Graham & Doddsville An investment newsletter from the students of Columbia Business School Inside this issue: Issue XIII Fall 2011 Interview: p1 Lee Cooperman Mario Gabelli — “Think Like an Leon Cooperman — “Buying Owner” Interview: p1 Straw Hats in Mario Gabelli Mario Gabelli ’67, CFA, the Winter” started his career as an Interview: p1 automotive and farm Marty Whitman equipment analyst at Loeb Rhodes & Co. In Alumni Profile p25 1977 he founded GAMCO Investors Student Write- p29 (NYSE: GBL), where he is currently Chairman up: GLDD and CEO, as well as a portfolio manager and Student Write- p31 the company’s largest up: MSG shareholder. GAMCO now manages roughly Editors $36 billion dollars across open and closed-end mu- Anna Baghdasaryan tual funds, institutional Mario Gabelli MBA 2012 and private wealth man- sity and his M.B.A. from Joseph Jaspan Leon Cooperman agement, and invest- ment partnerships. Mr. Columbia Business School. MBA 2012 Leon “Lee” Cooperman ’67, Gabelli earned his B.S. (Continued on page 12) CFA, began his post- from Fordham Univer- Mike DeBartolo, CFA business school career in MBA 2013 1967 with Goldman Sachs. In addition to holding a Marty Whitman — “Business Skill Jay Hedstrom, CFA number of key positions MBA 2013 within the firm, Mr. Cooper- Critical to Investment Success” Jake Lubel man was founder, Chairman and Chief Executive Officer Mr. Whitman founded MBA 2013 of Goldman’s Asset Manage- the predecessor to the ment division. In 1991, he Third Avenue Funds in Visit us at: left the firm to launch 1986 and M.J. Whitman, a www.grahamanddodd.com Omega Advisors, Inc., a full service broker-dealer www0.gsb.columbia.edu/students/ value-oriented hedge fund affiliated with Third Ave- organizations/cima/ which now manages roughly nue in 1974. He has man- $5.5 billion. Mr. Cooperman aged the flagship Third earned his B.A. in Science Avenue Value Fund since from Hunter College and his its inception in 1990 and M.B.A. from Columbia Busi- was Third Avenue’s Chief ness School. Mr. Cooper- Investment Officer from man and his wife are signa- its founding through Janu- tories of Warren Buffett’s ary 2010. (Continued on page 20) “Giving Pledge”. (Continued on page 2) Marty Whitman Page 2 Welcome Back to Graham & Doddsville We are pleased to present We start off this issue with Our third interview is with you with Issue XIII of Gra- Lee Cooperman ‘67, foun- veteran value investor Marty ham & Doddsville, Columbia der, Chairman and CEO of Whitman, Third Avenue Business School‘s student- Omega Advisors, Inc. Mr. Management‘s Chairman and led investment newsletter, Cooperman reflects on the Portfolio Manager, and an co-sponsored by the Heil- path of his incredibly suc- Adjunct Professor of Dis- Pictured: Bruce Greenwald, brunn Center for Graham & cessful career, describes tress Value Investing at Co- named the ―Guru to Wall Dodd Investing and the Co- how his firm constructs its lumbia Business School. Mr. Street‘s Gurus,‖ at the Colum- lumbia Student Investment portfolio, and outlines the Whitman shares his thoughts bia Student Investment Man- Management Association. theses behind a few of his on some compelling areas of agement Conference in Febru- top investment ideas. investment opportunity, dis- ary 2011. This issue features a trio of cusses his approach to com- legendary value investors, We also had the privilege of pany valuation and describes who honored us with their speaking with Gabelli Asset some of his firm‘s most suc- time and sage advice. One Management (GAMCO In- cessful investments. thing became crystal clear: vestors) founder, Chairman there is no single ―right‖ and CEO Mario Gabelli, Please feel free to contact us way to practice value invest- well-known value investor if you have comments or ing. Each successful value and alum of Columbia Busi- ideas about the newsletter. investor adapts the practice ness School‘s class of 1967. We hope you enjoy reading to his or her own style, Mr. Gabelli provides his Graham & Doddsville as much although Graham & Dodd approach to security analy- as we enjoy putting it to- and their famous disciples sis and discusses his interest gether! remain an inspiration to so in BEAM, National Fuel Gas many of us. and The Madison Square - Editors, Graham & Doddsville Garden Company. Investor Warren Buffett re- ceives a gift from students on a tal or medical school to- tion, that the school would Heilbrunn-sponsored trip in (Cooperman from page 1) ward your fourth year of be losing revenues for