Graham & Doddsville
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Graham & Doddsville An investment newsletter from the students of Columbia Business School Inside this issue: Issue XXXVIII Winter 2020 2019 Graham & Paul B. Kazarian ’81 Dodd Breakfast p. 3 Japonica Partners 2019 CSIMA Stock Pitch Challenge p. 3 Paul B. Kazarian is the Founder, Chairman, and CEO of Paul B. Kazarian p. 5 Japonica Partners and its non-profit affiliate, the Charles & Agnes Kazarian Foundation. Japonica, CBS Students’ founded in 1988, is a private investment firm that has Investment Ideas p. 17 built its track record by creating transformational investments with low risk high return. Heron Foundation p. 25 Japonica’s culture, under Mr. Kazarian’s leadership, is to . see what others do not see and to use “education- education-education”, a Japonica mantra, to accomplish what others believe is impossible. Editors: Japonica’s transformational investments have three building blocks developed over Mr. Kazarian’s career: Frederic Dreyfuss discover systemic misconceptions, discover a massive MBA 2020 Paul B. Kazarian ’81 undervaluation, and create extraordinary value. Using Sophie Song, CFA this model, Japonica’s investment track record includes MBA 2020 (Continued on page 5) John Szramiak MBA 2020 Heron Foundation Rodrigo de Paula MBA 2021 Heron is a private founda- Matt Habig tion established in 1992. MBA 2021 Its mission is to help peo- ple and communities help Alison Tien themselves out of pov- MBA 2021 erty. Heron pursues its mission by championing people, places, and firms From left to right: Dana K. Bezerra, Preeti that challenge broken Bhattacharji ’14, and Nisha Prasad ’17 conventions and dare to change. Visit us at: www.grahamanddodd.com Dana K. Bezerra is the president of Heron. Bezerra began her career in agriculture www.csima.info in California. Her family owned a dairy farm in the San Joaquin Valley, where she witnessed the bankruptcy of a local creamery, the formation of an independent milk producers’ cooperative, and the provision of a local tax abatement package to a multinational food company, leaving a lasting impression on the complicated rela- tionship between communities and markets. Bezerra proceeded to work at Merrill Lynch, where she specialized in Philanthropy and Nonprofit Management, then joining Heron in 2006. As a program officer, Bez- (Continued on page 25) Page 2 Welcome to Graham & Doddsville We are pleased to bring you the Mr. Kazarian also discussed ’20, Kyle Campbell ’21 and K.Y. 38th edition of Graham & how treacherous he thinks the Wong ’20 recommended buy- Doddsville. This student-led sovereign bond market is, and ing Etsy (NASDAQ:ETSY). investment publication of Co- shared invest in sovereigns. lumbia Business School (CBS) is Lastly, you can find more inter- co-sponsored by the Heilbrunn We also sat down with the views on the Value Investing with Center for Graham & Dodd President of the Heron Foun- Legends podcast, hosted by Investing and the Columbia Stu- dation, Dana Bezerra, along Professor Tano Santos. Recent dent Investment Management with recent CBS alumni Preeti guests include Leon Cooper- Association (CSIMA). Since our Bhattacharji ’14, VP Integrat- man, Joel Greenblatt, and Fall 2019 issue, the Heilbrunn ed Markets, and Nisha Prasad Meredith Trivedi, Managing Bruce Greenwald. Center hosted the 28th Annual ’17, Senior Associate Integrat- Director of the Heilbrunn Graham & Doddsville Breakfast in ed Markets. They discussed the We thank our interviewees for Center. Meredith leads the October 2019 and the 5th An- evolution of impact investing contributing their time and Center, cultivating strong nual CSIMA Stock Pitch Competi- over the past several decades, insights not only to us, but to relationships with some of Heron’s mission to invest 100% the world´s most experi- tion in November 2019. the whole investing community. of its capital in socially respon- enced value investors and We first interviewed Paul B. sible investments, their unique creating numerous learning G&Dsville Editors Kazarian ’81, Founder, Chair- investment process for analyz- opportunities for students man, and CEO of Japonica Part- ing socially impactful compa- interested in value investing. ners. Mr. Kazarian shared with nies, and what the future holds us his extensive experience, for impact investing and how starting as corporate white this will affect the entire invest- knight in the 1980s and Fortune ing landscape. 