13 episodes

Value investing is more than an investment strategy — it’s a fundamental way of thinking about finance. Value investing was developed in the 1920s at Columbia Business School by professors Benjamin Graham and David Dodd, MS ’21. The authors of the classic text, Security Analysis, Graham and Dodd were the very pioneers of their field and their security analysis principles provided the first rational basis for investment decisions. Despite the vast and volatile changes in the economy and securities markets during the last several decades, value investing has proven to be the most successful money management strategy ever developed. Value investors’ success over the second half of the twentieth century proved not only the validity of the value approach, but its preeminence over even the most widely taught and practiced modern investment theory, which was developed in the 1950s and ’60s and remains dominant even today.

Our mission today is to promote the study and practice of Graham & Dodd’s original investing principles and to improve investing with world-class education, research, and practitioner-academic dialogue. In this podcast you will hear from some of the world’s greatest investors, their views on the investment management industry, how they developed their investment process and how they see the field changing over time.

Value Investing with Legends Columbia Business School

    • Investing

Value investing is more than an investment strategy — it’s a fundamental way of thinking about finance. Value investing was developed in the 1920s at Columbia Business School by professors Benjamin Graham and David Dodd, MS ’21. The authors of the classic text, Security Analysis, Graham and Dodd were the very pioneers of their field and their security analysis principles provided the first rational basis for investment decisions. Despite the vast and volatile changes in the economy and securities markets during the last several decades, value investing has proven to be the most successful money management strategy ever developed. Value investors’ success over the second half of the twentieth century proved not only the validity of the value approach, but its preeminence over even the most widely taught and practiced modern investment theory, which was developed in the 1950s and ’60s and remains dominant even today.

Our mission today is to promote the study and practice of Graham & Dodd’s original investing principles and to improve investing with world-class education, research, and practitioner-academic dialogue. In this podcast you will hear from some of the world’s greatest investors, their views on the investment management industry, how they developed their investment process and how they see the field changing over time.

    Bruce Greenwald - Staying on the Right Side of the Trade

    Bruce Greenwald - Staying on the Right Side of the Trade

    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!

    • 55 min
    Matthew McLennan - The Power of Selectivity and Patience

    Matthew McLennan - The Power of Selectivity and Patience

    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

    • 1 hr
    Joel Greenblatt - Investing Off the Beaten Path

    Joel Greenblatt - Investing Off the Beaten Path

    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 Principa

    • 50 min
    Leon Cooperman - Looking For More For Less

    Leon Cooperman - Looking For More For Less

    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 Gold

    • 47 min
    Ross Glotzbach - The Power and Strength of Experience

    Ross Glotzbach - The Power and Strength of Experience

    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!

    • 58 min
    Jenny Wallace - Identifying Value at the Summit

    Jenny Wallace - Identifying Value at the Summit

    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 o

    • 1 hr 21 min

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