great stock pick, what to consider when building a team, why passive investing brings opportunities for active managers, and so much more!

Key Topics:

• Richard's early exposure to investing as a career (3:38)
• The advantage of learning asset management in a family office environment (5:05)
• How the connection between economic and social growth influenced Richard's studies at Brown University (7:03)
• Richard's early career journey from telex translation to analyst (8:45)
• How Richard developed the beginnings of his "superior business" investment philosophy (9:53)
• Why Richard decided to move to Hong Kong (11:22)
• The Asian investment landscape in the late 80s (12:43)
• Creating the foundation for Overlook Investments (17:05)
• The four components of a great stock pick (18:34)
• How to assess a company's pricing power (21:45)
• Richard's defense against the lack of corporate governance regulations when he started in the Asian markets (25:06)
• Using the "tower" to track potential investments (27:51)
• The Overlook approach to portfolio construction (29:52)
• The five evils ( 32:19)
• Why you should keep an eye on current account imbalances (33:26)
• Why Richard decided to cap the growth of assets under management at Overlook (37:25)
• Richard's perspective on cutting fees (38:56)
• The critical aspects of building a team (40:51)
• How diversity plays a critical at Overlook (42:32)
• Why Richard refuses to do post-mortems (44:04)
• Figuring out the institutional framework in China (45:59)
• The impact of deteriorating US-China relations on the investment landscape (51:27)
• How passive investing increases opportunities for active managers (55:00)
• And much more!

Mentioned in this Episode:

• Overlook Investments

 Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

Welcome back to a new season of the show! Our first conversation is going to be a little different as we'll be talking about this year's picks for the 5x5x5 Russo Student Investment Fund. Joining me today is Tom Russo, who designed and funded this first-ever student investment fund at Columbia Business School in 2014, and students James Shen and Freda Zhuo, whose portfolio picks have performed particularly well.

The 5x5x5 fund is run by the students of the Value Investing course at Columbia Business School, with ideas being submitted by the students each year. Five students are selected with five ideas that will be held in their entirety for five years. At the end of five years, the inflation-adjusted original amount is invested back into the fund and any other gains will be used to support scholarships for traditionally under-represented members of the class. As we enter year six of the fund, we're taking a deeper look at the performance of the fund.

On this episode, Tom, James, Freda and I discuss how the 5x5x5 fund is more valuable than others, why James and Freda selected the particular companies for investment, what they have learned since investing in those companies, overall observations of the past 5 years of the fund, and so much more!

Key Topics:

• Why the 5x5x5 fund is more valuable than other student-run funds (1:35)
• The higher purpose of the fund (2:42)
• How Nuance Communications attracted James' attention (3:41)
• What James learned from his initial research into Nuance (4:43)
• The changes James has seen in the months since the initial investment was made (5:57)
• Why investors should be on the lookout for companies making the transition to cloud-based software (6:42)
• Getting comfortable with a long investment horizon (8:16)
• Nuance's competitive advantages over new players entering the market (9:24)
• Why Freda became interested in investing in Aon PLC (11:09)
• What Freda has learned about Aon since investing (12:12)
• How Freda maintained confidence in Aon despite the hit caused by COVID-19 (13:05)
• Significant developments in the insurance industry due to COVID-19 (14:32)
• Aon's risk management advantage (17:58)
• Why Aon's customer-centric model gives them an extra edge in client retention (20:28)
• How Aon mitigates disintermediation risk (23:00)
• Using new technology as an advantage for Nuance communications (25:49)
• How Aon covers risks internally (28:15)
• The redistributive nature of the shock caused by the pandemic (31:57)
• Observations from the past five years of the 5x5x5 fund (33:09)
• What to consider when constructing a resilient portfolio (36:22)
• Tom's review of the fund and participants (40:47)
• And much more! 

Mentioned in this Episode:

• 5x5x5 Student Investment Fund
  • James Shen's Write-Up of Nuance Communications
  • Freda Zhuo's Write-Up of Aon Plc

 Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

In this episode of Value Investing with Legends, Tano Santos and Michael Mauboussin sit down with Kent Daniel, Professor of Finance at Columbia Business School, to discuss his journey from physics at Caltech to leading research in behavioral finance and quantitative investing. Kent shares insights from his academic work and his years at Goldman Sachs, including his critiques of the Fama-French model, the role of intangible information in asset prices, and the implications of short selling constraints. The conversation spans decades of market evolution, empirical challenges, and the behavioral patterns that continue to shape financial theory and practice.

