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

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

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

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

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!   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!

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

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

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