New Graham & Doddsville Issue: Pabrai, Moroz, Carr, Peterson & More

Columbia Business School is out with the Fall 2019 issue of its Graham & Doddsville newsletter.  It features interviews with Mohnish Pabrai (Pabrai Investment Funds), Paul Moroz (Mawer Investment Management), Ellen Carr (Weaver C. Barksdale), and Matthew Peterson (Peterson Capital).

These managers talk about names such as Wolters Kluwer, Alphabet (GOOG), Constellation Software (CSU.TO), GrafTech (EAF), DailyJournal (DJCO), and more.

The issue also features student investment pitches from the Pershing Square Challenge, including long Aramark (ARMK), long ServiceMaster (SERV), long US Foods (USFD).


Embedded below is the Fall 2019 issue of Graham & Doddsville:



You can download a .pdf copy here.

New Graham & Doddsville Issue: John Hempton, Yen Liow, Bill Stewart

Columbia Business School is out with the Spring 2019 issue of its Graham & Doddsville newsletter.  It features interviews with Bronte Capital's John Hempton, Aravt Global's Yen Liow, and Stewart Asset Management's Bill Stewart.

It also includes student investment pitches such as long Dollarama, long Align Technology, long Carsales.com, and long Dean Foods 6.50% senior unsecured.

Embedded below is the Spring 2019 issue of Graham & Doddsville:



You can download a .pdf link here.

Graham & Doddsville New Issue: Polen Capital, Glenn Hubbard & Joseph Stiglitz, DG Capital

The winter issue of the Graham & Doddsville newsletter is out.  Columbia Business School's publication this time around interviews Glenn Hubbard and Joseph Stiglitz, as well as Damon Ficklin and Jeff Mueller of Polen Capital, and finishes up with DG Capital Management's Dov Gertzulin.

The newsletter also features student investment pitches from the 2018 Women in Investing conference: long Nordstrom (JWN) and a pitch from the 2018 CSIMA stock pitch challenge: long Lions Gate Entertainment (LGF.A).

Polen Capital talks about their positions in Alibaba (BABA), Adobe (ADBE), Align Technology (ALGN), and Starbucks (SBUX).

Embedded below is the Winter 2018 issue of Graham & Doddsville from Columbia Business School:



You can download a .pdf copy here.

Graham & Doddsville Fall 2018 Issue: Tweedy Browne, Greenhaven Road & More

Columbia Business School has just released the Fall 2018 issue of its Graham & Doddsville newsletter.  In it, they interview members of Tweedy, Browne Company such as Roger De Bree, Andrew Ewert, Frank Hawrylak, Jay Hill, Amelia Koh, Tom Shrager, John Spears, and Bob Wyckoff.  They also interview Scott Miller of Greenhaven Road Capital.

Additionally, the issue also includes student investment pitches such as long JD.com (JD) and long Qorvo (QRVO)


Tweedy Browne Buys Baidu, Sina, AutoZone

Tweedy recently bought some Chinese equities: search engine giant Baidu (BIDU) and Sina (SINA), which owns Weibo, a popular social media business.  They like the profitable advertising business models but have smaller position sizes due to various risks.

Domestically, Tweedy also purchased shares of AutoZone (AZO):  "If you lookover the previous 11-yearperiod, its intrinsic value grew by 16% per annum, with a significant percentage of that growth driven by share buybacks. The historical record also revealed a stable and defensive business. Same store sales at AutoZone have grown in 19 out of the last 20 years, including in 2008 and 2009.AutoZone has also historically produced high returns, with a 14% ROA (return on assets) and a roughly 30% lease adjusted ROIC (return on invested capital)."


Greenhaven Road Long Etsy, Fiat, Yelp

Greenhaven Road's founder talks about his positions in Etsy, (ETSY), Fiat Chrysler (FCAU) and Yelp (YELP). 

