Today’s conversation is a special one. I’m delighted to share my fireside chat with Markel Corporation’s Tom Gayner from our 26th Annual CSIMA Conference. With decades of industry experience, Tom joined us to share insights into how Markel has differentiated itself from others in the insurance industry and the investment approach and philosophies that facilitate its continued growth.

Thomas “Tom” Gayner is the Co-Chief Executive Officer of Markel Corporation. He oversees investing activities for the company, as well as the Markel Ventures’ diverse industrial and service businesses. Tom joined Markel in 1990 to form Markel Gayner Asset Management which provided equity investment counsel for Markel Corporation and outside clients.

In this episode, Tom and I discuss how he went from analyzing Markel to joining the team after its IPO, Markel’s three-engine business model, how Markel Ventures originated, why it’s essential to create an environment that’s supportive of the way you'd like to operate, and so much more!

Key Topics:

• Tom’s journey to joining Markel (1:28)

• Markel’s three-engine architecture of insurance, investments, and Markel  Ventures (5:00)

• How AMF Bakery Equipment became Markel Ventures' first investment (9:18)

• The four lenses for assessing equity investments (13:33)

• Markel’s nuanced approach to portfolio management (20:44)

• Learning to improve your investment decision-making process (24:14)

• Why Tom calls financial statements a donut truth (28:01)

• Translating the language of GAAP accounting to real economic meaning (29:48)

• Assessing a company’s debt levels (33:31)

• How interest rates massively impact human behavior (35:05)

• And much more!

Mentioned in this Episode:

• Markel Corporation Annual Reports

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!

When evaluating a company, getting a clear picture of all the relevant factors can be challenging. That’s why today’s guest, Scott Hendrickson, heavily emphasizes management quality and companies where diligence can provide a high level of conviction.

As a Columbia Business School graduate and adjunct professor, Scott is both a practitioner and a teacher. He has been an integral part of the investing program for almost a decade.

Scott Hendrickson is a Partner and the Co-Founder of Permian Investment Partners, a $1.2 billion management-focused global long/short investment fund. Before co-founding Permian, Scott worked as an Investment Analyst at Brahman Capital. Prior to Brahman, Scott worked as an Associate at Industrial Growth Partners, a middle-market-focused private equity fund. Scott started his career as an Analyst in Merrill Lynch’s Investment Banking Program. Scott graduated from Emory University with a BBA in Finance in 2000 and Columbia Business School with an MBA in 2007. Scott serves on the Columbia Business School adjunct faculty, teaching Applied Value Investing since 2014.  

In this episode, Scott, Tano, and I discuss Scott’s journey to a career in investing, why Permian has management as their core focus, the three main business quality metrics they employ, risk management for short interests, characteristics of transformational acquisitions, how teaching has expanded Scott’s perspective, and so much more!

Key Topics:

• How Scott’s interest in investing evolved from his love for music (1:57)

• Scott’s learnings from his time at Brahman Capital (5:35)

• Criteria Permian seeks in longs and shorts (7:01)

• Why Permian has management as a core focus (8:08)

• How the quality of Permian’s LPs has become an advantage (10:53)

• Permian’s approach to screening (12:49)

• The three main business quality metrics employed (15:38)

• Permian’s portfolio construction and power rank system (17:20)

• Breaking down the four short frameworks (22:01)

• Risk management for short interests (24:46)

• Factoring in the macro view (26:31)

• How Permian applies value-added research (30:00)

• What it means to be “diligence-able” and why that matters (33:38)

• Characteristics of transformational acquisitions (37:22)

• Differentiating between structural and fixable costs (39:41)

• What’s behind the long-term underperformance of European stock markets (42:35)

• How teaching has expanded Scott’s perspective (44:54)

• Scott’s recommendations for investors to improve the odds that they will be successful over time (46:26)

• What keeps Scott up at night and excited about the future (47:23)

• Scott’s book recommendations (50:16)

• And much more!

Mentioned in this Episode:

• William N. Thorndike’s Book | The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success

• Jim Rogers’ Books

• • Investment Biker: Around the World with Jim Rogers

  • Adventure Capitalist: The Ultimate Road Trip

• Hernando De Soto’s Book | The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else

• Joel Greenblatt’s Book | You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits

• Seth A. Klarman’s Book | Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful 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!

