Barron’s published an article this weekend titled “Graham and Doddsville Head Downtown” describing NYU’s first value investing class. Jamie Rosenwald, co-founder of Dalton Investments, launched the class to let NYU MBA students in on a secret; one that is well known by uptown rival Columbia Business School.
Rosenwald, an engaging 54-year-old, attended NYU, too. “I was jealous that Columbia had street cred,” he says.
In Rosenwald’s class, students learn the basic tenets of value investing.
Buying companies at 50 cents on the dollar dramatically lessened a risk of loss. Intensive research also abridged the risk, and reduced the need to diversify. As day follows night, stock prices eventually reflect fundamentals. The students waded through Berkshire Hathaway’s annual reports and shareholder letters from renowned investor Seth Klarman of the Baupost Group.
To bring the lessons home, he invited his fellow value investors to class. David Abrams of Boston’s Abrams Capital, who got his start with Klarman, told about an early and costly mistake, when he persuaded his boss to buy a fifth of a company that turned out to be a fraud. “Be very wary of book value,” Abrams warned the students. “The problem with Excel [spreadsheets] is that [they] give you a very false sense of precision.”
Bob Robotti, another prominent investor, got his start as an accountant. “You have to understand the numbers,” Robotti said. “But you don’t have to be Warren Buffett to do this right.”
As the birthplace of value investing, Columbia Business School has become known as the academic capital of value investing. However, in between the days of Benjamin Graham and David Dodd and now, Columbia has also gone through periods where value investing fell out of favor.
Below are a few articles that discuss the resurgence of value investing at Columbia in the late 1990’s / early 2000’s. I would like to think that this time will be different, and value investing at Columbia is here to stay. Unfortunately, as value investors, we are all too aware that “Many shall be restored that are now fallen and many shall fall that are in honor.” (Horace – Ars Poetica)
“Value Hunting: Columbia Students Bet on Ugly Ducklings” (Hermes, Fall 1994)
“The Heresy That Made Them Rich” (The New York Times, October, 29, 2005)
Click here to read the original Barron’s article “Graham and Dodd Head Downtown.”