Key Topics:

● Introduction by Tano Santos and Michael Mauboussin (0:00)

● Introduction of guest Kent Daniel and his academic and professional background (0:48)

● Kent shares his early life, education at Caltech, and influences like Richard Feynman (3:31)

● Transition from physics to finance, MBA at UCLA, and entry into PhD program (5:46)

● Kent's dissertation on time variation in asset returns and statistical test power (8:02)

● Discussion on behavioral vs. rational explanations for return predictability (11:51)

● Kent's time at University of Chicago during the rise of behavioral finance (15:18)

● Challenge to the Fama-French three-factor model with characteristics vs. covariances paper (22:40)

● Behavioral finance classic: Overreaction and underreaction explained through psychology (27:31)

● Discussion on tangible vs. intangible information in financial markets (36:04)

● Current research on short selling, borrow costs, and market inefficiencies (41:40)

● Kent's experience at Goldman Sachs and practical application of academic research (50:02)

● Reflections on the quant crisis and build-up of leverage pre-2008 (56:26)

● Discussion on value investing post-2008 and limitations of book-to-market (57:00)

● Kent's nuanced view on market efficiency and the role of frictions (1:02:16)

● Views on indexing, ETFs, and financial market design (1:06:11) 

● Kent shares what excites and worries him about the future of markets (1:08:09)

● Kent's current reading and listening recommendations (1:10:07) And much more!

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Today's conversation is with Kim Shannon President and Co-Chief Investment Officer at Sionna Investment Managers. Kim founded Sionna Investment Managers in 2002 and has more than 35 years of industry experience, and previously served as the Chief Investment Officer and Senior Vice President at Merrill Lynch Investment Managers Canada. Kim is also a board member with the Canadian Coalition for Good Governance, the author of The Value Proposition: Sionna's Common Sense Path to Investment Success, and the recipient of numerous awards, including Morningstar Fund Manager of the Year (2005).

I've been looking forward to meeting Kim for quite a while and I finally had the opportunity to do so recently at a panel that we did during the last Berkshire shareholder meeting. Kim has had a fascinating career so far, with a unique perspective as a rare woman in the asset management industry. Near the end of her undergrad degree in science, Kim had an opportunity that showed her a new side to a career in business. That realization set her on an entirely new path toward the investment industry, where she worked her way from the very bottom to top positions at Merrill Lynch Investment Managers, eventually opening her own firm.

On this episode, Kim and I discuss why she became a believer in value investing, the importance of mentorship for building your reputation and career, her approach to portfolio construction and investment philosophy, and so much more!

Key Topics:

• Kim's journey from a degree in science to a corporate career in the investment world (2:50)
• Why Kim became a believer in value investing (4:23)
• The value of viewing business as more than the profit motive (5:42)
• How worked her way up from the bottom at Royal and Sun Alliance to being pursued by Merrill (7:02)
• The state of the asset management industry for women in the early 1980s (11:02)
• How mentorship helped Kim build her reputation and career (11:36)
• Why the meritocracy of the asset management industry is beneficial for women (13:00)
• The deteriorating situation for women in the asset management industry (14:49)
• Shocking statistics for women in leadership positions in the industry (16:04)
• The mission of Variant Perspectives (16:41)
• The principles Kim has built into Sionna's investment approach (19:11)
• Kim's approach to search, using a quant model as the first step (23:28)
• How Kim's team performs fundamental analyses on potential investments (27:57)
• How knowledge analysis is structured at Sionna (30:20)
• Why being a specialist can increase your biases (31:32)
• Sionna's perspective on assessing relative value (32:37)
• The importance of the financial services sector (34:04)
• The unique aspects of value investing in the Canadian market (35:08)
• How Kim thinks about sizing positions and risk management (39:17)
• The three main reasons to exit (41:13)
• Why this down market is unique (45:03)
• The Canadian market opportunity which has opened up (47:30)
• Analyzing the current crisis from the perspectives of big tech and energy (49:04)
• The problem with over-anticipating the next move in the market (50:09)
• Why you need to understand financial history (51:18)
• Getting curious about what happens when value underperforms growth (52:56)
• Why Kim thinks this is one of the best times to buy value (56:47)
• The tricky balance between the success of passive investing and the need for active managers (58:54)
• And much more!