On Fiat, he notes: "Fiat Chrysler is reducing the low margin fleet business by getting out of sedans and focusing on SUVs, aligning themselves with customer preferences and higher margins.They are also going to either spin off or sell their parts division. If you backout the parts business, you're getting the core business for less than 3x earnings excluding net industrial cash and the parts business. That’s an attractive multiple for a growing earnings stream and a business that should remain profitable even if US new car sales decline by 30%."

Graham & Doddsville New Fall 2018 Issue

Embedded below is the new issue:



You can download a pdf copy here.

Asher Jacobs & Jade Hu Short Stericycle (SRCL) Presentation: Kase Learning Conference

We're posting up a series of presentations from the recent Kase Learning Short Selling Conference.  Next up is Asher Jacbos and Jade Hu, Columbia MBA students who pitched a short of Stericycle (SRCL).


Asher Jacbos & Jade Hu's Presentation: Short Stericycle (SRCL)

-  See 36% downside over the next 18 months.  Fallout over recent lawsuit settlement is only in the early innings as it highlighted the company's price gouging.  Company won't be able to continue its rollup strategy with 4 turns of leverage.  Numerous accounting redflags highlight the company's deteriorating fundamentals

-  Company focuses on the medical waste market with around 80% market share.  Has expanded to other industries like shredding, environmental waste, and other areas

-  They expect the company's pricing power increases to be capped at around 5%, compared to historic increases of 18% biannually.  Competition will increase in the space as they're heavily spending on marketing to take share

-  Think one segment's revenue will drop 7% based on lack of ability to drive pricing.  Sees volume decreasing 7% (but not as severe as it was previously) as they're making price concessions to drive business.  7% revenue decline leads to a 14% EBITDA decrease

-  Company is seeing a mix shift to lower margin businesses.  Credit rating was recently downgraded, lots of debt due in 2020

-  Thinks management is focused on empire building, as incentive compensation is built on absolute adjusted EBITDA

- Expect continued earnings misses, large asset impairment.  Base case assumes 9x EV/EBITDA.  If margins stabilize and the stock gets a higher multiple, there's only 20% upside, capping risk on the short


Embedded below is the video of their presentation:



And here's a link to their presentation from the Columbia Business School's Graham & Doddsville newsletter.

Be sure to check out the rest of the presentations from the Kase Learning Short Selling Conference.

New Graham & Doddsville Issue: Mauboussin, Greenwald & More

A new issue of Columbia Business School's Graham & Doddsville newsletter has been released.  It features interviews with Professor Bruce Greenwald as he retires, and Mark Cooper of First Eagle Management.  It also features a conversation with Michael Mauboussin of Blue Mountain Capital and Tom Digenan of UBS Asset Management.

Lastly, it also interviews upcoming fund launch: Rishi Renjen's ROAM Global.  Prior to launching, he worked at Maverick Capital, TPG-Axon, and Glenview Capital.

This time around, Graham & Doddsville also includes student investment pitches from the Pershing Square Challenge. 

1st place this year was a short of Stericycle (SRCL), 2nd place was a short of Credit Acceptance (CACC), and 3rd place was a short of Spotify (SPOT).  The issue also showcases pitches on short CH Robinson (CHRW), short Harvey Norman, and long Digicel credit.

Embedded below is the latest issue of Graham & Doddsville:



You can download a .pdf copy here.

And if you missed it, be sure to check out the recent past issue that includes interviews with Lee Cooperman, David Poppe, and John Harris.

Graham & Doddsville Latest Issue: Howard Marks Interview & Pitches on SPR, SERV

The Fall 2017 issue of Columbia Business School's newsletter Graham & Doddsville has been released.  In it, they feature an interview with Howard Marks of Oaktree Capital.  We've highlighted many of Marks' letters in the past.

The new issue also features Paul Sonkin of GAMCO Investors/Gabelli Funds who talks about learning from mistakes and pitching the perfect investment.

Additionally, they profile Jeremy Weisstrub's new firm, Aryeh Capital Management.  Prior to founding the new firm, he worked at Greenlight Capital.  He talks about his bullishness on shares of ServiceMaster (SERV), which includes businesses like Terminix, American Home Shield, and more.

