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Graham & Doddsville Graham & Doddsville An investment newsletter from the students of Columbia Business School Issue XXV Fall 2015 Inside this issue: Omaha Dinner P. 3 Alex Sacerdote of Whale Rock Capital Alex Sacerdote P. 6 Alex Sacerdote is the founder and portfolio manager of Whale Rock Capital Management, a $1 billion global long/short equity Columbia IIC manager focused on the technology, media and telecom (TMT) Meeting Ideas P. 16 sectors. Prior to founding Whale Rock, Mr. Sacerdote was an analyst and sector portfolio manager at Fidelity Investments. Ed Bosek P. 22 He began his career in Smith Barney’s TMT investment Jane Siebels P. 34 banking group, and also served as VP of Finance at Interactive Imaginations, an internet advertising start up. Alex received his Global Endow- MBA from Harvard and earned his BA from Hamilton College. ment Management P. 38 Alex Sacerdote Alex currently serves on the Board of Trustees of Hamilton (Continued on page 6) Editors: Ed Bosek of Jane Siebels Brendan Dawson MBA 2016 BeaconLight of Siebels Scott DeBenedett Asset Ed Bosek is the MBA 2016 founder and managing Management Anthony Philipp partner of Research MBA 2016 BeaconLight Capital, a $250 million global Brandon Cheong long/short equity Jane Siebels, MBA 2017 fund. Before founding CEO of Siebels Eric Laidlow, CFA Ed Bosek BeaconLight, Ed was Jane Siebels Asset a partner at Atticus MBA 2017 Management (Continued on page 22) (Continued on page 34) Benjamin Ostrow MBA 2017 Global Endowment Visit us at: www.grahamanddodd.com Rolf Heitmeyer Management www.csima.info Global Endowment Management (GEM) was founded in 2007 and manages $7 billion Hugh Wrigley James Ferguson Andrew Burns for clients including endowments, foundations, and other institutional investors. Hugh Wrigley is a co-founder of GEM. Previously, he served as Head of the Private Investments Group at DUMAC and as (Continued on page 38) Page 2 Welcome to Graham & Doddsville We are pleased to bring you the (AAPL), Amazon (AMZN), Ellie Hugh Wrigley, James Fer- 25th edition of Graham & Mae (ELLI), and NetEase guson, and Andrew Burns Doddsville. This student-led in- (NTES). If readers are interest- from Global Endowment Man- vestment publication of Colum- ed in hearing more of Alex’s agement discuss compensation bia Business School (CBS) is co- views and perspectives, he will in the investment industry, the sponsored by the Heilbrunn be presenting at the Boston importance of being able to Center for Graham & Dodd Investment Conference on invest in smaller spaces, and Investing and the Columbia Stu- Thursday, November 12. the risks inherent in transition- dent Investment Management ing from analysis to manage- Association (CSIMA). Ed Bosek of BeaconLight Cap- ment. ital shares his perspectives on Meredith Trivedi, the Since our Spring 2015 issue, the variant perception through Lastly, we continue to bring Heilbrunn Center Director. Heilbrunn Center hosted the identifying Fundamental, Mean- you pitches from current stu- Meredith skillfully leads the sixth annual “From Graham to ingful, and Different (FMD) dents at CBS. CSIMA’s Invest- Center, cultivating strong Buffett and Beyond” Omaha ideas. Ed discusses his global, ment Ideas Club provides CBS relationships with some of Dinner. This event is held on the generalist strategy, which al- students the opportunity to the world’s most experi- eve of the Berkshire Hathaway lows his team to identify differ- practice crafting and delivering enced value investors, and Shareholders’ meeting and fea- entiated opportunities to gen- investment pitches. In this is- creating numerous learning tures a panel of renowned erate alpha on long and short sue, we feature three ideas opportunities for students speakers. positions, and walks through from our classmates Nielsen interested in value invest- current ideas including Daqin Fields ‘17, Justin Hong ‘17, and ing. The classes sponsored In this issue, we were fortunate Railway (601006) in China and Alexander Levy ‘17: a special by the Heilbrunn Center to speak with six investors from Builders FirstSource (BLDR) situation based paired trade are among the most heavily four firms who provide a range in the U.S. incorporating a long position in demanded and highly rated of different perspectives and Rentech Nitrogen Partners LP classes at Columbia Busi- investment approaches. Jane Siebels of Siebels Asset and a short position in CVR ness School. Management Research discuss- Partners (RNF, UAN), long Alex Sacerdote of Whale es her unique exposure to Tenneco (TEN), and short Las Rock Capital discusses his commodities from an early age Vegas Sands (LVS). unique approach to technology and focus on opportunity funds. focused investing. His S-curve Jane shares some thoughts on As always, we thank our and competitive advantage the outlook for commodities interviewees for contributing frameworks allow for the identi- and emerging markets, and also their time and insights not only fication of companies