Richard Lawrence - Investing in Superior Businesses

With the COVID-19 crisis dominating our spring semester, the focus of the podcast shifted slightly, and we had several conversations with distinguished investors talking about the impact of the crisis on financial markets.

For this season, in addition to the essential lessons about investing and good asset management practices, we are going to explore broader investment experiences and different approaches. Today, I'm particularly delighted to share this conversation with the great value investor, Richard Lawrence who has made a career as a true pioneer, particularly in Asia, where he built a legendary track record.

Richard is the Chairman and Executive Director of the Overlook Investment Group, a firm that invests in publicly listed equities across Asia, and that he founded in 1991. The Overlook Partnership, which Richard founded in 1992, currently has over $6 billion in assets under management, and since inception has achieved an astonishing capital-weighted annual compounded return of almost 14%.

On this episode, Richard and I discuss the advantages of learning asset management in a family office environment, why he decided to move to Hong Kong, the evolving Asian investment landscape, the Overlook investment philosophy, the four components of a great stock pick, what to consider when building a team, why passive investing brings opportunities for active managers, and so much more!

Key Topics:

• Richard's early exposure to investing as a career (3:38)
• The advantage of learning asset management in a family office environment (5:05)
• How the connection between economic and social growth influenced Richard's studies at Brown University (7:03)
• Richard's early career journey from telex translation to analyst (8:45)
• How Richard developed the beginnings of his "superior business" investment philosophy (9:53)
• Why Richard decided to move to Hong Kong (11:22)
• The Asian investment landscape in the late 80s (12:43)
• Creating the foundation for Overlook Investments (17:05)
• The four components of a great stock pick (18:34)
• How to assess a company's pricing power (21:45)
• Richard's defense against the lack of corporate governance regulations when he started in the Asian markets (25:06)
• Using the "tower" to track potential investments (27:51)
• The Overlook approach to portfolio construction (29:52)
• The five evils ( 32:19)
• Why you should keep an eye on current account imbalances (33:26)
• Why Richard decided to cap the growth of assets under management at Overlook (37:25)
• Richard's perspective on cutting fees (38:56)
• The critical aspects of building a team (40:51)
• How diversity plays a critical at Overlook (42:32)
• Why Richard refuses to do post-mortems (44:04)
• Figuring out the institutional framework in China (45:59)
• The impact of deteriorating US-China relations on the investment landscape (51:27)
• How passive investing increases opportunities for active managers (55:00)
• And much more!

Mentioned in this Episode:

• Overlook Investments

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!