The newsletter also features student investment pitches, including long Spirit Aerosystems (SPR), which was the winning pitch at the Women in Investing (WIN) Conference.

Embedded below is the fall issue of Graham & Doddsville:



You can download a .pdf copy here.

Graham & Doddsville Spring 2017 Issue: Begg, Sosin, Krishna

Columbia Business School is out with its spring 2017 issue of Graham and Doddsville.  It features:

- Interview with A. Rama Krishna of ARGA Investment Management who talked about investing in international markets and in particular, Russia.

- Interview with Cliff Sosin of CAS Investment Partners talking Herbalife (HLF) and World Acceptance (WRLD).

- Interview with Chris Begg of East Coast Asset Management, who we've featured on the site numerous times in the past.  He shares his thesis on TransDigm Group (TDG) and thoughts on Sherwin Williams (SHW).

The new issue also includes student investment pitches such as long Yum China (YUMC), long Alaska Airlines (ALK), long Corning (GLW), and long Dollarama (DOL).


Embedded below is the spring 2017 issue of Graham & Doddsville:



You can download a .pdf copy here.

For more of their past issues, we've also posted up their interview with Kingstown Capital as well as their interview with Meritage Group and MSD Capital.

New Graham & Doddsville Issue: Kingstown Capital Interview

Columbia Business School has released the Winter 2017 edition of its Graham & Doddsville newsletter.  In it, they feature a great interview with Guy Shanon and Michael Blitzer of Kingstown Capital.

They talk about their investment process and also outline their thesis for their largest position, Adient (ADNT), a spin-off from Johnson Controls (JCI).

The issue also features chats with Rupal Bhansali of Ariel Investments, Simeon Wallis of ValorBridge Partners, Jared Friedberg of Mercator, as well as Charles and Roy Studness of Studness Capital Management.

Lastly, this edition includes student investment pitches on short Foot Locker (FL), long Axalta Coating Systems (AXTA), and short Cardtronics (CATM).

Embedded below is Columbia Business School's latest Graham & Doddsville:



You can download a .pdf copy here.

You can also view past issues of this newsletter, including interviews with Meritage Group and MSD Capital.

Graham & Doddsville New Issue: Interviews With MSD Capital, Meritage Group & More

The Spring 2016 issue of the Graham & Doddsville newsletter has been released by Columbia Business School.  In it, they have some great interviews with John Phelan of MSD Capital, Alex Magaro of Meritage Group, Adam Wyden of ADW Capital, and short-seller Marc Cohodes.

The issue also features the stock pitches from students from the 9th annual Pershing Square challenge.  Long Alimentation Couche-Tarde (TSE:ATD.B) won first place.  Next, second place went to a long pitch on Charles Schwab (SCHW).  Finalists also included a long pitch on Advance Auto Parts (AAP), a long of Alcoa (AA), and a long of Alliance Data Systems (ADS).

Embedded below is the latest Graham & Doddsville issue:



You can download a .pdf copy here.

Graham & Doddsville New Issue: Craig Effron, Jon Salinas, Jeff Gramm & More

The Winter 2016 edition of the Graham & Doddsville newsletter was released and if you haven't had a chance to view it, it's posted below.  The Columbia Business School publication features some interesting interviews with money managers that don't necessarily get as much spotlight.  It features:

- An interview with Craig Effron of Scoggin Capital Management

- An interview with Jon Salinas of Plymouth Lane Capital (previously was with Marble Arch)

- Interview with Jeff Gramm of Bandera Partners, who is also the author of the recently released book Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism

- Interview with Shane Parrish, founder of the popular Farnam Street blog


Lastly, the issue also features stock pitches from Columbia Business School students.  They pitch short Dexcom (DXCM), short Quest Diagnostics (DGX), and long XPO Logistics (XPO).

Embedded below is the latest issue of Graham & Doddsville:



You can download a pdf copy here.