With the constant evolution of the asset management industry, investors need to stay a step ahead to justify earning an active management fee. With over 40 years of experience in the industry, this is a lesson that today’s guest, Bill Nygren of Harris Associates, instills in the younger analysts he mentors.

Bill is a true legend of value investing and an investor you can turn to whenever the market is uncertain. He radiates fundamental ideas and has an expansive perspective on the comings and goings of the market and the economy at large. 

Bill is the Chief Investment Officer for US equities at Harris Associates, which he joined in 1983, and a vice president of the Oakmark Funds. He has been a manager of the Oakmark Select Fund since 1996, Oakmark Fund since 2000, and the Oakmark Global Select Fund since 2006. Bill served as the firm’s director of research from 1990 to 1998. He has received many accolades during his investment career, including being named Morningstar’s Domestic Stock Manager of the Year for 2001, and he holds an M.S. in Finance from the University of Wisconsin’s Applied Security Analysis Program (1981) and a B.S. in accounting from the University of Minnesota (1980).

In this episode, Bill, Michael, and I discuss why Bill was drawn to value investing, why generalist analysts transition more easily to portfolio manager than specialists, his approach to idea generation and portfolio construction, pivoting in times of crisis and great distress, recession insights from over 40 years of experience, and so much more!

Key Topics:

• Welcome Bill to the show (1:09)
• Bill’s lifelong fascination with the line between gambling and investing (2:17)
• Why Bill was drawn to value investing (4:51)
• The importance of working at a firm that shares your investment philosophy (6:26)
• Why generalist analysts transition more easily to portfolio manager than industry specialists (9:36)
• Dealing with industry intricacies as a generalist analyst (14:05)
• Harris Associates’ approach to idea generation (15:55)
• What it’s like to be an analyst at Harris Associates (18:31)
• Why Harris uses multiple techniques to define value (24:25)
• Looking at management’s attitude towards capital redeployment (26:33)
• Harris’ maintenance process and error recognition methods (30:08)
• Bill’s thoughts on the news of Microsoft’s massive investment into OpenAI(32:53)
• Pivoting in times of crisis and great distress (36:38)
• Capital One as a case study of a stock that represents a good investment opportunity today (41:25)
• Recession insights from over 40 years of industry experience (44:02)
• Thinking about the effect of the current interest rate environment (48:35)
• Criteria for portfolio construction and position sizing (49:52)
• The evolving opportunity set (53:21)
• Identifying anomalies in GAAP accounting (55:44)
• The things that keep Bill up at night and excited about the future (59:31)
• Bill’s book recommendations (1:02:04)
• And much more!

Mentioned in this Episode:

• Harris Associates
• Oakmark Funds
• Michael Dell’s Book | Play Nice But Win: A CEO's Journey from Founder to Leader
• John Mack’s Book | Up Close and All In: Life Lessons from a Wall Street Warrior
• Joe Maddon & Tom Verducci’s Book | The Book of Joe: Trying Not to Suck at Baseball and Life

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!

One of the most exciting things in our industry is finding young investment managers who are incredibly bright, hard-working, and well-trained in the investment process. Our guest today, Angela Aldrich, fits that bill perfectly.

Angela is the co-founder of Bayberry Capital Partners, a hedge fund with a half-billion dollars in assets based in New York. Before starting Bayberry Capital Partners, she worked at John Griffin’s Blue Ridge Capital, which shut down in 2017 after a glorious 21-year run during which it returned its investors an average return of 15.3% annually. Angela graduated from Duke University with a degree in economics and received an MBA from Stanford University Graduate School of Business. Before joining Blue Ridge, Angela worked at Goldman Sachs, BDT Capital Partners, and Scout Capital Management.

In this episode, Angelo, Tano, and I discuss her path to a career in investing, what it was like to be mentored by John Griffin, Angela’s key learnings from her transition from analyst to portfolio manager, Bayberry’s investment philosophy and approach to search, portfolio construction and sizing, how to find opportunities in volatility, case studies of companies which demonstrate Bayberry’s organizational principles in action, and so much more!

