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David Abrams - Applying a Fundamental and Value-Oriented Approach to Investing

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Manage episode 236090993 series 2503232
Content provided by Columbia Business School. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Columbia Business School or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://player.fm/legal.

Today’s conversation is with investor David Abrams, who was described by the Wall Street Journal as a “one man wealth machine.” David is the CEO and Portfolio Manager of Abrams Capital, an investment firm that he founded in 1999. Abrams Capital is unlevered and long-term oriented and currently holds over $9 billion in assets under management. David is notoriously private and is not keen on interviews and appearances so I’m especially grateful to him for sharing with us today.

After graduating with a BA in History from the University of Pennsylvania, David made an unplanned entrance into a career in investing. It was then that he discovered his love for the field and he went on to work with another value investing legend, Seth Klarman of the Baupost Group, before starting his own firm. David is a member of the Board of Trustees of Berklee College of Music and an overseer of the College of Arts and Sciences at the University of Pennsylvania.

On this episode, David and I discuss how his experience working on merger and risk arbitrage transactions led to his decision to join the Baupost Group, what it was like to start Abrams Capital in the midst of economic uncertainty, why David prefers a generalist approach, the importance of the fundamentals in assessing investment opportunities, and so much more!

Key Topics:

  • How David got into investing after completing a BA in History (2:58)
  • David’s experience with his first job in the investment world (3:45)
  • David’s decision to join The Baupost Group and expand his expertise beyond arbitrage (7:01)
  • Why David took a year off after leaving The Baupost Group (9:37)
  • What it was like to start Abrams Capital on the heels of the stock market crash in 1998 (11:12)
  • Why David wanted to have a broad mandate for Abrams Capital (12:54)
  • The key factors to examine when analyzing the fundamental economics of a potential investment opportunity (14:11)
  • The importance of forming judgments and using qualitative analysis rather than solely relying on the numbers (16:17)
  • How the current market tolerance for risk and uncertainty has changed compared to 20-30 years ago (18:01)
  • The increasing value of human and intellectual capital (19:42)
  • Why an increased risk appetite and tolerance for failure is beneficial for the markets (20:26)
  • The advantages and disadvantages of being a generalist (21:18)
  • Why you always need to consider the position of the other side of the market (22:32)
  • The assessments David uses to determine the fundamental value of a company (24:13)
  • The impact of the relentless forces of competition on investment decisions (26:37)
  • How the presence of catalysts affects investment requirements (28:53)
  • David’s approach to developing a successful relationship with a company’s management team (29:56)
  • Why exiting investments isn’t always a straightforward process (34:32)
  • How David develops his investment wish list (36:55)
  • How traveling helps David’s keep a broad perspective and outlook on various industries (39:06)
  • The relationship between conviction and position sizing for David (40:51)
  • David’s approach to industry diversification, currency risk, and hedging (41:26)
  • Why David made the decision not to use leverage in his portfolio (44:02)
  • Does the state of the economy at large factor into David’s investment process? (45:44)
  • David’s perspective on the future of value investing and the asset management industry (49:09)
  • And much more!

Mentioned in this Episode:

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!

  continue reading

58 episodes

Artwork
iconShare
 
Manage episode 236090993 series 2503232
Content provided by Columbia Business School. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Columbia Business School or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://player.fm/legal.

Today’s conversation is with investor David Abrams, who was described by the Wall Street Journal as a “one man wealth machine.” David is the CEO and Portfolio Manager of Abrams Capital, an investment firm that he founded in 1999. Abrams Capital is unlevered and long-term oriented and currently holds over $9 billion in assets under management. David is notoriously private and is not keen on interviews and appearances so I’m especially grateful to him for sharing with us today.

After graduating with a BA in History from the University of Pennsylvania, David made an unplanned entrance into a career in investing. It was then that he discovered his love for the field and he went on to work with another value investing legend, Seth Klarman of the Baupost Group, before starting his own firm. David is a member of the Board of Trustees of Berklee College of Music and an overseer of the College of Arts and Sciences at the University of Pennsylvania.

On this episode, David and I discuss how his experience working on merger and risk arbitrage transactions led to his decision to join the Baupost Group, what it was like to start Abrams Capital in the midst of economic uncertainty, why David prefers a generalist approach, the importance of the fundamentals in assessing investment opportunities, and so much more!

Key Topics:

  • How David got into investing after completing a BA in History (2:58)
  • David’s experience with his first job in the investment world (3:45)
  • David’s decision to join The Baupost Group and expand his expertise beyond arbitrage (7:01)
  • Why David took a year off after leaving The Baupost Group (9:37)
  • What it was like to start Abrams Capital on the heels of the stock market crash in 1998 (11:12)
  • Why David wanted to have a broad mandate for Abrams Capital (12:54)
  • The key factors to examine when analyzing the fundamental economics of a potential investment opportunity (14:11)
  • The importance of forming judgments and using qualitative analysis rather than solely relying on the numbers (16:17)
  • How the current market tolerance for risk and uncertainty has changed compared to 20-30 years ago (18:01)
  • The increasing value of human and intellectual capital (19:42)
  • Why an increased risk appetite and tolerance for failure is beneficial for the markets (20:26)
  • The advantages and disadvantages of being a generalist (21:18)
  • Why you always need to consider the position of the other side of the market (22:32)
  • The assessments David uses to determine the fundamental value of a company (24:13)
  • The impact of the relentless forces of competition on investment decisions (26:37)
  • How the presence of catalysts affects investment requirements (28:53)
  • David’s approach to developing a successful relationship with a company’s management team (29:56)
  • Why exiting investments isn’t always a straightforward process (34:32)
  • How David develops his investment wish list (36:55)
  • How traveling helps David’s keep a broad perspective and outlook on various industries (39:06)
  • The relationship between conviction and position sizing for David (40:51)
  • David’s approach to industry diversification, currency risk, and hedging (41:26)
  • Why David made the decision not to use leverage in his portfolio (44:02)
  • Does the state of the economy at large factor into David’s investment process? (45:44)
  • David’s perspective on the future of value investing and the asset management industry (49:09)
  • And much more!

Mentioned in this Episode:

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!

  continue reading

58 episodes

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