New Graham & Doddsville Issue: Interviews With Alex Sacerdote & Ed Bosek

Columbia Business School's investment newsletter Graham & Doddsville is out with its latest edition.  It features interviews with Whale Rock Capital's Alex Sacerdote, BeaconLight Capital's Ed Bosek, Jane Siebels of Siebels Asset Management, as well as the gentlemen from Global Endowment Management.

Sacerdote talks about his focus on the technology sector and the 'S curve' of inflection points that is so critical to his process of finding successful tech investments.  He also lays out his thesis on Amazon (AMZN) and NetEase (NTES),

Bosek previously worked at Atticus Capital, a fund we highlighted on the site numerous times before it eventually closed. He talked about how deregulation and demutualization are big drivers of his idea generation and pitched China Resource Enterprises (SEHK:291) and Daqin Railway (SHSE:601006).

The issue also features two student pitches: a long of Tenneco (TEN) and a merger arbitrage/special situation pair of long RNF / short UAN.

Embedded below is the latest issue of Graham & Doddsville:



Be sure to also check out the previous issue of Graham & Doddsville.

Lei Zhang's Lecture at Columbia Business School (Hillhouse Capital)

Below are notes from Hillhouse Capital's Lei Zhang's lecture at Columbia Business School courtesy of Zong Z. Peng.


Notes From Lei Zhang's Lecture at Columbia Business School

In the high flying world of investing, Lei Zhang maintains a relatively low profile. Yet since he was seeded by David Swesen of Yale Endowment with $20 million in 2005, he has achieved a ~40% compounded annual return (28x not adjusting for inflation), making him one of the best performing investment managers. To put it into perspective, Warren Buffet has achieved a compounded annual return of ~22%, albeit for the past 50 years!! Today, Lei Zhang’s Hillhouse Capital, named after a street nearby Yale where Lei received his MBA and master’s in public policy, manages ~$18 billion. Thought not just focused on tech, Lei is best known for backing several most successful Chinese internet entrepreneurs and start-ups (e.g. Tencent, JD.com). On April 29th, Lei paid a visit to the “Temple of Value Investing” Columbia Business School to share his investing and life lessons. Below are my synthesis of his wisdom:

For those who crave for brevity, here is the essence of the lessons that Lei Zhang shared:

• Being a long-term investor gives you a big advantage from the starting line.
• Do deep fundamental research, make few bets instead of keeping on chasing ideas. This way you simply your life and your business. 
• Hillhouse invests in changes and strives to help create value through entrepreneur-like thinking and problem solving. “We are entrepreneurs so happen to be investors” 
• Spend quality time with quality people, doing quality things. Hopefully part of the outcome is making money. 
• Stay connected to reality and everyday life, do not become a victim of your own success. 
• Four most important traits in people that Lei looks for: intellectual curiosity, intellectual independence, intellectual honesty, and empathy.

For those who want more details and articulations, read on:

1. Investment Strategy

Flexibility – Lei only had one investor in his fund when starting out Hillhouse – David Swensen from Yale Endowment seeded Hillhouse with $20 million. He could have raised more money with Swensen’s endorsement but did not. He wanted to start with a solid foundation, a strategy that allows him 100% flexibility to invest in whatever he believes in and is passionate about, be it public equity, venture capital, or private equity. In Lei’s words “it’s not about the format but about the essence.” To him the essence is to invest in companies that he thinks make sense, truly believes in, run by people who he respects and are open-minded, and could compound capital over a long stretch of time no matter what stage the company is in. In terms of his investment team, Lei believes in a generalist model and prides himself on being one of the analysts.