This podcast is not an offer to sell or the solicitation of an offer to purchase any securities, nor is it an offer of any advisory services. This podcast is for informational and educational purposes only, and intended to provide general market commentary. The discussion of any individual investments discussed in this podcast is for informational purposes only, and any such investments are not representative of all of the investments held, or that may in the future be held, by any fund, account or investment vehicle managed by Bayberry Capital Partners LP. Nothing in this podcast, including any discussion of past results, is a guarantee of similar or future outcomes.

Key Topics:

• Welcome Angela to the show (2:12)
• How Angela found her way to a career in investing (3:09)
• The transformational experience of working with John Griffin, founder of Blue Ridge Capital Management (5:53)
• Navigating the transition from analyst to portfolio manager (9:13)
• Portfolio construction as a form of risk management (11:20)
• Finding opportunities in periods of crisis and high volatility (15:00)
• The investment philosophy and organizational principles that drive results at Bayberry Capital (18:25)
• Bayberry’s approach to recognizing surprisingly high business quality (22:04)
• Signposts of suitable candidates for the short side (25:39)
• Unlocking value from an investment thesis (27:22)
• How to avoid thesis creep (30:26)
• The central importance of identifying the right key investment factors (33:23)
• Portfolio sizing principles at Bayberry (36:21)
• Why WillScot Mobile Mini Holdings became Bayberry’s largest long (39:36)
• How Bayberry goes about valuing businesses (48:27)
• Why Bayberry became interested in Burford Capital (50:38)
• What keeps Angela worried and excited about markets in the future (1:01:14)
• Angela’s book recommendations (1:02:32)
• And much more!

Mentioned in this Episode:

• Carol S. Dweck’s Book | Mindset: The New Psychology of Success
• Sudhir Venkatesh’s Book | Gang Leader for a Day: A Rogue Sociologist Takes to the Streets

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!

Over the past several decades, asset management has transformed from a small industry with a few experts competing against a majority of amateurs in the market to a market saturated with well-equipped and highly resourced experts competing against each other.

When I think about my pantheon of all-time great investment thinkers and writers, our guest today stands out as one of the industry's legends. Charley Ellis has played the most significant role in how I think about the investment industry, and I can’t think of anyone better to talk about the industry's evolution.

Dr. Charles D. Ellis is the founder and former managing partner of Greenwich Associates, an international consultancy where he advised large institutional investors, foundations, and government organizations in more than 130 financial markets across the globe. Through that lens, he has been a keen observer of what works in organizations and markets for the last half-century. For nine years, Charley was chair of the Investment Committee at Yale, his alma mater, where he worked closely with its legendary Chief Investment Officer, David Swensen. He also served as a director of the Vanguard Group from 2001 to 2009. Charlie is a Harvard Business School graduate and has taught advanced investing courses at both Yale and Harvard. The CFA Institute recognized him as one of the twelve leading contributors to the investment profession, and along the way, Charlie has published nineteen books.

In this episode, Tano, Charley, and I discuss what inspired him to found Greenwich Associates, what goes into identifying the right questions to ask, how the industry has shifted from a winner’s game to a loser’s game, the massive changes in the asset management industry since the founding of Greenwich Associates, lessons from the Yale endowment model, Charley’s book recommendations, and so much more!

Key Topics:

• Welcome Charley to the show (1:13)
• How Charley’s early experience at Donaldson, Lufkin & Jenrette inspired the concept for Greenwich Associates (3:07)
• Structuring research and gathering the right kinds of questions (7:51)
• How Charley developed a passion for sharing insights with the public at large (10:00)
• The dual roles of academia and the industry itself in the evolution of the asset management industry (11:46)
• Simon Ramo and The Loser’s Game (13:33)
• Massive changes in the asset management industry since Charley founded Greenwich Associates (19:07)
• Why it was much easier for active managers to beat the market in the early days of the industry (25:03)
• Understanding the relentless pace of competition (29:35)
• The importance of actively determining the right investment strategy for you (32:44)
• Charley’s perspective on the legacy of Vanguard’s Jack Bogle (37:26)
• Why Charley cites John Neff as the best active manager of his time (43:27)
• David Swenson’s capacity for innovative thinking (46:51)
• Lessons from the Yale endowment model (51:02)
• Highlights from Charley’s book, Capital (58:38)
• Essential elements of creating and perpetuating a great culture (1:00:06)
• Why the willingness to address problems head-on is crucial in sustaining excellence (1:02:30)
• Charlie’s excitement about our education system (1:06:19)
• Which overlooked issue does Charlie wish garnered more attention? (1:07:07)
• Charley’s book recommendations (1:12:09)
• And much more!

