Graham & Doddsville An investment newsletter from the students of Columbia Business School Inside this issue: Issue XL Fall 2020 Bill Nygren, Harris Associates Bill Nygren P. 3 Bill Nygren has been a manager of the Oakmark Select Fund (OAKLX) since 1996, Oakmark Fund CBS Students Invest- (OAKMX) since 2000 and the Oakmark Global ment Ideas P. 20 Select Fund (OAKWX) since 2006. He is also the Chief Investment Officer for U.S. Equities at Harris Ray Kennedy P. 26 Associates, which he joined in 1983; he served as the Sarah Ketterer & firm's Director of Research from 1990 to 1998. Alessandro Valentini Bill Nygren, CFA (Continued on page 3) ’06 P. 38 John Mullins & Dan Ray Kennedy, Hotchkis & Wiley Kaskawits ’11 P. 50 Ray Kennedy serves as a portfolio manager on the High Yield bond portfolios at Hotchkis & Wiley. Editors: Prior to joining the firm, Mr. Kennedy was a Managing Director, portfolio manager and senior Rodrigo de Paula member of PIMCO's investment strategy group. At MBA 2021 PIMCO, he headed the global high yield business Matt Habig along with managing and overseeing High Yield MBA 2021 funds, bank loan trading and collateralized debt Ray Kennedy, CFA (Continued on page 26) Alison Tien MBA 2021 Bill Ledley Causeway Capital MBA 2022 Causeway Capital manages equities globally with a Tom Moore fusion of fundamental and quantitative analysis. The MBA 2022 firm was founded in 2001 and has $39B in assets under Franklin Shieh management as of September 30th, 2020. MBA 2022 Sarah Ketterer and Alessandro Valentini (Continued on page 38) ’06, CFA Lyrical Asset Management Visit us at: www.grahamanddodd.com As Co-Portfolio Managers of the International Value www.csima.info portfolio, Dan Kaskawits ’11 and John Mullins lead the international investing effort at Lyrical Asset Manage- ment. Dan and John are also Portfolio Managers of the Lyrical Global and Global Impact portfolios, as well as Associate PM’s for the U.S. strategy. Lyrical manages concentrated long-only portfolios, reflecting both deep value and quality/growth. The John Mullins and Dan firm has a long-term orientation with just 15% annual- Kaskawits ’11, CFA ized turnover since inception. (Continued on page 50) Page 2 Welcome to Graham & Doddsville We are pleased to bring you the John are co-portfolio managers 40th edition of Graham & of the International Value fund Doddsville. This student-led at Lyrical Asset Management. investment publication of Co- They explained their concen- lumbia Business School (CBS) is trated approach to value in- co-sponsored by the Heilbrunn vesting, which focuses on find- Center for Graham & Dodd ing high-quality businesses Investing and the Columbia Stu- whose secular growth charac- dent Investment Management teristics are underappreciated Association (CSIMA). by the market, resulting in Meredith Trivedi, Managing cheap valuations. We first interviewed Bill Ny- Director of the Heilbrunn gren, portfolio manager of the We continue to bring you Center. Meredith leads the Oakmark Funds at Harris Asso- stock pitches from current CBS Center, cultivating strong ciates. Mr. Nygren discussed students. In this issue, we fea- relationships with some of Oakmark’s approach to value ture two pitches from the 2020 the world´s most experi- investing, which looks past tradi- Women in Investing Confer- enced value investors and tional GAAP accounting to find ence: April Yin ’22, Maria Van creating numerous learning businesses whose potential may Heeckeren ’22, Joyce Zhang ’22 opportunities for students be understated today. Bill shared and Sherry Zhang ’22 share interested in value investing. with us a few sectors Oakmark their long idea on Hanesbrand finds attractive, as well as his (NYSE: HBI), and then Cathy general views on today’s mar- Yao ’22, Flora Chai ’22, Joanna kets and how they compare to Zhou ’22 and Wenbo Zhao ’22 prior periods in his career. share their long idea on The TJX Companies (NYSE: TJX). We also chatted with Ray Ken- We also feature a pitch from nedy of Hotchkis & Wiley. Ray Dickson Pau ’22, presenting his has had an extensive career in long idea on Farfetch (NYSE: the high yield bond markets. He FTCH). shared with us his framework for credit investing in today’s Lastly, you can find more inter- uncertain times, and how his views on the Value Investing with thoughts on the macro environ- Legends podcast, hosted by ment impact his approach. Professor Tano Santos. Profes- Professor Tano Santos, the sor Santos has recently con- Faculty Director of the Heil- Next, we interviewed Sarah ducted interviews with guests brunn Center. The Center Ketterer and Alessandro including Henry Ellenbogen & sponsors the Value Investing Valentini ’06 