Value Investing with Legends

Today’s conversation is with C.T. Fitzpatrick, Founder, Chief Executive Officer, Chief Investment Officer at Vulcan Value Partners. C.T. founded Vulcan in 2007 and since then, all five strategies have peer rankings in the top 1% of value managers in their respective categories. Before starting Vulcan Value Partners, C.T. worked as a principal and portfolio manager at Southeastern Asset Management and over his 17-year tenure, his team achieved double-digit returns and was ranked in the top 5% of money managers over five, ten, and twenty-year periods consistently. We’re again taking a different approach to this episode of the podcast. The health crisis has worsened significantly since our last episode and though there has been some stabilization in valuations, the market’s fragility is still apparent as the uncertainty about the extent of the economic shutdown and the long-run impact of the crisis remains. In light of the extraordinary circumstances we find ourselves in, I couldn’t think of anyone better to talk about investing in the current environment than C.T. Fitzpatrick, with the benefit of his more than 30 years of experience in financial markets. On this episode, CT and I discuss how Vulcan has improved their portfolio over the past few weeks, why it’s critical to stress-test your portfolio, how this crisis will accelerate the demise of certain industries while benefitting other companies, the parallels between the global financial crisis in 2008-2009 and the current market behavior, and so much more!   Key Topics: Using your investment horizon as your main risk management tool (3:57) Why Vulcan prioritizes value stability over discount (6:32) How Vulcan has improved its portfolio over the past few weeks (7:28) What it means to stress-test your portfolio (8:14) Why thorough analysis is critical in light of this extraordinary event (8:46) The benefit of a strong balance sheet for weathering this crisis (11:22) Vulcan’s approach to different asset classes (12:58) The strategy behind concentrating portfolios in periods of volatility (15:13) Why CT considers the margin of safety to be the most important risk metric (18:01) How the crisis will accelerate the demise of certain industries (19:44) The evolution of the airline industry and its weaknesses during this crisis (21:24) Companies that will benefit from the behavior changes triggered by lockdowns and quarantines (22:58) The parallels between the global financial crisis in 2008-2009 and the current market behavior (25:17) How the political climate has colored policymakers’ response to market volatility (28:16) A key difference between the global financial crisis and the current crisis caused by the pandemic (29:52) Analyzing potential scenarios and outcomes for companies (33:45) Why you need to monitor the economies in countries which are at a more advanced stage of the pandemic (35:48) The Vulcan investment philosophy (37:26) How CT analyzes a company’s valuation (40:10) The importance of value stability (41:47) Why CT believes value investing is here to stay for the long term (43:23) And much more!   Mentioned in this Episode: Vulcan Value Partners   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!

Today’s conversation is with Michael Mauboussin, Head of Consilient Research at Counterpoint Global. Before joining Counterpoint Global, Michael was the Director of Research at BlueMountain Capital Management in New York and previously the Head of Global Financial Strategies at Credit Suisse and Chief Investment Strategist at Legg Mason Capital Management. Michael has also authored several books and has been an adjunct professor of finance at Columbia Business School since 1993, where he is on the faculty of the Heilbrunn Center for Graham and Dodd Investing. As of this recording, the university campus is quiet and empty, with classes moving online for the spring semester. Of course, this is due to the coronavirus global pandemic which hit the world quite suddenly and has required extreme public health measures. The markets have responded as expected to the crisis and the economy is in a tailspin. In light of all of this, I wanted to take a slightly different approach to today’s episode and have a discussion about not only how to think about markets, but also the psychological stress caused by the crisis. For that, I couldn’t think of anyone better than our first repeat guest, Michael Mauboussin. On this episode, Michael and I talk about the debate on the economic impact of the coronavirus pandemic, the argument for the centralized implementation of public health solutions, using the expectations infrastructure to analyze companies, how stress affects investment decisions, how risk attitudes are shaped by loss and crisis, and so much more!   