Ross Glotzbach - The Power and Strength of Experience
Value Investing with Legends
Are You Worried a Little Bit About These Two Trends?
The number of credit stocks in the United States has gone down over the last 20 years by 40, 50%. At the same time, passive investment and smart beta industry is growing. Are you worried a little bit about these kind of two trends taking place in financial markets?
Today’s conversation is with Ross Glotzbach, the CEO and Head of Research at one of the great names in value investing, Southeastern Asset Management, the firm founded by Mason Hawkins over 40 years ago. Ross is also the co-portfolio manager on Longleaf Partners, Small-Cap and Global Funds, as well as the Longleaf Partners Global UCITS Fund. Before joining Southeastern in 2004, he was a Corporate Finance Analyst at Stephens, Inc. after graduating from Princeton University.
From a young age, Ross was fascinated with investing in businesses where he could turn 50 cents into $1. By the time he was starting college, Ross was introduced to the concept of value investing and got the opportunity to manage real money of his own, which he attributes as a key step on his path to becoming a value investor. Not one to take the passive route, Ross set out to learn as much about value investing as he could and determine whether it was the right strategy for him. After multiple internships and valuable experience working at Stephens, Ross joined Southeastern with their culture of “true value investors”.
On this episode, Ross and I talk about his introduction to value investing, why he values his time at Stephens so much, his experience as an analyst at Southeastern, what it means to be Head of Research, why he places so much importance on having conversations with management, the engaged approach to investing, and so much more!
Key Topics:
- Ross’s early interest in finding ways to buy $1 for 50 cents (2:56)
- How Ross started out with value investing (3:56)
- Ross’s experiences exploring outside of the value investment strategy (6:59)
- What Ross learned while working at Stephens (9:50)
- Ross’s first years as an analyst at Southeastern (11:29)
- Why you must have a master list of companies you’d love to own (13:44)
- Ross’s path from Junior Analyst to Head of Research (15:33)
- The day-to-day responsibilities of Ross’s role as Head of Research (16:11)
- Why Southeastern prefers their analysts to be generalists (18:14)
- How Southeastern’s multi-country research team stays coordinated (19:18)
- Ross’s strategy for finding good investment ideas in the small-cap sector (21:00)
- The opportunities traditional value investors often miss by ignoring conversations management (23:09)
- Ross’s criteria for assessing business quality (26:13)
- How Ross assesses barriers to entry of potential investments (27:28)
- Southeastern’s qualitative strategy for handling the disruption of industries by technology (29:11)
- Why industry disruption can give value investors a competitive advantage (31:10)
- Southeastern’s approach to valuation (33:04)
- How Southeastern manages diversification and risk (36:52)
- The engaged approach for balancing active and passive investment (39:42)
- The leadership transition with Mason Hawkins (45:46)
- Ross’s perspective on value underperforming relative to growth (49:36)
- What Ross thinks about the growth of the passive investment market (51:39)
- How private equity investing has changed in recent years (54:41)
- And much more!
Mentioned in this Episode:
- Southeastern Asset Management
- Longleaf Partners Funds
- Benjamin Graham’s Book | The Intelligent Investor
- Stephens, Inc.
- Mason Hawkins, Chairman and Principal, Southeastern Asset Management
- Staley Cates, Vice-Chairman and Principal, Southeastern Asset Management
Thanks for Listening!
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