the March 2008. G&D: After graduating college and receive a sepa- next four years and that I from Columbia Business rate degree. I finished my couldn‘t possibly know what School, you began your very science major in the sum- I wanted to do after eight successful career at Gold- mer of 1963, which enabled days. The only person who man. What drew you to the me to enroll in dental really appreciated the signifi- sell-side following business school. After being in den- cance of my decision was school? tal school for about eight the dean of Hunter College. days, I wasn‘t sure that was I went back to Hunter and, LC: Something that I the direction I wanted to since I had finished my ma- should mention, before ad- go. This became quite a jor during the summer, took dressing my time at Colum- traumatic situation. I had to 10 elective courses in eco- bia and Goldman, was my go to the dean of the dental nomics and received 10 A‘s. decision to not pursue a school and tell him I wanted That furthered my interest dental education. This was to matriculate back into the in business. Upon gradua- the most difficult decision I undergraduate school to tion I went to work for had made in my life up to complete my fourth under- Xerox up in Rochester, NY that point. Back in 1963, if graduate year unencum- as a quality control engi- you completed your under- bered. The dean put me on neer. graduate major and minor in a great guilt trip, telling me three years, you could that I had deprived the 101st After about 15 months I count your first year of den- applicant of a dental educa- (Continued on page 3) Issue XIII Page 3 Lee Cooperman (Continued from page 2) management that we were decided I wanted to get an making a mistake not being My last day at Goldman was MBA to advance my creden- in the asset management November 30th, 1991 and I tials. I wanted to stay in the business. The firm, being a started Omega the very New York area and I was brokerage house, was next day. Over the past interested in finance, so strongly opposed to what twenty years I‘ve been rais- Columbia was a natural fit. they considered competing ing the money, hiring the With great modesty, I with their client base. Every people, running the money “… there was one would say that I was an at- brokerage firm at the time and setting up the infra- person who had a tractive package coming out was largely in this business. structure. It‘s kind of been of Columbia Business Once Salomon Brothers and non-stop. I‘m getting older profound influence School. I was Beta Gamma some others announced but I‘m still handling it okay. Sigma, had straight A‘s, a 6 their launching of an asset on me. I even have month old child and was a management business, Gold- G&D: Did anyone or any serious person. Wall Street man leadership asked me to investing class at Columbia a letter he sent me was hiring with abandon, a establish one of their own. I Business School have a par- lot of which had to do with left research at that time ticularly significant influence in 1977 hanging on the market cycle. I was and became Chairman and on you? my wall. His name interviewing in 1966, which CEO of Goldman Sachs was a year in which the Asset Management. LC: Yes, there was one was Roger Murray, market was peaking, though person who had a profound no one knew that. I ac- This was the beginning of influence on me. I even Benjamin Graham‟s cepted an offer with Gold- my exit from the firm. They have a letter he sent me in man Sachs, which at the wanted to capture as many 1977 hanging on my wall. successor as the pro- time was not what it would assets as possible because His name was Roger become a decade or two they wanted to build the Murray, Benjamin Graham‘s fessor of security later. This was fortunate business to a scale that successor as the professor analysis at Columbia because I was able to con- would be relevant to a firm of security analysis at Co- tribute, in a small way, to like Goldman Sachs. On the lumbia and, in fact, a subse- and, in fact, a subse- the firm‘s later success. other hand, my motivation quent editor of the book was the proper perform- Security Analysis. Mario quent editor of the I got my MBA on January ance of the assets in my Gabelli, a very dear friend of 31, 1967. I had a six month control. I realized after a mine, also studied under book Security Analy- old child and I had no short time I didn‘t want to him and would probably say sis.” money in the bank so I was be on the road every week, the same thing.