Key Topics: The two main sides of the debate on the economic impact of coronavirus (5:11) What pandemics and wars in the past demonstrate about the resilience of the economy (7:14) How Michael believes the economic impact of coronavirus will compare to previous world wars and pandemics (8:48) Why the response to the coronavirus crisis has been so different in Asia, Europe and the US (12:05) The argument for the centralized implementation of public health solutions (14:57) Framing the current crisis as an externality (16:21) Our theories about the sharp correction in equity prices (18:15) Will the current crisis measures result in long-term changes to our collective behavior? (20:03) The consistency of the underlying reality of financial markets (21:38) Assessing the effect of increasing concentration (24:11) Why it’s so important to have a protocol in place for tackling the crisis (26:30) Using the expectations infrastructure to analyze companies (30:37) Measuring volatility as an indicator of risk in the short-term (35:01) Why psychological stress can have a bigger impact than physical stress (38:07) The conditions for psychological stress (38:44) How stress affects investment decisions (39:24) The interaction between psychological and agency issues during periods of massive uncertainty (40:28) How to reduce the stresses of social isolation during the coronavirus crisis (42:51) Teaching without in-person classes (45:04) What is myopic loss aversion? (46:42) How risk attitudes are shaped by loss and crisis (47:44) And much more! Mentioned in this Episode: Michael Mauboussin’s Website Michael Mauboussin’s Books Michael Mauboussin and Alfred Rappaport’s Book | Expectations Investing: Reading Stock Prices for Better Returns Tyler Cowen’s Bloomberg Article | Bill Gates Is Really Worried About the Coronavirus. Here’s Why. Mancur Olson’s Book | The Logic of Collective Action: Public Goods and the Theory of Groups   Thomas Philippon’s Book | The Great Reversal: How America Gave Up on Free Markets     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!  

Today’s conversation is with Francisco García Paramés, chairman and chief investment officer at Cobas Asset Management, which he founded in 2016. Before founding Cobas, Francisco was with Bestinver for over 25 years. During that time, he built a legendary record and posted an average annual return of 15%, outperforming the reference benchmark by more than 700 basis points. Francisco is based in my home country of Spain and his reputation has extended far beyond its border. As a self-taught follower of Warren Buffett’s investment approach, he is a vocal advocate of the core ideas behind value investing. Francisco is also the author of a book that I highly recommend, called Investing for the Long Term, in which he explains the underpinnings of his investment approach and experience. On this episode, Francisco and I talk about his self-taught route to becoming a value investor, his experiences over more than 25 years in asset management during huge events in the financial markets, how he approaches valuation and portfolio construction, what it was like to run a one-man shop, and so much more!   Key Topics: Why Francisco recommends to always keep your options open (4:46) How basketball helped Francisco in his business studies (5:37) The influence of Peter Lynch on Francisco’s investing philosophy (7:45) From portfolio analyst to manager in less than two years (9:28) Finding value in the Spanish market during the early 90s economic crisis (11:21) Francisco’s self-taught approach to growing as a value investor (12:30) The importance of patience and having a long-term perspective (13:05) How Francisco managed the Bestinver portfolio analysis in his first decade (14:15) Francisco’s approach to valuation (15:27) Shifting to a quality and growth perspective (16:56) The lessons learned over 25 years of bubbles and crashes (19:30) How Francisco builds up the resilience of a portfolio (22:00) How to think about cash in a bottoms-up approach (24:43) Francisco’s portfolio construction strategy (28:02) Building conviction as a one-man shop (31:10) Francisco’s journey to becoming an author (36:40) Getting started with Cobas Asset Management (38:58) Why Francisco values a team approach at Cobas (40:32) The importance of client relationships in developing a strong base (42:10) Analyzing the growth of Limited Holding Group (43:15) Analyzing the growth and quality of Melia (47:48) Aligning the long-run outlook of the team, clients, and management (48:42) Francisco’s thoughts on the market’s current underperformance relative to growth (50:39) And much more!   Mentioned in this Episode: Cobas Asset Management Francisco García Paramés’ Book | Investing for the Long Term Bestinver S.A. Peter Lynch’s Book | One Up On Wall Street: How To Use What You Already Know To Make Money In The Market Joel Greenblatt’s Book | The Little Book That Still Beats the Market Cobas Letters from the Asset Manager Benjamin Graham’s Book | The Intelligent Investor: The Definitive Book on Value Investing   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!

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! 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!  

