In this episode, host Michael Mauboussin sits down with Seth Klarman, CEO and portfolio manager of The Baupost Group. One of the most influential practitioners of value investing, Seth shares his formative stories — from arbitraging coins as a kid to launching Baupost in 1982 — and reflects on his decades-long investment philosophy. They explore timeless principles of market inefficiencies, the importance of temperament, specialization versus generalization, the role of patient capital, and the challenges and opportunities ahead for investors in today’s world. Seth also opens up about technology trends like AI, the evolving market structure, and the enduring lessons from Graham & Dodd — and much more!

Key Topics:

• Seth’s early entrepreneurial ventures and coin arbitrage (2:10)
• Lessons from working at Mutual Shares with Max Heine and Michael Price (4:12)
• Starting Baupost and managing the founding families’ wealth (10:53)
• Core principles behind value investing and market inefficiencies (13:06)
• The impact of indexing, ETFs, and passive investing trends (16:42)
• Generalists vs. specialists in investment research (19:06)
• How Baupost evaluates opportunities across asset classes (21:13)
• Why value investing combines a contrarian streak with a calculator (23:51)
• The importance of meeting management teams and assessing intent (26:44)
• Building and educating a long-term oriented client base (29:06)
• Managing behavioral biases and fostering the right temperament (31:21)
• Current market outlook and where Baupost sees value today (34:03)
• How AI is changing research and efficiency at Baupost (36:54)
• Broader applications of the “Moneyball” mindset (40:13)
• The difference between an analyst and a portfolio manager (44:01)
• Seth’s views on risk, business ethics, and business education (45:50)
• What worries Seth about the future — and what excites him (48:11)
• Book recommendations from Seth Klarman (51:42)
• And much more!

Mentioned in this Episode:

• Margin of Safety by Seth Klarman
• Security Analysis by Benjamin Graham & David Dodd (Seventh Edition)
• Moneyball by Michael Lewis
• Lost & Found by Kathryn Schulz
• Being Wrong by Kathryn Schulz
• The Light Eaters by Zoë Schlanger

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!

In this episode of Value Investing with Legends, Tano Santos and Michael Mauboussin sit down with Kent Daniel, Professor of Finance at Columbia Business School, to discuss his journey from physics at Caltech to leading research in behavioral finance and quantitative investing. Kent shares insights from his academic work and his years at Goldman Sachs, including his critiques of the Fama-French model, the role of intangible information in asset prices, and the implications of short selling constraints. The conversation spans decades of market evolution, empirical challenges, and the behavioral patterns that continue to shape financial theory and practice.

Key Topics:

● Introduction by Tano Santos and Michael Mauboussin (0:00)

● Introduction of guest Kent Daniel and his academic and professional background (0:48)

● Kent shares his early life, education at Caltech, and influences like Richard Feynman (3:31)

● Transition from physics to finance, MBA at UCLA, and entry into PhD program (5:46)

● Kent's dissertation on time variation in asset returns and statistical test power (8:02)

● Discussion on behavioral vs. rational explanations for return predictability (11:51)

● Kent's time at University of Chicago during the rise of behavioral finance (15:18)

● Challenge to the Fama-French three-factor model with characteristics vs. covariances paper (22:40)

● Behavioral finance classic: Overreaction and underreaction explained through psychology (27:31)

● Discussion on tangible vs. intangible information in financial markets (36:04)

● Current research on short selling, borrow costs, and market inefficiencies (41:40)

● Kent's experience at Goldman Sachs and practical application of academic research (50:02)

● Reflections on the quant crisis and build-up of leverage pre-2008 (56:26)

● Discussion on value investing post-2008 and limitations of book-to-market (57:00)

● Kent’s nuanced view on market efficiency and the role of frictions (1:02:16)

● Views on indexing, ETFs, and financial market design (1:06:11)

● Kent shares what excites and worries him about the future of markets (1:08:09)

● Kent's current reading and listening recommendations (1:10:07) And much more!

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!

In this episode, Cliff Asness joins Tano Santos and Michael Mauboussin for a conversation that spans the evolution of quantitative investing, lessons from market crises, and the enduring tension between risk and behavioral explanations in finance. From his formative years at the University of Chicago under Gene Fama to building AQR into a quant powerhouse, Cliff reflects candidly on theory, performance, and how markets may have become less efficient in recent years.

Key Topics:

• Tano and Michael return from sabbatical and reflect on recent academic and classroom experiences (0:00)
• Overview of Cliff’s career and contributions to quant investing and academic finance (1:13)
• Cliff recounts his underachiever label, how standardized tests changed his path, and why he chose Penn’s M&T program (2:54)
• How Cliff’s coding work for Andy Lo inspired his academic path and led to Chicago (5:03)
• A breakdown of the 1992 and 1993 Fama-French papers, and how they reshaped asset pricing (8:45)
• Cliff discusses the theoretical divide between Fama and Thaler and his own evolution toward a behavioral perspective (13:08)
• Memories of presenting momentum to Fama, intellectual honesty, and voice-shaking dissertation defenses (17:13)
• Why Cliff chose Goldman over academia, his role in developing Goldman’s quant group, and the influence of LTCM (22:00)
• Launching in August 1998 during the Russia default; early drawdowns and lessons from the tech bubble (27:50)
• How quant signals hold up, risks of crowding, and the difference between short-term and long-term capacity (34:32)
• Momentum held, but value strategies collapsed. How AQR dealt with long underperformance (43:31)
• Valuation starting points can obscure long-term performance; recent decades viewed in proper context (49:22)
• Cliff's provocative “Less Efficient Market Hypothesis” and three key drivers: indexing, interest rates, and social media (50:54)
• Is passive investing weakening price discovery? Reflections on Sharp’s arithmetic and Grossman-Stiglitz (54:12)
• How echo chambers and meme stocks challenge traditional models of rational price formation (58:28)
• Why companies aren’t issuing more equity despite sky-high valuations, and the fading role of smart capital allocators (1:00:46)And much more!

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!