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Graham and Doddsville - Issue 13 - Fall 2011

Graham and Doddsville - Issue 13 - Fall 2011

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Published by g4nz0
Graham & Doddsville
An investment newsletter from the students of Columbia Business School
Inside this issue:
Issue XIII Fall 2011

Interview: p1 Leon Cooperman Interview: Mario Gabelli Interview: Marty Whitman Alumni Profile Student Writeup: GLDD Student Writeup: MSG p1 p1 p25 p29

p31

Editors Anna Baghdasaryan MBA 2012 Joseph Jaspan MBA 2012 Mike DeBartolo, CFA MBA 2013 Jay Hedstrom, CFA MBA 2013 Jake Lubel MBA 2013
Visit us at:
www.grahamanddodd.com
www0.gsb.columbia.edu/students/ organizati
Graham & Doddsville
An investment newsletter from the students of Columbia Business School
Inside this issue:
Issue XIII Fall 2011

Interview: p1 Leon Cooperman Interview: Mario Gabelli Interview: Marty Whitman Alumni Profile Student Writeup: GLDD Student Writeup: MSG p1 p1 p25 p29

p31

Editors Anna Baghdasaryan MBA 2012 Joseph Jaspan MBA 2012 Mike DeBartolo, CFA MBA 2013 Jay Hedstrom, CFA MBA 2013 Jake Lubel MBA 2013
Visit us at:
www.grahamanddodd.com
www0.gsb.columbia.edu/students/ organizati

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Published by: g4nz0 on May 10, 2012
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Leon “Lee” Cooperman ’67,
CFA, began his post-business school career in1967 with Goldman Sachs.In addition to holding anumber of key positions within the firm, Mr. Cooper-man was founder, Chairmanand Chief Executive Officer 
of Goldman’s Asset Manage-
ment division. In 1991, heleft the firm to launchOmega Advisors, Inc., avalue-oriented hedge fund which now manages roughly$5.5 billion. Mr. Coopermanearned his B.A. in Sciencefrom Hunter College and hisM.B.A. from Columbia Busi-ness School. Mr. Cooper-man and his wife are signa-
tories of Warren Buffett’s“Giving Pledge”.
 
(Continued on page 2)
Lee Cooperman
 — 
 
“Buying
Straw Hats in
the Winter”
Marty Whitman
 — 
 
“Business SkillCritical to Investment Success”
 
Mr. Whitman foundedthe predecessor to theThird Avenue Funds in1986 and M.J. Whitman, afull service broker-dealer affiliated with Third Ave-nue in 1974. He has man-aged the flagship ThirdAvenue Value Fund sinceits inception in 1990 and
 was Third Avenue’s Chief 
Investment Officer fromits founding through Janu-ary 2010.
(Continued on page 20)
Fall 2011Issue XIII
Editors
 
Anna BaghdasaryanMBA 2012 Joseph JaspanMBA 2012Mike DeBartolo, CFAMBA 2013 Jay Hedstrom, CFAMBA 2013 Jake LubelMBA 2013
Inside this issue:
Interview:Leon Coopermanp1Interview:Mario Gabellip1Interview:Marty Whitmanp1Alumni Profile p25Student Write-up: GLDDp29Student Write-up: MSGp31
Leon Cooperman
Visit us at:
Graham & Doddsville 
An investment newsletter from the students of Columbia Business
School
 
Mario Gabelli ’67, CFA,
started his career as anautomotive and farmequipment analyst atLoeb Rhodes & Co. In1977 he foundedGAMCO Investors(NYSE: GBL), where heis currently Chairmanand CEO, as well as aportfolio manager and
the company’s largest
shareholder. GAMCOnow manages roughly$36 billion dollars acrossopen and closed-end mu-tual funds, institutionaland private wealth man-agement, and invest-ment partnerships. Mr.Gabelli earned his B.S.from Fordham Univer-
Mario Gabelli
Mario Gabelli
 — 
 