Today’s conversation is with Professor Bruce Greenwald, guru to Wall Street’s gurus. Bruce is the Robert Heilbrunn Professor of Finance and Asset Management Emeritus at Columbia Business School and is the former Academic Director of the Heilbrunn Center for Graham & Dodd Investing. He has been the recipient of numerous awards, including the Columbia University Presidential Teaching Award and his classes are consistently oversubscribed, with more than 650 students taking his courses every year. Columbia Business School’s unmatched tradition in value investing started with the teaching of Ben Graham and later David Dodd and Roger Murray. But for almost a decade after Roger Murray retired, that tradition lay dormant. That’s when Bruce joined Columbia in 1991, after leaving Harvard Business School and has since played a critical role in reinvigorating value investing. On this episode, Bruce and I talk about how he revitalized value investing at Columbia Business School, why you should be a specialist, how to approach valuations, why investment managers can’t build a portfolio, how to remain relevant despite the growth of passive investing, and so much more! This is our last episode of the season but we will be doing our first live podcast at the Columbia Student Investment Management Association (CSIMA) Conference on February 7, 2020, at Columbia University. There will be a wonderful collection of speakers, many of whom have been past guests on the podcast, as well as some very distinguished value investors who will be visiting from Europe. We hope to see you there and until then, thank you for listening and Happy Holidays!   Key Topics: How Bruce received the Heilbrunn chair (3:58) Bruce’s unintentional initiation into value investing (4:51) The start of the value investing course at Columbia (6:12) Becoming the “Guru to Wall Street’s gurus” (6:46) How the value investing course developed into a full program (7:14) Bruce’s career journey from Bell Labs to Harvard Business School (8:16) The value investing oral tradition (10:30) Applying a value orientation to your investment search strategy (12:11) Why you need to be a specialist (13:24) What you can learn from Warren Buffett about specialization (14:56) Paul Hilal’s approach to investing by first spending the time to learn (16:28) How the economics of the business fits into the valuation (18:21) The implicit role of economics in Ben Graham’s methodology (20:11) How to approach the valuation of a moat business (24:11) The factors to consider when calculating your return (26:51) Why you have to pay attention to management behavior (30:48) How Intel’s acquisition of Altera showed a shift in management’s strategy (31:50) The importance of active research for value investors (34:14) The evolution of value investing away from a sole focus on asset values (36:11) Why investment managers can’t build a portfolio (36:56) Bruce’s approach to risk management (38:31) How economic changes are creating new opportunities for value investors (41:07) The role government will have to play in the changing economy (45:01) How regulatory uncertainty affects businesses (49:10) Why Bruce isn’t worried about the growth of passive investing (53:28) And much more!  Mentioned in this Episode: New York Times Article | PRIVATE SECTOR; A Guru to Wall Street's Gurus Bruce C. N. Greenwald’s Books Value Investing: From Graham to Buffett and Beyond Competition Demystified: A Radically Simplified Approach to Business Strategy The Columbia Student Investment Management Association (CSIMA) Conference 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!

Today’s conversation is with Matthew McLennan, head of the Global Value team and a portfolio manager of the Global Value, International Value, US Value and Gold strategies at First Eagle Investment Management, where host Tano Santos also works as a Senior Advisor.  Matt is interested in the field of education, and he is a trustee of the Trinity School in New York City. He serves as co-chair of the Board of Dean’s Advisors of the Harvard School of Public Health and as a board member of the University of Queensland in the United States of America. He is also a trustee of the Board of Directors for the Library of America. After sparking his interest in investing in boarding school, Matt went on to study at the University of Queensland where he was given a unique opportunity to take part in the management of a $10 billion pool of capital at the Queensland Investment Corporation. This was to be the first of many successful career moves as that experience positioned him perfectly to join the Goldman Sachs team in Sydney. After rising through the ranks at Goldman Sachs, Matt joined First Eagle in the heart of the global financial crisis and where he once again proved the importance of fundamentals, selectivity, and patience. On this episode, Matt and I talk about what sparked his interest in investing, why learning how to think is more valuable than specific finance theory, his investment approach, the role of temperament in investing, his career at Goldman Sachs, how joining First Eagle during the global financial crisis ended up being a blessing in disguise, why you shouldn’t try to predict market activity, and so much more!   