Mentioned in this Episode:

• Charley Ellis’ Books
  • Figuring It Out: Sixty Years of Answering Investors' Most Important Questions
  • Inside Vanguard: Leadership Secrets From the Company That Continues to Rewrite the Rules of the Investing Business
  • Winning the Loser's Game: Timeless Strategies for Successful Investing
  • Capital: The Story of Long-Term Investment Excellence
  • What It Takes: Seven Secrets of Success from the World's Greatest Professional Firms
• Charley Ellis’ Articles
  • The Loser’s Game
  • In Defense of Active Investing
• Burton G. Malkiel’s Book | A Random Walk Down Wall Street: The Best Investment Guide That Money Can Buy
• Neil deGrasse Tyson’s Book | Astrophysics for People in a Hurry

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!

Success comes from value creation. 

For a strategic initiative to create value, it must increase willingness to pay or decrease willingness to sell. Otherwise, the resources expended will not flow into profitability.

Today’s discussion is one I was looking forward to because we’re focusing on value-based strategy frameworks and using strategic analysis to understand whether a company has a competitive advantage. Joining us to explore this topic is someone who has taken a fundamentally sound framework and brought it to life with excellent insights and vivid examples, Felix Oberholzer-Gee.

Felix Oberholzer-Gee is the Andreas Andresen Professor of Business Administration in the Strategy Unit at Harvard Business School. A member of the faculty since 2003, Felix has won numerous awards for excellence in teaching, including the Harvard Business School Class of 2006 Faculty Teaching Award for best teacher in the core curriculum and the 2002 Helen Kardon Moss Anvil Award for best teacher in the Wharton MBA program. He teaches competitive strategy in executive education programs such as the Program for Leadership Development, the Senior Executive Program for China, and a program for media executives titled Effective Strategies for Media Companies. His course, Strategies Beyond the Market, is a popular elective class for second-year MBA students. Felix is the author of numerous books, and his latest book, Better, Simpler Strategy, will be a major subject of today’s conversation.

In this episode, Felix, Tano, and I discuss how Felix defines his strategy framework, why willingness to pay and willingness to sell should be at the core of every strategy conversation, the value of ROIC as a metric of success, how Felix thinks about driving competitive advantages, value capture versus value creation, how to think about complements and substitutes, the potential for innovation and productivity growth, and so much more!

Key Topics:

• Welcome Felix to the show (2:03)
• Why a Ph.D. for career advancement unexpectedly led to Felix’s transition into academia (2:24)
• How case writing guides Felix’s interests and research focus (4:20)
• Defining a value-based strategy framework (6:25)
• Why should every conversation start with “Are we increasing willingness to pay or are we decreasing willingness to sell?” (10:08)
• Why Felix chose return on invested capital (ROIC) as a primary metric (12:40)
• Looking at ROIC distribution over the long term (14:22)
• Focusing on creating a competitive advantage inside of your industry segment (18:25)
• The significant issues strategists have with P&L statements (21:31)
• Value capture versus value creation (24:56)
• Determining willingness to pay (28:21)
• Harnessing network effects to increase willingness to pay (29:19)
• When to be worried about new entrants (33:18)
• Types of relationships between complementors (36:59)
• Understanding complements and value creation (40:26)
• Identifying complements and subtitutes (43:27)
• The effect of different management practices on productivity and willingness to sell (50:53)
• Tying willingness to pay and willingness to sell to strategy maps (56:01)
• Case study: Best Buy (58:09)
• The potential for innovation and productivity growth (1:02:09)
• Why Felix is obsessed with the differences between how we think about products and services versus jobs (1:04:50)
• Felix’s book recommendations (1:08:18)
• And much more!