“Think Like anOwner”
sity and his M.B.A. fromColumbia Business School.
(Continued on page 12)
Marty Whitman
 
We are pleased to presentyou with Issue XIII of 
Gra-ham & Doddsville,
Columbia
Business School‘s student
-led investment newsletter,co-sponsored by the Heil-brunn Center for Graham &Dodd Investing and the Co-lumbia Student InvestmentManagement Association.This issue features a trio of legendary value investors,who honored us with theirtime and sage advice. Onething became crystal clear:
there is no single ―right‖
way to practice value invest-ing. Each successful valueinvestor adapts the practiceto his or her own style,although Graham & Doddand their famous disciplesremain an inspiration to somany of us.
Welcome Back to
Graham & Doddsville 
Page 2
We start off this issue with
Lee Cooperman ‘67, foun-
der, Chairman and CEO of Omega Advisors, Inc. Mr.Cooperman reflects on thepath of his incredibly suc-cessful career, describeshow his firm constructs itsportfolio, and outlines thetheses behind a few of histop investment ideas.We also had the privilege of speaking with Gabelli AssetManagement (GAMCO In-vestors) founder, Chairmanand CEO Mario Gabelli,well-known value investorand alum of Columbia Busi-
ness School‘s class of 1967.
Mr. Gabelli provides hisapproach to security analy-sis and discusses his interestin BEAM, National Fuel Gasand The Madison SquareGarden Company.Our third interview is withveteran value investor MartyWhitman, Third Avenue
Management‘s Chairman and
Portfolio Manager, and anAdjunct Professor of Dis-tress Value Investing at Co-lumbia Business School. Mr.Whitman shares his thoughtson some compelling areas of investment opportunity, dis-cusses his approach to com-pany valuation and describes
some of his firm‘s most suc-
cessful investments.Please feel free to contact usif you have comments orideas about the newsletter.We hope you enjoy reading
Graham & Doddsville
as muchas we enjoy putting it to-gether!
- Editors, Graham & Doddsville
 
Pictured: Bruce Greenwald,
named the ―Guru to WallStreet‘s Gurus,‖ at the Colum-
bia Student Investment Man-agement Conference in Febru-ary 2011.
G&D:
After graduatingfrom Columbia BusinessSchool, you began your verysuccessful career at Gold-man. What drew you to thesell-side following businessschool?
LC:
Something that Ishould mention, before ad-dressing my time at Colum-bia and Goldman, was mydecision to not pursue adental education. This wasthe most difficult decision Ihad made in my life up tothat point. Back in 1963, if you completed your under-graduate major and minor inthree years, you couldcount your first year of den-
(Cooperman from page 1)
tal or medical school to-ward your fourth year of college and receive a sepa-rate degree. I finished myscience major in the sum-mer of 1963, which enabledme to enroll in dentalschool. After being in den-tal school for about eight
days, I wasn‘t sure that was
the direction I wanted togo. This became quite atraumatic situation. I had togo to the dean of the dentalschool and tell him I wantedto matriculate back into theundergraduate school tocomplete my fourth under-graduate year unencum-bered. The dean put me ona great guilt trip, telling methat I had deprived the 101
st
 applicant of a dental educa-tion, that the school wouldbe losing revenues for thenext four years and that I
couldn‘t possibly know what
I wanted to do after eightdays. The only person whoreally appreciated the signifi-cance of my decision wasthe dean of Hunter College.I went back to Hunter and,since I had finished my ma- jor during the summer, too10 elective courses in eco-
nomics and received 10 A‘s.
That furthered my interestin business. Upon gradua-tion I went to work forXerox up in Rochester, NYas a quality control engi-neer.After about 15 months I
(Continued on page 3)
Investor Warren Buffett re-ceives a gift from students on aHeilbrunn-sponsored trip inMarch 2008.
 