500 CEO in the 1990s, before becoming - with $4bn - one of We continue to bring you the largest owner of Greek stock pitches from current CBS Sovereign Debt during the Euro- students. In this issue, James zone crisis in the 2010s. He Shen ’20 shares his long idea on explained why he does not be- Nuance Communications lieve in the standard risk/return (NASDAQ:NUAN), Bruce Kim framework and how Japonica ’20 presents his short thesis on built a 30-year track record of Peloton Interactive investment displaying high return (NASDAQ:PTON), Alvaro with low risk, and how the firm Pasquin ’20 presents a long Professor Tano Santos, the finds and addresses systematic thesis on Rolls-Royce Holdings Faculty Director of the Heil- misconceptions in the market. (LSE:RR.), and Mingming Wu brunn Center. The Center sponsors the Value Investing Program, a rigorous academ- ic curriculum for particularly committed students that is taught by some of the indus- try´s best practitioners. The classes sponsored by the Heilbrunn Center are among the most heavily demanded and highly rated classes at Columbia Business School. Value Investing students visit the set of Professor Tano Santos and Meredith CNBC’s Fast Money with Guy Adami Trivedi record the Value Investing with Legends Podcast Volume I, Issue Page 2 3 Page 3 Graham & Dodd Breakfast - October 2019 Kent Daniel delivers opening remarks Attendees at the 29th Annual Cliff Assness and Professor Tano Graham and Dodd Breakfast Santos CSIMA Stock Pitch Challenge - November 2019 CBS team presents their pitch Judges at the 5th Annual CSIMA Stock Pitch Challenge Heilbrunn Center team and CSIMA Stock Pitch VPs CSIMA Co-President Dao Hao '20 interviews Michael and AVPs Weinberg '98 and Anna Nikolayevsky '98 Page 4 SAVE THE DATE The Heilbrunn Center for Graham & Dodd Investing at Columbia Business School presents THE 11TH ANNUAL From Graham to Buffett and Beyond OMAHA DINNER Friday, May 1, 2020 6 p.m. to 9 p.m. The Hilton Omaha 1001 Cass Street Omaha, Nebraska Tickets go on sale in March at www.grahamanddodd.com The annual From Graham to Buffett and Beyond event is generously sponsored by: For inquiries, please contact: [email protected] Page 5 Paul B. Kazarian, Japonica Partners a select number of including at Harvard started strong at Columbia transformational Business School, OECD, Business School. At CBS, I investment efforts such as: INET, Oxford, London learned from some of the best one of the largest private School of Economics, professors in the world on owners of Greek CESifo, London Business investing, finance, accounting, government bonds School, credit rating and management. Often when (GGBs), majority agencies, U.S. Military making difficult and important stockholder who assumed Academy at West Point, decisions, I remember key executive positions National School of wisdoms learned at CBS. (Chairman, CEO, and Development at Peking CFO) at Fortune 300 University, and ISCTE “My exposure to Sunbeam-Oster Company, Business School at the largest stockholder of Instituto Universitário de investing, and value Paul B. Kazarian CNW Corp, largest Lisboa. Mr. Kazarian ’81 creditor and sole served as the Sole Special investing in particular, proponent of successful Advisor to the Center for started strong at joint plan to reorganize European Policy Studies Allegheny International, (CEPS) Task Force on Columbia Business and lead sponsor and Government Balance global institutional investor Sheets. Mr. Kazarian School. At CBS, I organizer of Borden Inc. received the 2016 William Pitt the Younger Award learned from some of Japonica’s non-profit for extraordinary affiliate, The Charles & leadership in strengthening the best professors in Agnes Kazarian democracy through the world on investing, Foundation, named after government financial Mr. Kazarian’s management. finance, accounting, grandparents who were survivors of the first Graham & Doddsville and management. genocide of the 20th (G&D): What was your path century, the Armenian to investing? Often when making Genocide, is a philanthropic operating Paul B. Kazarian (PBK): My difficult and important foundation whose core path was very simple and clear. decisions, I remember competency is to improve I had one professional job in public financial my life before Japonica and wisdoms learned at management (PFM) and that was in the corporate financial literacy. The finance department at CBS.” Foundation’s year-end Goldman Sachs with a wide 2018 assets and spending range of clients from the US G&D: What important lessons since founding are over a government, to high tech start- would you like to share as a quarter-billion US dollars. ups, to the firm’s largest and white knight investing in most important clients. By corporates and sovereigns? Prior to founding Japonica chance or design, I don't know and the Kazarian which, I worked closely with PBK: There were many, as Foundation, Mr. Kazarian many, if not most, of the this ties in with our focus on was an investment banker members of the senior double bottom line. Japonica at Goldman, Sachs & Co. management committee. This was the largest stockholder in Mr. Kazarian is an adjunct was an amazing learning one of the largest railroad professor in the sector of experience and I made the firm holding companies in North public financial a lot of money with my hard America, CNW Corp., and management at Columbia work, good judgment, and commenced a US$1.6 billion Business School and has execution skills. white knight tender offer and lectured and presented My exposure to investing, and full board proxy to maximize extensively and globally, value investing in particular, shareholder value.