Long Term Orientation – Hillhouse is a long-term investor. Lei thinks that when you have a long-term orientation, from day one you have a huge advantage over most people – it’s what he calls free option value of time arbitrage. His view on the Chinese stock market at the time of this speech? “It’s like 1999 all over again, but times three.” The environment is so bubbly that any company that changes its name into something internet related could get an elevated multiple on their valuations. Some say long-term investing does not work in China because everybody trades so much. Speaking at one mutual fund conference, some managers asked Lei “how do you make so much money despite being a long term investor” (everyone in the room laughed really hard on this comment). Some Chinese mutual fund managers complain to regulators, “I know you want long term investors, but we need to make money, we have a fiduciary duty.” The understanding of long-term investing in China is so distorted, people think there is a cost to being a long-term investor.

Note: Lei’s comments on China looks squarely on mark in hindsight, given the on-going chaos in the Chinese A shares market, which just had its biggest single day drop (8.5%) since 2007 at the writing of this post.  

Bias Toward Inaction – But how does Hillhouse find high quality names? The way is to do deep fundamental value research and only research things that could potentially compound value over time. There are many people in China that are successful at trading, but traders have capacity issues because they have to trade all the time. In China, an average portfolio manager has 600% annual turnover, Lei’s public equity portfolio has only 15% turnover and he continues to own his private equity portfolio. Hillhouse does not attempt to constantly chase different horses. In a given year, Hillhouse takes on 2-4 positions at best and sometimes only one. By taking away the action, Lei believes you simplify your life and the investment business, and you let the portfolio compound for you instead of you doing the work. By being patient and not too active, he was able to accumulate a portfolio of high quality names.

Note: All these principles are pretty much the  the bias toward inaction is very similar to another value investing legend Monish Pabrai, whose book “The Dhandho Investor” I highly recommend. 


2. Deviation From Traditional Value Investing Philosophies

Investing in changes – Lei Zhang is a big believer in value investing, but where he deviates from the traditional value investing philosophy is that he likes investing in changes. He believes that it is change that derives value and he would like to invest in people driving them. In particular with China, and globally as well, technology has become a bigger part of the game, either in traditional or new industries. Changes are driving forces for creative destruction and value creation. He spends a lot of time understanding the changes and the people behind them. Lei says that one thing about investing in early stage company is that some companies look distracted on the outside, but if you look at the core they are intensely focused. On the other hand, the traditional sense of value investing represented by Warren Buffet dislikes changes and prefers long-term stable businesses with strong moat, hence why Warren ends up with big positions in names like in Coca Cola, Amex, Wells Fargo, and IBM.

Note: the above differentiation may be an over-simplification as Warren also has a much larger capital base to deploy.  

Example 1: Blue Moon and JD.com. Blue Moon is in a traditional business, liquid laundry detergent. Hillhouse would never have invested in it if everything is done the same way, as there is P&G and Uniliver, which you invest in for their brand value and moat. After investing in Blue Moon, Lei arranged its executives to meet with those from JD, having Blue Moon learning about ecommerce from JD and have JD learning about merchandising from Blue Moon. Subsequently, Blue Moon redesigned its detergent packs so that they could fit into JD’s delivery bins. Leveraging social media and ecommerce, Blue Moon achieved the largest brand build up in years and now is the largest liquid detergent brand in China.


Value Investing Taken to the Next Level – Lei believes his approach is value investing taken to the next Level. In addition to investing in changes and long-term fundamental value, he also wants to compound that value by participating in the value creation process via deep research. The traditional Ben Graham value mismatch alone is not good enough (current price vs. intrinsic value), he wants to grow that value mismatch over time, not just to take advantage of an arbitrage opportunity. To this end, Lei thinks his approach is more like constructive (or suggestive) activism, though Lei rejects the notion that he is an activist. For him, the traditional sense of activism falls into the category of “life is too short” (too much work and headache? Ackman’s battle with Herbalife comes to mind).