management that we weremaking a mistake not beingin the asset managementbusiness. The firm, being abrokerage house, wasstrongly opposed to whatthey considered competingwith their client base. Everybrokerage firm at the timewas largely in this business.Once Salomon Brothers andsome others announcedtheir launching of an assetmanagement business, Gold-man leadership asked me toestablish one of their own. Ileft research at that timeand became Chairman andCEO of Goldman SachsAsset Management.This was the beginning of my exit from the firm. Theywanted to capture as manyassets as possible becausethey wanted to build thebusiness to a scale thatwould be relevant to a firmlike Goldman Sachs. On theother hand, my motivationwas the proper perform-ance of the assets in mycontrol. I realized after a
short time I didn‘t want to
be on the road every week,introducing a new productand sourcing new funds. Iwanted to spend my timevisiting companies and find-ing new mispriced stocks. Iwanted to manage money insuch a way that my interests
and the clients‘ interests
were 100% aligned. I didnot want to build a big busi-ness like Goldman Sachswanted me to. I have thehighest respect for Gold-
man, but it was the firm‘s
reluctance to go into thehedge fund business that ledto me start Omega.
Page 3Issue XIII
Lee Cooperman
 
My last day at Goldman wasNovember 30
th
, 1991 and Istarted Omega the verynext day. Over the past
twenty years I‘ve been rais-
ing the money, hiring thepeople, running the moneyand setting up the infra-
structure. It‘s kind of been
non-
stop. I‘m getting olderbut I‘m still handling it okay.
G&D:
Did anyone or anyinvesting class at ColumbiaBusiness School have a par-ticularly significant influenceon you?
LC:
Yes, there was oneperson who had a profoundinfluence on me. I evenhave a letter he sent me in1977 hanging on my wall.His name was Roger
Murray, Benjamin Graham‘s
successor as the professorof security analysis at Co-lumbia and, in fact, a subse-quent editor of the book 
Security Analysis
. MarioGabelli, a very dear friend of mine, also studied underhim and would probably saythe same thing. As ourvalue investing professor, heshowed a great deal of ex-citement for the subjectmatter. I would also sayWarren Buffett influenced
me tremendously. I‘m an
expert in his writings andhis views. Finally, Grahamand Dodd influenced me aswell. Their book 
Security  Analysis
is sitting right thereon my shelf.
G&D:
How has your ap-proach to investing changed
(Continued on page 4)
“… there was one
 person who had a profound influenceon me. I even havea letter he sent mein 1977 hanging onmy wall. His namewas Roger Murray,
Benjamin Graham‟s
successor as the pro-fessor of security analysis at Columbiaand, in fact, a subse-quent editor of thebook Security Analy-
sis.” 
 
decided I wanted to get anMBA to advance my creden-tials. I wanted to stay in theNew York area and I wasinterested in finance, soColumbia was a natural fit.With great modesty, Iwould say that I was an at-tractive package coming outof Columbia BusinessSchool. I was Beta Gamma
Sigma, had straight A‘s, a 6
month old child and was aserious person. Wall Streetwas hiring with abandon, alot of which had to do withthe market cycle. I wasinterviewing in 1966, whichwas a year in which themarket was peaking, thoughno one knew that. I ac-cepted an offer with Gold-man Sachs, which at thetime was not what it wouldbecome a decade or twolater. This was fortunatebecause I was able to con-tribute, in a small way, to
the firm‘s later success.
I got my MBA on January31, 1967. I had a six monthold child and I had nomoney in the bank so I wasnot in the position to takethe obligatory trip to Hawaiior Australia. I started as ananalyst at Goldman the nextday. I then spent close to25 glorious years with thefirm.I had a number of differentroles in the company. Forexample I was made Partnerin charge of research in1976 and, at the same time,
I was Chairman of the firm‘s
investment policy commit-tee. For a number of years,I had been telling Goldman
(Continued from page 2)

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