How to Find Value at Value Prices

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!

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