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!

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