The Long View

Charlie Dreifus: ‘You Have to Dig Deeper to Find Inefficiencies. But They’re There’

Nov 5, 2024

In this conversation, Charlie Dreifus, a seasoned portfolio manager known for his expertise in small-cap value strategies, shares insights from his impressive investment career. He discusses how his family's refugee background instilled a cautious investment mentality. Dreifus explains his valuation strategies focusing on market inefficiencies and contrasts mutual funds and ETFs, highlighting their unique advantages. He emphasizes the importance of passion in both investing and personal life, illustrating how it fuels success and fulfillment.

55:16

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Episode guests

Charlie Dreifus

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Quick takeaways

Charlie Dreifus emphasizes the importance of a risk-averse investment strategy shaped by his early experiences, focusing on capital preservation and downside protection.

He advocates for active management in the small-cap value space, arguing that diligent research can uncover overlooked companies that passive strategies may miss.

Deep dives

Charlie Dreyfus' Early Influence and Risk Aversion

Charlie's investment approach is heavily influenced by his upbringing as the son of Jewish refugees from Nazi Germany, which instilled in him a risk-averse mentality. This perspective shapes his investment strategy, emphasizing downside protection and loss mitigation, leading to a consistent focus on preserving client capital. He recalls how a relative's interest in dividend-paying stocks sparked his early fascination with the stock market, leading him to start investing at a young age. This formative experience cultivated his analytical skills, as he sought out underappreciated investment opportunities even before the advent of modern technology.

Intro

2min

From Curiosity to Capital: A Journey Through Early Investing

9min

Valuation Strategies and Market Dynamics in Small-Cap Investing

36min

Navigating Investment Choices: Mutual Funds vs. ETFs

3min

A Lifelong Passion for Investing and Family

2min

The Importance of Passion in Professional Life

3min

Our guest this week is Charlie Dreifus. Charlie is portfolio manager of the Royce Special Equity Funds, highly regarded by Morningstar’s Manager Research team. Charlie was named Fund Manager of the Year by Morningstar in 2008 for his work on the Small-Cap Value US Equity Strategy, which he began running in 1998 after portfolio management stints at Lazard and Oppenheimer. Charlie’s investment career began in 1968. He holds degrees from City College of New York and Baruch College.

Background

Bio

Royce Small-Cap Special Equity Investment

Steven McBoyle, co-portfolio manager

Small-Cap Value

“Small-Cap Funds Are More Promising Than They Have Been in Years. Here Are the Ones to Buy,” by Lewis Braham, Barrons.com, Oct. 11, 2023.

“Why Value Veteran Charlie Dreifus Balks at Banks and Favors the Rust Belt,” by John Coumarianos, citywire.com, April 21, 2022.

Other

Chuck Royce

Abraham Briloff

“A Conversation With Investing Legend Charlie Dreifus,” Interview with Russ Kinnel, Morningstar.com, Aug. 14, 2020.

Public Company Accounting Oversight Board