Example 2: Strategic partnership between Tencent and JD.com

Lei is an early investor in both companies and brought many senior executives to JD, Tencent was one of one of Hillhouse’s earliest investments and remains in the portfolio. In 2013, Lei saw a new trend – JD had a great retail gene, but was having difficulty confronting mobile commerce on the technology front. On the other hand, Tencent had just acquired an ecommerce business. The core problem is that Pony Ma had never dealt with inventory before and suddenly had lots of physical goods on hand. Lei brought the two companies together, summarizing their problems with one word each, mobile vs. inventory. The solution is for Tencent to hand inventory to JD and JD to hand mobile to Tencent. Pony and Richard hated each other and had been fighting to win the ecommerce war, but the deal just makes all the sense.

Through research, Hillhouse was able to present and close the biggest ecommerce deal at the time. In the process, Hillhouse did get diluted, but got a lot of certainty for both companies out of it. The idea is through research, you could present to founders compelling ideas and add value in the process. Through this example, Lei conveyed that he loves entrepreneurs that are confident, open-minded, and willing to learn from competitors.

Example 3: WeChat moves into Southeast Asia

In Indonesia, for example, Lei helped create a joint venture between Tencent’s WeChat and Global Mediacom, Indonesia’s largest media, television and pay TV conglomerate. At the time, WeChat was behind Facebook Messenger, WhatsApp, and Line in user count, and today has surpassed the first two and is on par with Line. Again, Lei emphasized that he found the opportunity through “research.”

Note: In this sense, I think Lei’s approach is not just deep research, it is thinking as entrepreneurs. Focus the research on seeking truth, finding solutions to cracking business problems, and analyzing how value could be created instead of focusing on coverage and fishing for the next stock picking idea. In his own words, “we are entrepreneurs happen to be investors.”


3. What Hillhouse Looks For in Entrepreneurs and People?

Lei finds the most impressive people are the people who have deep passion and execute that passion with discipline, instead of people who exhibit habitual behavior. Specifically Lei looks for four qualities:

- Intellectual curiosity - driver of passion.  Have seen really smart people who are No. 1 in whatever they do, but in the end do not necessarily have the capacity to realize their full potential.  The reason is that they are No. 1 not because they want to understand how things work, it's because they are in the habit of being No. 1.  This makes life miserable.  If there is no passion in what you do, you will get burned out early on or reach a plateau soon.

- Intellectual independence - this allows a person to grow over long-period of time (I say this is the compounding value of knowledge and wisdom)

- Intellectual honesty - being authentic and intellectually honest is so important.  Lei also does not like people who are overly promotional and who are focused on organizing bureaucracy.  At Hillhouse, the team does not do 150-page presentations and sell internally.  Repeat your lies 100 times you believe in it yourself.

- Empathy not sympathy - the most powerful tool to be a successful entrepreneur or investor is to understand the pain points of consumers, employees, analysts, and entrepreneurs.

If you have the above qualities and a long-term oriented mentality, the rest of it is luck and law of large numbers, do what you are passionate about over and over again, and enjoy doing it over and over again, success will follow in time.

Note: I would like to put my own spin on the above comment, "even if you do not achieve exceptional success in the end, I bet you will have a heck of a lot of fun along the way."


4. Other Lessons From Lei

- Don't say I am going to work for this firm or that firm, don’t get into the argument with yourself. Just ask the simple question, are they the quality people you want to spend time with, who are you working with, working for, what kind of people are they, are they the kind of people who give “positive energy.”

- The world has already evolved way beyond the traditional employment relationship but to a more partnership model. It’s all about in what capacity and in what environment you could bring the best of yourself.

- Don’t wait for the opportunity to analyze your mistakes, spend 10x more effort trying to analyze your mistakes than success.


Thanks again to Zong Z. Peng for the notes.

Graham & Doddsville Latest Issue: Interviews With First Eagle, Jericho & More

Columbia Business School is out with the latest edition of its Graham & Doddsville investment newsletter.  This issue features interviews with Matthew McLennan and Kimball Brooker of First Eagle Investment Management, Josh Resnick of Jericho Capital, and Harvey Sawikin of Firebird Management.

Additionally, they talk with Eric Yip and Mark Unferth of Alder Hill Management, and Rolf Heitmeyer of Breithorn Capital.