Mentioned in this Episode:

• Kim Shannon's Book | The Value Proposition: Sionna's Common Sense Path to Investment Success
• Sionna Investment Managers
• Variant Perspectives
• Sionna Article | Waiting For

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

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Today's conversation is with Dan Davidowitz and Jeff Mueller of Polen Capital, which is a firm that is dedicated to researching and analyzing the highest-quality companies around the globe and investing for the long haul and with a business owner's mindset. Dan is the co-head of the Large Company Growth Team and the lead portfolio manager of the firm's flagship Focus Growth strategy. Jeff is co-portfolio manager of the Global Growth strategy and earned his MBA from Columbia Business School, where he was a graduate with honors and distinction of the Value Investing Program.

This episode is our third recording since the coronavirus health crisis, and we have kept doing it remotely. Since Spring Break, Columbia Business School has gone fully online and I am absolutely in awe of how the school has been able to pivot to this new format almost seamlessly and we owe this to the terrific people who have been working tirelessly throughout this challenging period and who deserve all our appreciation.

My goal with these episodes is to bring guests on who can help us navigate the investment environment and the enormous uncertainty surrounding the economic impact of the virus, which in my opinion is far from clear. I believe our listeners should be focusing on a rigorous, bottom-up approach or on funds that practice a bottom-up approach that is resilient to a variety of scenarios. Thus far the economic impact is probably a bit under-estimated, but it affects different sectors differently and thus the opportunity to build a resilient portfolio is there.

On this episode, Dan, Jeff and I discuss how they developed their investment philosophies, what value means in today's market environment, what you need to know about investing in compounders, the value of guardrails, and so much more!

Key Topics:

• The impact of the current coronavirus pandemic on life at Columbia University (1:02)
• How Dan found an interest in business and finance while pursuing studies in Public Health (6:13)
• What Dan's first buy-side job taught him about value investing (7:54)
• Why frustration led Dan to learn more about the modern approach to value investing (9:00)
• Polen's compounder approach to value investing (9:42)
• The importance of being with an organization whose approach aligns with your investment philosophy (11:07)
• How the events of September 11, 2001 re-routed Jeff's career (12:15)
• Why Jeff set himself the goal of attending Columbia University (13:02)
• Jeff's philosophy on wealth generation and investment (14:24)
• The evolution of the US financial markets since Graham's first writings (15:20)
• What does value mean today (21:00)
• The key elements to consider when analyzing compounders (24:32)
• Why Polen doesn't seek new investment opportunities based on economic trends (29:53)
• Polen's approach to quality analysis of potential investments (34:57)
• Investing within a small pool of potential companies (40:22)
• The never-ending quest for knowledge (42:51)
• What moat attacks reveal about barriers to entry (44:53)
• Polen's perspective on building resilient portfolios (50:07)
• How the Polen Focus Growth portfolio has been adjusted in light of the coronavirus crisis (54:57)
• The importance of Polen's guardrails (57:44)
• The changes to the Polen Global Growth portfolio in the current crisis (59:25)
• Dan and Jeff's outlook for the future of value investing (1:02:08)
• And much more! 

Mentioned in this Episode:

• Polen Capital
• Value Investing with Legends Season 3, Episode 4 | C.T. Fitzpatrick - Value Investing in Times of Deep Distress 

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

Today's conversation is with C.T. Fitzpatrick, Founder, Chief Executive Officer, Chief Investment Officer at Vulcan Value Partners. C.T. founded Vulcan in 2007 and since then, all five strategies have peer rankings in the top 1% of value managers in their respective categories. Before starting Vulcan Value Partners, C.T. worked as a principal and portfolio manager at Southeastern Asset Management and over his 17-year tenure, his team achieved double-digit returns and was ranked in the top 5% of money managers over five, ten, and twenty-year periods consistently.

We're again taking a different approach to this episode of the podcast. The health crisis has worsened significantly since our last episode and though there has been some stabilization in valuations, the market's fragility is still apparent as the uncertainty about the extent of the economic shutdown and the long-run impact of the crisis remains.

In light of the extraordinary circumstances we find ourselves in, I couldn't think of anyone better to talk about investing in the current environment than C.T. Fitzpatrick, with the benefit of his more than 30 years of experience in financial markets.

On this episode, CT and I discuss how Vulcan has improved their portfolio over the past few weeks, why it's critical to stress-test your portfolio, how this crisis will accelerate the demise of certain industries while benefitting other companies, the parallels between the global financial crisis in 2008-2009 and the current market behavior, and so much more!