Key Topics: Why theFirst Eagle Investment Management Foundation Scholarship was created (3:09) How the First Eagle fellowship will benefit the recipient and the firm (4:07) Matt’s early life growing up in a small town in Australia (6:04) Looking at his parent’s land as a metaphor for the power of selectivity and patience (7:08) How a boarding school investment club sparked Matt’s interest in investing (7:40) Matt’s opportunity to work in asset management for a large capital pool (9:23) Why learning how to think was more valuable to Matt than specific finance theory (10:33) How the state of the markets in the 80s provided an interesting environmental backdrop for Matt during his studies (11:34) How working with the Queensland Investment Corporation helped to shape Matt’s investment philosophy later in life (12:51) Matt’s investment approach and the role of temperament (14:18) Leaving the backyard to join Goldman Sachs (16:12) The role of mentors at Goldman Sachs in developing Matt as a value investor (17:14) Why you need to consider the two important assets missing from the balance sheet (17:54) How the market’s perspective on value investing changed during Matt’s career at Goldman Sachs (20:00) Why the late 90s was a difficult time to be a value investor (21:33) The reason that joining First Eagle was appealing for Matt (23:43) How joining First Eagle during the global financial crisis ended up being a blessing in disguise (26:54) Why instead of trying to predict market activity you should take advantage of markets after the fact (29:20) Matt’s perspective on measuring growth (32:06) How Matt identifies potential investment ideas (34:54) Why Matt invests in businesses with scarce intangible assets (35:51) The challenge you face when buying companies in competitive industries (36:46) The role of specialized knowledge in investment analysis (38:53) Why First Eagle reinforces a culture where continuous learning is valued (40:47) How First Eagle decided on hedging with a real asset (43:02) The usefulness of gold as a hedge in comparison to other commodities (45:12) Matt’s views on the current unusual state of the markets (48:51) The right portfolio response to the current state of the markets (53:47) Why Matt attributes a lot of the success of passive investing to the poor approach taken by some active managers (58:04) And much more! Mentioned in this Episode: First Eagle Investment Management First Eagle Investment Management Foundation Scholarship Tanya Kostrinsky, the inaugural recipient of the First Eagle Investment Management Foundation scholarship Bruce C. N. Greenwald’s Book | Value Investing: From Graham to Buffett and Beyond The Columbia Student Investment Management Association (CSIMA) Conference Goldman Sachs Jean-Marie Eveillard, Senior Advisor to the First Eagle Investment Management Global Value team Value Investing with Legends | Taking a Top-Down Approach to Value Investing with Jean-Marie Eveillard Value Investing with Legends | Looking For More For Less with Leon Cooperman Bill White, former Chairman of the Economic and Development Review Committee at the OECD   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!

Today’s conversation is with Joel Greenblatt, Founder and Managing Partner of Gotham Asset Management. Since founding Gotham in 1985, Joel and his partner Robert Goldstein have developed the firm into a large asset management company, well beyond the traditional hedge fund model and offering mutual fund products for the retail investor. Throughout his career, Joel has been a very successful adjunct professor here at Columbia Business School and has also published several successful books. Growing up, Joel intuitively learned about business from his father, a shoe manufacturer. From these dinner table lessons, his biggest takeaway was the idea that stocks are not simply pieces of paper that bounce around and to remember you own a piece of a business. After completing his MBA at Wharton School of the University of Pennsylvania, Joel started his investment career and quickly progressed from analyst to partner, and soon started Gotham where he has successfully bridged theory and practice for over 30 years. On this episode, Joel and I talk about his introduction to Ben Graham and value investing, why he switched from law school to a career in the investment world, his early role in risk arbitrage, why he decided to start his firm, how he turned a tough negotiation with Mike Milken into a win for Gotham, why he advocates for a value-based approach to investing, and so much more!   Key Topics: What Joel learned from his father about business (2:46) How Joel developed his core perspective on investing (3:13) Why Ben Graham’s stock-picking rules resonated with Joel (4:35) How Joel ended up writing an article for the Journal of Portfolio Management while a student at Wharton (5:51) How trading options at Bear Stearns helped Joel realize he wanted to pursue an investment-related career (7:23) Joel’s experience as the only analyst at a startup hedge fund (7:58) Why Joel’s early role in risk arbitrage was a good foundation for his Special Situations course at the Heilbrunn Center (9:28) The lucky situation Joel found himself in when he went to Wall Street (10:51) Why Joel decided to start his firm (12:26) Joel’s tough negotiation with Mike Milken (13:17) The influences that shaped Joel’s initial investment approach at Gotham (15:01) How Joel succeeds without specializing (19:09) The advantage of investing off the beating path (19:41) Why Joel decided to become an author (23:29) How writing and teaching have helped Joel become a better investor (24:23) Why it returned the outside capital from Gotham (25:38) Joel’s investment philosophy (28:02) Joel’s career-long rebellion against the efficient market hypothesis and portfolio management theory (28:49) The fascinating results from Joel’s benevolent brokerage firm (35:11) Why the strategy from The Little Book That Still Beats the Market can be difficult readers to implement (37:48) Why Joel advocates for a valuation-based approach to investing (42:14) The prudent approach most people should take when investing in the market (48:22) And much more!   