Lastly, the new issue features student investment pitches of: long Altice, long Fiat Chrysler, long HCA, long Genuine Parts Company, and long Precision Castparts (PCP).

Embedded below is the latest issue of Graham & Doddsville:



Be sure to also check out the previous issue of Graham & Doddsville including an interview with Bill Ackman.

Wally Weitz Interview: Columbia Business School's Graham & Doddsville

Columbia Business School is out with the Fall 2014 edition of their investment newsletter: Graham & Doddsville.  In it, they interview Wally Weitz of Weitz Investment Management, Guy Gottfried of Rational Investment Group, as well as the gentlemen from Development Capital Partners.

Additionally, the newsletter features student pitches on short B&M European Value Retail and long Countrywide Plc.

As always, this is definitely a worthwhile read.

Embedded below is the Fall 2014 issue of Graham & Doddsville:


You can download a .pdf copy here.

For more great stuff from past issues of this newsletter, be sure to check out Lee Ainslie's interview as well.

Philippe Jabre Interview: Columbia Business School's Graham & Doddsville

Columbia Business School is out with the Spring 2014 issue of its Graham & Doddsville newsletter.  In it, they interview Philippe Jabre of Jabre Capital as well as Arnold Van Den Berg and Jim Brilliant of Century Management.  It also profiles H. Kevin Byun of Denali Investors and Eric Rosenfeld of Crescendo Partners.

Additionally, pitches from the Pershing Square Challenge are presented.  MBA students presented longs of Allegion (ALLE), Carnival (CCL), Clean Harbors (CLH), Naspers (JSE:NPN) and a short of Cablevision (CVC).

The full issue is below, but here's some select quotes from Jabre's interview:

Jabre talks about starting his own firm and notes that,

"Before you start a  hedge fund you have to  follow the right steps. I  always tell people it's the  same as if you are a doctor,  architect, or lawyer opening  a practice. I first joined a  bank, then after ten years I  joined Lehman Brothers.  Then, with a group of four  partners, we spun off from  Lehman Brothers and  created GLG. And then  after that, I created my own  fund. You follow the steps  so people will follow you.    I remember after business  school I wanted to create  my own fund at age 25. My  father told me if you want  to lose money, go lose  money at other people's  expense. You can't become  a fund manager unless  you’ve lost a lot of money  and survived. So JabCap was  a normal evolution when I  started it seven years ago. A  lot of clients followed  because I had a very good  track record at my prior  funds over the previous  fifteen years and that made  it easier. But you need a  track record and you need  to have clients. The barriers  to entry are very high today  and what people look for is  a track record and the  experience of managing  money unsupervised. And  that's a very difficult concept that you learn with time."


Jabre on opportunities: "So the key thing is to find  things that have done nothing for ages and  suddenly there is an event  that you need to be the first  to understand or appreciate.  And this is where you have a huge opportunity to outperform."


Embedded below is the Spring 2014 issue of CBS' Graham & Doddsville newsletter:



For more from Columbia Business School, be sure to check out their interview with Maverick Capital's Lee Ainslie in a previous issue as well as their interview with Li Lu.

Sohn Investment Contest Winner Michael Guichon: Long Fiat

We're posting up notes from the Sohn Investment Conference in New York, produced in partnership with Bloomberg LINK.  Next up is the winner of the Sohn Investment Contest.  Michael Guichon won.  He's an MBA student at Columbia and he pitched long Fiat.


Michael Guichon's Sohn Conference Presentation

David Einhorn, Bill Ackman, Michael Price, and Seth Klarman were judges. Finalists: Fiat, PENN, Intercontinental Hotel. Winner is 1st year CBS student. 

Fiat. Expected to trade on NYSE in Oct 2014. 90% upside, PT 16.50 euros. FCA: Fiat Chrysler Autos.  EV/EBITDA 3x.  Cheapest automaker in the world.  Also owns Ferrari/Maserati. 

