Is There a Risk Management Approach to Value Investing?

Today’s conversation is with David Samra, managing director of Artisan Partners and founding partner of the Artisan Partners International Value Team. He is the lead portfolio manager of the Artisan International Value Fund, which he has managed since its inception in September 2002. Mr. Samra also was co-portfolio manager for the Global Value Fund from its inception in December 2007 through September 2018. Before joining Artisan Partners, David was a portfolio manager and a senior analyst in international equities at the legendary Harris Associates.

David enrolled in Columbia Business School (CBS) in 1991, right before the value investing program was re-launched and he considers his classes in the fundamentals of investing and internship with value investor Mario Gabelli to be critical in the development of his investment philosophy. Since leaving business school, David has focused on international investing and under his leadership, his team was twice named Morningstar, Inc.’s International-Stock Fund Manager of the Year in 2008 and 2013.

On this episode, David and I talk about his early drive to pursue a career in money management, why he was drawn to work in international investments, what he learned from working with value investing legends, the contrast between the traditional and modern value investor, the most effective way to select securities, and so much more!

Key Topics:

• When David uncovered his interest in becoming an asset manager (3:56)
• How David’s inclination towards value investing showed up in school (5:00)
• David’s early steps towards a career in money management (6:53)
• Attending CBS before the value investing program was revitalized (8:43)
• The CBS class that taught David about the difference between a good and a bad business (9:44)
• How working with Mario Gabelli helped David to develop his investment philosophy (11:01)
• Why David took a pay cut to work in international investing at Montgomery Asset Management (12:09)
• Travelling around the world to assess non-US securities (14:46)
• How working with David Herro complemented David’s approach to security analysis (16:37)
• The contrast between the traditional and the modern value investor (18:11)
• Leveraging the opportunities created for value investors during a financial crisis (24:17)
• What the global financial crisis taught David about risk management (25:54)
• Finding the balance between price and quality to put yourself in the best position from a risk/reward profile (26:39)
• Why many value investors had to shift their thinking because of the tech bubble (27:31)
• Using screens to for investment idea generation (29:44)
• David’s most effective method for finding securities (30:49)
• Why the artisan research team is made up of generalists organized by geography (32:36)
• The benefits of making investment decisions on a company-specific level, rather than economic trends (34:50)
• The business analysis and valuation process David uses for international investments (36:14)
• How some European banks have become more appealing for value investors (41:03)
• Analyzing the price and quality of the Spanish Bank, Bankia (44:43)
• Analyzing the success of Compass Group (49:18)
• David’s views on the future of value investing in the face of rising passive investing (51:29)
• And much more! 

Mentioned in this Episode:

• Artisan Partners
• Bennett Stewart’s Book | The Quest for Value: A Guide for Senior Managers
• Benjamin Graham’s Book | The Intelligent Investor: The Definitive Book on Value Investing
• Value Investing with Legends Podcast:
  • Season 2 Episode 6 | Bruce Greenwald - Staying on the Right Side of the Trade
  • Season 1, Episode 2 | Tom Russo - The All Important Power of Consumer Brands

Thanks for Listening!

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