Mentioned in this Episode: Gotham Asset Management Joel Greenblatt’s Books: The Little Book That Still Beats the Market The Big Secret for the Small Investor - A New Route to Long-Term Investment Success You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits Joel Greenblatt’s Journal of Portfolio Management Article | How the small investor can beat the market Malcolm Gladwell’s Book | Outliers: The Story of Success Mike Milken, Financier Benjamin Graham and David L. Dodd’s Book | Security Analysis Benjamin Graham’s Book | The Intelligent Investor Warren Buffet’s Shareholder Letters John Train’s Books David Dreman’s Books Joel Greenblatt’s Morningstar Paper | Adding Your Two Cents May Cost a Lot Over the Long Term Cliff Asness, Managing and Founding Principal of AQR Capital Managements   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!

of Omega Advisors. After getting his MBA from Columbia Business School, Leon joined Goldman Sachs as a Junior Analyst and ultimately built up Goldman Sachs' asset management division, GSAM. In 1991 Leon decided to follow his passion for money management and started his hedge fund, Omega Advisors, which became a family office in 2018. Leon is a member of The Giving Pledge and he takes great pleasure in giving back to those organizations and institutions that made a difference in his life.  From humble beginnings, Leon benefitted greatly from the public education system while attending high school and college in the Bronx. Intuition has always played an important role in Leon’s life. After years of hard work to fulfill his goal of becoming a dentist, he followed that intuition and dropped out of dental school after just 8 days, forfeiting a full year of tuition and expenses. That misstep into dentistry put Leon on the path that would lead to Columbia Business School and a job at Goldman Sachs right after graduation, which he credits with changing the trajectory of his life.  On this episode, Leon and I talk about how Leon went from dreams of dentistry to a successful career in the investment world, Leon’s approach to value investing, Leon’s career path at Goldman Sachs, why Leon founded Omega Advisors, how politics affects policy, Leon’s take on the current state of the financial markets, Leon’s approach to philanthropy, and so much more!   Key Topics: The two factors to which Leon attributes his success (2:56) Why Leon wrote a letter to President Obama (3:12) How getting an MBA from Columbia Business School changed the trajectory of Leon’s life (4:22) Why Leon dropped out of dental school (4:36) The key role intuition played from early in Leon’s life (6:05) How Leon ended up working at Goldman Sachs right after graduating (6:56) Leon’s introduction to value investing at Columbia Business School (8:12) Leon’s career at Goldman from Junior Analyst to Partner (9:36) The benefits of the close working relationship between sales, trading, and research at Goldman (11:08) The dual roles Leon had to play in the 70s (11:42) Leon’s favorite aspect of doing investment research (12:37) Why Leon keeps up to date with the micro- and macro-activities of the business world (13:44) The origin of Goldman Sachs Asset Management (14:42) The inception of Omega Advisors Hedge Fund and its evolution into a family office (16:50) Why Leon decided to retire (18:05) What Leon told Warren Buffett about The Giving Pledge (18:48) Why Leon decided to leave Goldman Sachs (19:16) How Leon’s brush with the S. Securities and Exchange Commission (SEC) positively impacted him (21:18) Leon’s investment strategy when he started Omega Advisors (22:24) The importance of surrounding yourself with knowledgeable people (23:06) How regulatory changes have driven up the cost of business (24:01) Why Leon attributes value orientation as the driver behind the success of Omega Advisors (25:35) Leon’s current investment strategy (26:02) Leon’s perspective on the current state of the financial markets (27:33) Why we should be worried about the amount of debt currently being created in the economy (29:46) What Leon considers to be a “normal” state for the markets (31:07) How government policy has contributed to the current income disparity (33:14) The problem with wealth tax (34:31) Why Leon believes America’s commitment to capitalism is so important (37:55) How the current state of politics is affecting the creation of sensible policy (39:42) The four things you can do with money (42:37) Leon’s philanthropic endeavors (43:54) And much more!    Mentioned in this Episode: The Giving Pledge Open Letter To The President Of The United States Of America from Leon Cooperman The Horatio Alger Association of Distinguished Americans Goldman Sachs Benjamin Graham and David Dodd’s Book | Security Analysis Cooperman College Scholars  The Cooperman Family Fund for a Jewish Future Lehman College   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!