with the explains her open outsourced to us, but to the investment potential to exponentially in- research platform, another community as a whole, and we crease their earnings power. He hallmark in her attempt to do thank you for reading. also shares a number of compel- things differently. ling ideas, including Apple - G&Dsville Editors Professor Bruce Greenwald, the Faculty Co-Director of the Heilbrunn Center. The Center sponsors the Value Investing Program, a rigor- ous academic curriculum for particularly committed stu- dents that is taught by some of the industry’s best practi- tioners. Mario Gabelli ’67 shares his Meredith Trivedi with Professor Bruce experiences as a panelist at the May 2015 Greenwald at the Value Investing Omaha Dinner Program Welcome Reception Volume I, Issue 2 Page 3 “From Graham to Buffett and Beyond” Omaha Dinner 2015 Mario Gabelli ’67, Bill Ackman, Tom Russo, and Tano Panelist Bill Ackman shares his views at the Omaha Santos speak on the Omaha Dinner Panel Dinner Budge & Carol Collins. Budge serves on the Heilbrunn Board of Overseer Member and Pershing Square Capital Center Advisory Board Partner Paul Hilal ’92 Former Heilbrunn Center Director and current Special Industry Advisor Louisa Schneider ’06 & Mario Gabelli ’67 Page 4 Columbia Business School Events: Pershing Square Challenge and Value Investing Program Welcome Reception Pershing Square Challenge finalists pitch their stock to Michael Herman ’16, Bill Ackman, and Damian Creber the panel of judges ’16 after the Pershing Square Challenge presentations Pershing Square Challenge judges listen intently to CBS Students mingle at the Value Investing Program student pitches Welcome Reception Bruce Greenwald speaks with students and alumni at the Value Investing Program Welcome Reception Volume I, Issue 2 Page 5 SAVE THE DATE 19th Annual Columbia Student Investment Management Association Conference January 29, 2016 A full-day event featuring some of the most well-known investors in the industry, presented by: The Columbia Student Investment Management Association and The Heilbrunn Center for Graham & Dodd Investing Visit our website for updates: http://www.csima.info For inquiries contact: Alex Carrington [email protected] Jason Klein [email protected] Stephen Lin [email protected] Page 6 Alex Sacerdote (Continued from page 1) College and Shady Hill some cases they knew as much matter of time before they School, and is active on or more than even the expanded beyond books. their investment management teams. If you are committees. really intellectually curious and At the time Amazon was very you want to spend 90% of out of favor, and I made a 25 Graham & Doddsville your time critically thinking, page presentation to the entire (G&D): Can you discuss your the buyside is where you want equity department advocating background and your path to to be. that Fidelity buy shares in investing? Amazon. I think half the At the same time, the internet investment team thought I was Alex Sacerdote (AS): I’ve revolution was just beginning. I crazy because of the high been interested in the stock decided to work for an valuation and losses, but some Alex Sacerdote market from an early age. In internet advertising start up in people must have liked the the early ‘80s, my father New York City in 1997 before analysis because I got the job bought each of me and my two going to business school. The at Fidelity, and that's how I got siblings a share of Apple and I company, Interactive into the business. watched it incessantly and was Imaginations, actually delighted when it split three pioneered the concept of the I spent the next six years there for one. Although I was too ad network. It gave me a as an analyst and sector young to understand that I had deeper understanding of portfolio manager primarily not tripled my money. In the internet based businesses, and focused on technology. It could second grade I distinctly there were a handful of other not have been a better training remember doing a report on publicly traded internet ground. First, there were so the stock market with crude companies like AOL and many great investors to engage stock charts. Yahoo that I carefully followed with and observe: Danoff, and invested in on my own. Wymer, Tillinghast with his Out of college, I started out as unique brand of value, and an investment banker in the So at business school I Myers, who actually started in Tech, Media, and Telecom targeted buyside opportunities my intern class back in 1999. It Group at Smith Barney. It was and secured a summer was a very individualistic place a boot camp-like experience in internship at Fidelity. I was with so many different styles which I really learned the very fortunate because Fidelity and processes. I also got some mechanics of finance. We were provides their interns with a nice time with Peter Lynch active with M&A deals, IPOs, tremendous amount of who loved to mentor younger and high yield offerings across responsibility.
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