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Graham & Doddsville Spring 2011 newsletter

Graham & Doddsville Spring 2011 newsletter

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Published by Jae Jun
newsletter discusses ITT spinoff, MSI analysis and DGX analysis.
newsletter discusses ITT spinoff, MSI analysis and DGX analysis.

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Published by: Jae Jun on Sep 02, 2011
Copyright:Attribution Non-commercial


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don‟t take controlled posi-tions. We don‟t try and
force things to happen any-more.
Activism is the newbuzzword. What do youthink about it?
There is nothing newunder the sun. We used
(Continued on page 4)
Mr. Price began his ca-reer in 1973 when he joined Max Heine at Mu-tual Series. In 2001, heleft the firm to begin hisown fund, MFP Investors,LLC. He earned aBachelor in Business Ad-ministration from Uni-versity of Oklahoma.G&D:
You have been in-volved in distressed and spe-cial situation investing for along time. How has yourstrategy evolved and what isthe mix today?
Michael Price (MP):
Ithas evolved indeed. As asmall mutual fund at MutualSeries, we had no say. Wehad small amounts of stock.We could not influenceproxy fights. We always hadvalue and we always hadsituations involving corpo-rate control. When thefunds got bigger, we realizedthat we could use our signifi-cant influence for the better-ment of our position, andthat of all the other share-holders. We did that for awhile, and then I got out of the fund business. Now I amback to a small, family office
kind of fund, where we don‟t
have that clout, but we tryand influence directors andofficers just because of ourpoint of view that we think iswell thought out. That ishow it has evolved. We
“It Is The Judgment That Counts” — 
Michael Price
“Big Companies In Small Industries” — 
Paul Johnson
Paul Johnson managesNicusa Capital, a long-term concentrated fun-damental value hedgefund. He began his ca-reer as a sell-side analystat several Wall Streetfirms. He has previouslytaught Security Analysisand Value Investing atColumbia BusinessSchool as an adjunct pro-fessor.Mr. Johnson holds a B.A.from UC Berkeley andan M.B.A. from Whar-ton.G&D:
Tell us a little aboutyour background and howyou got into value investing.
Paul Johnson (PJ):
In theearly part of my career, I wasa sell-side technology analyst.I worked for various firmson Wall Street for twentyyears. I was one of the sen-ior technology analysts onthe Street during the techbubble of the late '90s andwatched that market crash,which had a big impact onmy thinking. That experi-ence reinforced how criticalthe intrinsic value of the un-derlying company is to theultimate performance of astock. One can try to playthe game of outguessingwhere a stock price is going,
(Continued on page 13)
Spring 2011Issue XI1
Editors:Garrett JonesMBA 2011Daniel KaskawitsMBA 2011Anna BaghdasaryanMBA 2012Joseph JaspanMBA 2012
Inside this issue:
Pershing SquareCapital Challenge
P. 2
P. 22
P. 24
2010 Graham &Dodd Breakfast
P. 26
Michael PriceContact us at:
Visit us at:
Graham & Doddsville 
An investment newsletter from the students of Columbia Business School
Paul Johnson
We are pleased to presentyou with Issue XII of 
Gra-ham & Doddsville,
Business School‟s student
-led investment newsletterco-sponsored by the Heil-brunn Center for Graham &Dodd Investing and the Co-lumbia Investment Manage-ment Association.This issue features an inter-view with Michael Price,portfolio manager of MFPInvestors. Mr. Price de-scribes the evolution of his
Welcome to
Graham & Doddsville 
Page 2
investing career, shares hisperspective on activist in-vesting and gives us insight
into a few of his fund‟s posi-
tions.The issue also features aninterview with Paul Johnson,who manages Nicusa Capi-tal. Mr. Johnson describeshis value-focused, researchintensive approach and givessome examples of recentinvestments.We aim to offer specificinvestment ideas that arerelevant today. The currentissue includes two invest-ment ideas by studentteams, who were the finalistand the runner up of thePershing Square CapitalChallenge.Please feel free to contactus if you have comments orideas about the newsletteras we continue to refine thispublication for future edi-tions. Enjoy!
Pershing Square Value Investing and Philanthropy Challenge in Pictures
Pictured: Bruce Greenwald,
named the “Guru to WallStreet‟s Gurus,” at the Columbia
Investment Management Con-ference in February 2011.
Pershing Square Value Investing and Philanthropy Challenge
pared presentation of theidea that they had chosen,followed by 20 minutes of Q&A with the finalists.The five finalists were se-lected from a pool of 33teams, which enrolled in theApplied Security Analysisclass at Columbia BusinessSchool. The course wastaught by Professors
An-drew Brenner 
Daniel Yarsky
 (Morgan Stanley) and
Naveen Bhatia
(KeffiGroup). Students weretaught various search andvaluation strategies basedon the Graham & Doddvalue framework.First place was awarded tothe team of 
Rick Carew
(‟12) and
(‟11) who pre-
sented Motorola Solutions(MSI). The judges wereimpressed by the clarity of their thesis, depth of re-search, and strong under-standing of the underlyingbusiness (see write-up onpage 22).Practitioners in the invest-ment management industrygenerously donated theirtime and worked closelywith the teams to preparethem for the competition.Throughout the semester,each team had multiplechances to present in frontof investment managementfirms which provided feed-back and suggested furtherareas of research.Students and alumni gath-ered on April 8, 2011 forthe Fourth Annual PershingSquare Value Investing andPhilanthropy Challenge, avalue oriented stock pitchcompetition, co-sponsoredby the Heillbrunn Center of Value Investing at ColumbiaBusiness School and Per-shing Square Capital Man-agement. The competitionis anchored by their com-mitment to produce tal-ented, knowledgeable indi-viduals ready to take onleadership roles as valueinvestors.In a surprise but welcomedmove, Pershing Square in-creased the cash prize forthe competition to$100,000, half of which isdirected to the school forphilanthropic purposes, andthe remainder to the win-ning team. The prize struc-ture supports the goals forvalue investors of doing welland doing good.Bill Ackman, of PershingSquare, kicked off the com-petition by introducing theteam of judges. Each teamthen gave ten minute pre-
Page 3
Our deepest gratitude tothem all for their sup-port of Columbia Busi-ness School.
 JudgesWilliam AckmanPershing Square Capital ManagementPaul Hilal '92Pershing Square Capital ManagementAnand DesaiEton ParDaniel SchuchmanMSD CapitalCraig NerenbergBrenner West Capital Partners LPDavid BerkowitzZiff Brothers InvestmentsMick McGuireMarcato CapitalScott PearlSeneca Capital
Pershing Square Challenge FinalistsFirst PlaceCristiano Amoruso'12
Rick Carew'12Motorola Solutions (MSI)Matthew Robinson'12
Runner-upAnuj Aggarwal'12
Rahul Lulla'12Quest Diagnostics (DGX) Josh Saltman'11Allen Choi'11
Stanley Fourteau'12ropostale (ARO)Kyoo Lee'11Robert Bergan'12
 Joseph Jaspan'12Lender Processing Services (LPS)Adam Kramer'12Peter Lawrence'11
Melissa O'Connor'12Marsh & McLennan (MMC)Grant Smith'12

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