Key Topics:

• Using your investment horizon as your main risk management tool (3:57)
• Why Vulcan prioritizes value stability over discount (6:32)
• How Vulcan has improved its portfolio over the past few weeks (7:28)
• What it means to stress-test your portfolio (8:14)
• Why thorough analysis is critical in light of this extraordinary event (8:46)
• The benefit of a strong balance sheet for weathering this crisis (11:22)
• Vulcan's approach to different asset classes (12:58)
• The strategy behind concentrating portfolios in periods of volatility (15:13)
• Why CT considers the margin of safety to be the most important risk metric (18:01)
• How the crisis will accelerate the demise of certain industries (19:44)
• The evolution of the airline industry and its weaknesses during this crisis (21:24)
• Companies that will benefit from the behavior changes triggered by lockdowns and quarantines (22:58)
• The parallels between the global financial crisis in 2008-2009 and the current market behavior (25:17)
• How the political climate has colored policymakers' response to market volatility (28:16)
• A key difference between the global financial crisis and the current crisis caused by the pandemic (29:52)
• Analyzing potential scenarios and outcomes for companies (33:45)
• Why you need to monitor the economies in countries which are at a more advanced stage of the pandemic (35:48)
• The Vulcan investment philosophy (37:26)
• How CT analyzes a company's valuation (40:10)
• The importance of value stability (41:47)
• Why CT believes value investing is here to stay for the long term (43:23)
• And much more!

Mentioned in this Episode:

• Vulcan Value Partners

Thanks for Listening!

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Today's conversation is with Michael Mauboussin, Head of Consilient Research at Counterpoint Global. Before joining Counterpoint Global, Michael was the Director of Research at BlueMountain Capital Management in New York and previously the Head of Global Financial Strategies at Credit Suisse and Chief Investment Strategist at Legg Mason Capital Management. Michael has also authored several books and has been an adjunct professor of finance at Columbia Business School since 1993, where he is on the faculty of the Heilbrunn Center for Graham and Dodd Investing.

As of this recording, the university campus is quiet and empty, with classes moving online for the spring semester. Of course, this is due to the coronavirus global pandemic which hit the world quite suddenly and has required extreme public health measures. The markets have responded as expected to the crisis and the economy is in a tailspin.

In light of all of this, I wanted to take a slightly different approach to today's episode and have a discussion about not only how to think about markets, but also the psychological stress caused by the crisis. For that, I couldn't think of anyone better than our first repeat guest, Michael Mauboussin.

On this episode, Michael and I talk about the debate on the economic impact of the coronavirus pandemic, the argument for the centralized implementation of public health solutions, using the expectations infrastructure to analyze companies, how stress affects investment decisions, how risk attitudes are shaped by loss and crisis, and so much more!

Key Topics:

• The two main sides of the debate on the economic impact of coronavirus (5:11)
• What pandemics and wars in the past demonstrate about the resilience of the economy (7:14)
• How Michael believes the economic impact of coronavirus will compare to previous world wars and pandemics (8:48)
• Why the response to the coronavirus crisis has been so different in Asia, Europe and the US (12:05)
• The argument for the centralized implementation of public health solutions (14:57)
• Framing the current crisis as an externality (16:21)
• Our theories about the sharp correction in equity prices (18:15)
• Will the current crisis measures result in long-term changes to our collective behavior? (20:03)
• The consistency of the underlying reality of financial markets (21:38)
• Assessing the effect of increasing concentration (24:11)
• Why it's so important to have a protocol in place for tackling the crisis (26:30)
• Using the expectations infrastructure to analyze companies (30:37)
• Measuring volatility as an indicator of risk in the short-term (35:01)
• Why psychological stress can have a bigger impact than physical stress (38:07)
• The conditions for psychological stress (38:44)
• How stress affects investment decisions (39:24)
• The interaction between psychological and agency issues during periods of massive uncertainty (40:28)
• How to reduce the stresses of social isolation during the coronavirus crisis (42:51)
• Teaching without in-person classes (45:04)
• What is myopic loss aversion? (46:42)
• How risk attitudes are shaped by loss and crisis (47:44)
• And much more!

Mentioned in this Episode:

• Michael Mauboussin's Website
• Michael Mauboussin's Books
• Michael Mauboussin and Alfred Rappaport's Book | Expectations Investing: Reading Stock Prices for Better Returns
• Tyler Cowen's Bloomberg Article | Bill Gates Is Really Worried About the Coronavirus. Here's Why.
• Mancur Olson's Book | The Logic of Collective Action: Public Goods and the Theory of Groups

• Thomas Philippon's Book | The Great Reversal: How America Gave Up on Free Markets

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!