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! 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!

Today’s conversation is with Jennifer Wallace, a wonderful expositor to the main ideas of value investing, but also a very deep thinker when it comes to the interaction of value investing and the market at large. Jenny is the co-founder of Summit Street Capital Management, where she is the portfolio manager of the US equity value fund. She's also a Columbian through and through as she holds a BA from Columbia College and an MBA from Columbia Business School. Jenny is a member of the advisory board of the Heilbrunn Center for Graham & Dodd Investing and a great mentor to me. While working towards her MBA, Jenny joined the first cohort of students to take the value investing class offered by Bruce Greenwald. After being introduced to value investing, it became clear to Jenny that to be successful she needed to develop a skill set that would allow her to assess businesses, independent of conventional wisdom. To gain that perspective, she first went to work for McKinsey & Company. After leaving McKinsey, Jenny worked alongside investing legend Bob Bruce, before ultimately co-founding her firm. On this episode, Jenny and I discuss her studies at Columbia Business School as a student in the first cohort of the value investing class, her early career with value investing legends, how Summit Street was started, how Jenny developed her investment philosophy, her approach to data analysis, the impact of the growth of the passive investing industry on active managers, and so much more!    Key Topics:  The events program for the Heilbrunn Center during the 2019/2020 academic year (1:03) Why you should sign up for the center’s email newsletter (6:15) Jenny’s experience as a student in the first cohort of the value investing class (8:26) The structure of the first value investing class (10:20) Why Jenny decided to work for McKinsey instead of in investing (11:33) How Jenny’s background in psychology helps her as a value investor (12:56) The impact of Jenny’s time at McKinsey (13:28) Summit Street’s investment philosophy (15:42) How business’ operational efficiency contributes to investors’ downside projection (16:37) Bob Bruce’s pitch to Jenny (17:23) The importance of being able to read financials and let the numbers tell you a story (19:20) Bob Bruce’s advice on building up your knowledge about select companies (21:12) The opportunities and crises in the late 1990s market (22:25) The parallels between the investment landscape of the 1990s and now (24:19) The qualities that Jenny believes sets value investors apart from others (25:37) Why Jenny thinks being a good value investor starts with a certain type of person (27:23) How Summit Street was launched (28:32) The evolving focus of Summit Street (29:13) Jenny’s approach to data analysis and searching for investment ideas (32:47) Jenny’s perspective on the changing significance of classic value metrics (34:41) How Jenny use cash flow as a valuation metric to avoid value traps (37:29) Why you should focus on the numbers in assessing the management team of a potential investment (42:26) “Every stock that we buy has something working against it” (44:23) Why Jenny considers leverage and return on invested capital as critical quality measurements (46:17) Summit Street’s qualitative and quantitative valuation methodology (49:25) Summit Street’s research and evaluation process for potential investments (52:53) Why models are so useful for testing your assumptions (55:36) Jenny’s approach to exiting a position (58:59) The importance of using guardrails to force investment discipline (1:02:35) Jenny’s opinion on the growth of passive investing and its effect on the practice of value investing (1:05:29) Why Jenny believes that the fee race to the bottom for exchange-traded fund (ETF) products are not necessarily good for investors (1:09:25) The façade of diversity being offered by ETFs (1:10:45) The opportunities created by ETFs for active managers by ETFs (1:16:11) And much more!    Mentioned in this Episode: Meredith Trivedi, Managing Director, Heilbrunn Center for Graham and Dodd Investing The Heilbrunn Center for Graham & Dodd Investing Events Summit Street Capital Management Benjamin Graham and David L. Dodd’s Book | Security Analysis Benjamin Graham’s Book | The Intelligent Investor    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!