from Causeway Anouk Dey, Rishi Renjen, Rich- Program, a rigorous academ- Capital. Sarah and Alessandro ard Lawrence, Tom Russo and ic curriculum for particularly described Causeway’s unique Kim Shannon. committed students that is lens on value investing, which taught by some of the indus- combines rigorous fundamental We thank our interviewees for try´s best practitioners. The business analysis with a quantita- contributing their time and classes sponsored by the tive overlay that helps structure insights not only to us, but to Heilbrunn Center are among their portfolios. Sarah and Ales- the whole investing community. the most heavily demanded sandro shared their views on and highly rated classes at some of the hardest-hit areas of G&Dsville Editors Columbia Business School. the market during Covid-19 that may represent attractive oppor- tunities moving forward. Finally, we got the chance to speak with John Mullins and Dan Kaskawits ’11. Dan and Page 3 Bill Nygren, Harris Associates Mr. Nygren has received he told me that they were house. We would alter our many accolades during his stocks and that the numbers purchasing habits based on investment career, represented dollars, it prices that were charged. including being named suddenly became very That was how I learned to Morningstar's Domestic interesting to me. So that behave as a consumer— Stock Manager of the Year for 2001. interest in stocks and always trying to expand numbers was there from a what my dollars could buy He holds an M.S. in young age. by being very careful about Finance from the the price that I paid. University of Wisconsin's Applied Security Analysis “We would alter our Additionally, there was a Program (1981) and a B.S. Bill Nygren, CFA family trip out to visit an in Accounting from the purchasing habits based older cousin of mine who Harris Associates University of Minnesota on prices that were was serving in the Air (1980). Force. This would have Editor’s Note: This interview charged. That was how been, I guess, the tail end of the Vietnam War. The trip took place on September I learned to behave as a 30th, 2020. took us through Las Vegas consumer—always and my dad took my older Graham & Doddsville brother and me into, I think (G&D): Can you walk us trying to expand what what was the Kroger through your background grocery store across the my dollars could buy by and what brought you into street from the Motel 6 that the world of investing? being very careful we were staying in. My dad pulled out five nickels and Bill Nygren (BN): I grew about the price that I he said, "I'm going to show you two boys why you up in a middle-class family in paid. ” St. Paul, Minnesota. In should never gamble." He school, I always did better put the first nickel into a with numbers than words slot machine and seven and baseball was one of my I also grew up in a very nickels came out. Then he passions outside of school. traditional household. My put the next one in and a One of the things that dad worked outside the few more nickels came out. attracted me to baseball home and my mom raised I could see my dad getting was how easily available all the kids. My mom was frustrated because his the statistics were. I played always on a very tight object lesson was going Strat-O-Matic Baseball as a budget for grocery awry. kid and was always looking spending. Therefore, she in our local newspaper at would always shop specials. But I was standing there the full page of baseball box When I was a little kid saying, "Dad, stop. You're scores that they had. getting dragged to the way ahead, stop, stop." And Coincidentally in the St. Paul grocery store with my he just got angrier and Pioneer Press, the business mom, a weekly shopping angrier and threw these section was right next to trip would usually involve nickels in until they were all the baseball box scores and three different locations so gone and then said, "See that section had all the we’d buy the stuff that was boys, you should never stock quotes on it. I was on sale at each store. If gamble." By then my eyes intrigued by this page of grapes were on sale one were huge and I thought, numbers that I didn't know. week and cherries weren't, "This is fascinating. I just When I asked my dad and we had a lot of grapes in the watched my dad make (Continued on page 4) Page 4 Bill Nygren, Harris Associates multiples of his money. If investing. That's not as important to have an only he hadn't been so heroic as it sounds today investment approach that foolish to throw it all away." because I'm sure the local was consistent with the way library would have hundreds I thought about money and That created a fascination of books on investing.