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Submit ReviewToday’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:
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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:
Jim Rogers’ Books
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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!
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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.
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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!
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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!
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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!
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“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.
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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.
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“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
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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.
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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!
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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.
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