Risk is continued weakness in legacy markets. 6th largest automaker globally. Bought Chrysler in 2009.  Paid $4.4B for a business that generated $3.1B in 2013. Synergies, common components, scale for R&D.

Be sure to check out the rest of the presentations from the 2014 Sohn Investment Conference.

Lee Ainslie Interview: Columbia Business School's Graham & Doddsville

Columbia Business School is out with the Winter 2014 issue of its Graham & Doddsville investment newsletter.  This time, they feature a rare interview with Maverick Capital's Lee Ainslie.

The hedge fund manager talked about how he's always trying to learn new things and how he's read every investing book he can get his hands on (if you need some ideas, check out all our recommended reading lists in the right-hand column on the site).


Some interesting quotes from the interview:


On portfolio positioning: "In terms of sizing, our average long is roughly twice the size of an average short at Maverick and our long portfolio is more concentrated than our short portfolio.  This construction allows us to maintain net long exposure typically between 30% and 60%.  The greater diversification of our short portfolio reflects the riskier nature of these investments and that these positions turn over more frequently, so having a deeper bench of such investments is helpful."


On valuation:  "So while we place great emphasis on valuation in our investment decisions, valuation alone should never be the driver of either a long or a short investment ... I believe it is important to identify a catalyst that should benefit the valuation ... The most commonly used valuation metric at Maverick is sustainable free cash flow in comparison to enterprise value."


On what he looks for in deep dives: "The most critical factor that we're trying to evaluate is the quality of management - their intelligence, competitiveness and, most importantly, their desire to create shareholder value."


On what he looks for when hiring: "The most important components we gauge include competitiveness, mental flexibility and emotional consistency - that last trait is surprisingly important."  These are pretty similar to what Julian Robertson looked for when he was hiring or seeding funds.



This issue also highlights talks with Jim Grant of Grant's Interest Rate Observer, Dr. Kenneth Shubin Stein of Spencer Capital and Geoffrey Batt of Euphrates Iraq Fund

Embedded below is Columbia Business School's latest Graham & Doddsville newsletter:




You can download a .pdf copy here.

For past great issues of this newsletter, check out their interview with JANA Partners as well as one interviewing Li Lu.

Graham & Doddsville Fall Newsletter From Columbia Business School

Columbia Business School is out with its Fall 2013 edition of the Graham & Doddsville newsletter.  This issue features an interview with Aquamarine Capital's Guy Spier as well as a focus on Koch Industries, Homex (HMX) 9.75% Sr Guaranteed Notes, Wabash National (WNC), and Active Network (ACTV).

Spier gave an interesting interview about his career and investing style.  Here's a few select quotes:

"Something I believe quite strongly is that if you want to understand who an investor is, you need to understand their relationship to money in general, their relationship to the money that they specifically manage, and what the money means to them."

"At the end of the day, every successful investor ends up differentiating themselves on the unique aspects of their personality and who they are.  I'm not trying to be the best investor.  I'm just trying to be Guy Spier."

In his interview, Guy also walks through his thinking on Reciprocal Patent Exchange (RPX), as well as Fiat (FIATY).


Embedded below is the Fall 2013 edition of the Graham & Doddsville newsletter:




If you missed it in the past, Graham & Doddsville also had a great interview with JANA Partners.

Simeon McMillan's Sohn Conference Presentation on Tribute Company (Contest Winner)

We're posting up notes from the Ira Sohn Conference 2013 in New York.  Next up is a summary of the presentation from Simeon McMillan, a Columbia MBA student who won the Sohn investment contest and got to pitch at the conference: Tribune Company.


Tribune Company (TRBAA)

Newspapers, broadcast TV stations, cable networks.  McMillan used a sum of the parts (SOTP) analysis. Follows Greenblatt's book criteria. Only traded OTC, post-bankruptcy equity. SOTP gets low is 6% up from here, medium $88, up 60%, and high could even double. Key swing factor is the value of the WGN cable network.


Check out the rest of the hedge fund presentations from the event: notes from Ira Sohn Conference 2013.