Mentioned in this Episode:

• Felix Oberholzer-Gee’s Book | Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance
• Youngme Moon’s Book | Different: Escaping the Competitive Herd
• Frances Frei & Anne Morriss’ Book | Uncommon Service: How to Win by Putting Customers at the Core of Your 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!

To be a good value investor, you must be a good credit analyst.

Over the years, I learned so much from the many investors I’ve met through Heilbrunn. I’ve shamelessly incorporated these ideas and insights into my lecture notes and the curriculum. Today’s guest is one such person.

Mitch Julis has had a disproportionately large impact on both my thinking and the program design. Now he joins me for a conversation about the rich interactions between the nature of the firm’s business operation and the liability side of the balance sheet.

Mitchell R. Julis is the Co-Founder, Co-Chairman, and Co-Chief Executive Officer of Canyon Partners, LLC. Mitch is a graduate of the Woodrow Wilson School at Princeton University, Harvard Law School, and Harvard Business School. He received an honorary doctorate from Yeshiva University of New York in 2011. Before forming Canyon, Mitch directed a group of professionals responsible for a distressed and special situation securities portfolio at Drexel Burnham Lambert. He was a bankruptcy and creditors’ rights attorney at Wachtell, Lipton, Rosen & Katz in New York.

In this episode, Mitch and I discuss his journey from Bronx to Beverly Hills, the juxtaposition of accounting and accountability, why increasing spending power can undermine our federal system of competition, the four P’s of understanding governance, Mitch’s accidental entry into restructuring and bankruptcy law, arbitrage opportunities that arise in distressed situations, his approach to risk assessment, and so much more!

Key Topics:

• Welcome Mitch to the show (0:39)
• Mitch’s rich childhood in the Bronx (3:14)
• The journey to Princeton and Mitch’s goal to go to the Woodrow Wilson School of Public and International Affairs (9:35)
• The juxtaposition of accounting and accountability (15:47)
• Why increasing spending power can undermine our federal system of competition (18:09)
• How the four P’s of understanding governance play out in real-world situations (23:58)
• Mitch’s accidental entry into restructuring and bankruptcy law (29:31)
• Challenging the Countryman definition of executory contract at Harvard Law (33:12)
• Mitch’s unexpected career moves (35:39)
• How Mitch’s time at Drexel shifted his thinking about financial markets (38:30)
• Exploring arbitrage opportunities that arise in distressed situations (42:05)
• Using accounting to its maximum potential when modeling the evolution of the balance sheet (49:09)
• Insights from Canyon’s statement of changes in net financial obligations (50:09)
• Chapter 11 escape holes and loopholes created by the private equity world (54:49)
• Mitch’s approach to risk assessment (57:08)
• How the next financial crisis will play out (1:03:50)
• What keeps Mitch up at night with worry? (1:11:08)
• Mitch’s movie recommendations (1:15:14)
• Embracing a continuous learning mindset with humility (1:18:29)
• And much more!

Mentioned in this Episode:

• Canyon Partners
• Richard E. Neustadt’s Book | Presidential Power and the Modern Presidents: The Politics of Leadership from Roosevelt to Reagan
• Philip Hamburger’s Book | Purchasing Submission: Conditions, Power, and Freedom
• Freddie Gershon’s Book | Sweetie Baby Cookie Honey: A Novel
• Sujeet Indap & Max Frumes’Book | The Caesars Palace Coup: How a Billionaire Brawl Over the Famous Casino Exposed the Corruption of the Private Equity Industry
• The Offer on Paramount Plus
• Rabbi Benjamin Blech’s Article | Bernie & The Godfather
• Spirited on Apple TV

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!

“Right next to the really cheap junk, there are some really cheap gems."

Welcome to a new season of the Value Investing with Legends podcast!

We're delighted to welcome our first guests for the season, Andrew Wellington and Dan Kaskawits from Lyrical Asset Management. In 2008, Andrew started the firm with three core pillars of investing: value, quality, and analyzability. That approach leads them to focus on building concentrated portfolios that generate great returns through the core principles of value investing with a long-term time horizon.

Andrew Wellington is the Chief Investment Officer of Lyrical and has more than two decades of experience in the asset management industry. After spending five years in management consulting, in 1996, Andrew joined Pzena Investment Management as a founding member and its first research analyst. Five years later, after honing his skills as an equity analyst and value investor, Andrew joined Neuberger Berman in 2001, where he went on to run their institutional mid-cap value product. After Neuberger, Andrew spent two years in activist investing at New Mountain Capital. Andrew graduated summa cum laude and as the top graduating senior from the University of Pennsylvania’s Management & Technology Program in 1990, earning a Bachelor of Science in Economics from the Wharton School and a Bachelor of Science in Engineering from the School of Engineering.

Dan Kaskawits joined Lyrical in January 2018 as a Senior Research Analyst. Dan has over 15 years of experience investing in public equities. Before Lyrical, he served as an Analyst at Elm Ridge Capital from January 2011 to December 2017 and as an Associate at Citi Investment Research from October 2003 to June 2009. Dan graduated from Tulane University and received an MBA from Columbia Business School. Dan has earned the right to use the Chartered Financial Analyst designation.

In this episode, Andrew, Dan, and I discuss how they got started in the asset management industry, lessons they learned from value investing legends, why Andrew founded Lyrical Asset Management, what makes a successful international value strategy, Lyrical’s approach to search, how they operationalize their core pillars, why it’s advantageous to be a generalist, their top book recommendations, and so much more!

Lyrical Asset Management LP’s participation in this interview does not convey any offering or the solicitation of any offer to invest in the strategies discussed. Moreover, the information contained in this interview is not provided by Lyrical in a fiduciary capacity and does not constitute investment advice. Positions held by Lyrical portfolios are subject to change without notice; Lyrical bears no responsibility to update any opinions or information expressed herein. A list of all Lyrical recommendations is available upon request. Please see lyricalam.com/notes for a discussion of certain material risks of an investment in Lyrical’s strategies.

Key Topics:

• Welcome Andrew and Dan to the show (00:56)
• How Andrew got into asset management from management consulting (3:09)
• Dan’s journey to Columbia Business School and his asset management career (5:29)
• Invaluable lessons from Joel Greenblatt and Rich Pzena in being an equity analyst and a value investor (8:25)
• Learning to be a value investor at Elm Ridge (11:05)
• The restrictions that come from career concerns and what makes Lyrical Asset Management different (16:04)
• Crucial elements of a successful international value strategy (19:43)
• Lyrical’s approach to search and the use of screens (23:33)
• Defining quality and analyzability and how Lyrical operationalizes them (29:20)
• Computing ROIC with significant intangibles (36:12)
• Ashtead Technology is a quintessential example of Lyrical’s investment philosophy (42:43)
• Often overlooked benefits of counter-cyclical cashflow (46:59)
• The generalist’s advantage (50:04)
• Dimensions of popularity (52:52)
• Why Lyrical offers clients the opportunity to invest in value ETFs (54:55)
• How the FAANG stocks influenced the outsized return of growth vs. value stocks in the past 10 to 15 years (59:14)
• Lyrical’s value-focused impact strategy (1:02:27)
• Andrew’s philosophy: “Don’t predict; prepare.” (1:06:19)
• Dan and Andrew’s book recommendations (1:08:44)
• And much more!

Mentioned in this Episode:

• Lyrical Asset Management
• Value Investing with Legends Podcast | Allison Fisch - Unlocking Value in Emerging Markets
• Annie Duke’s Book | Quit: The Power of Knowing When to Walk Away
• Benjamin Graham’s Book | The Intelligent Investor Rev Ed.: The Definitive Book on Value Investing
• Bruce C. Greenwald’s Book | Competition Demystified: A Radically Simplified Approach to Business Strategy
• James Montier’s Book | Value Investing: Tools and Techniques for Intelligent Investment
• Michael Mauboussin’s Books
• Annie Duke’s Book | Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts
• Walter Isaacson’s Book | The Code Breaker: Jennifer Doudna, Gene Editing, and the Future of the Human Race
• Walter Isaacson’s Book | Steve Jobs
• Ryan Holiday’s Book | Stillness Is the Key

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!

“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!