Beating the S&P For Generations with Davis Funds Chairman Chris Davis

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News. This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

**Barry Ritholtz** (0:17)
This week on the podcast, strap yourself in for another banger. Chris Davis chews up the scenery. He is the portfolio manager of Davis Advisors. They've been kicking the S&P's butt for the past, I don't know, since 1969
$20 billion in client assets. Fascinating conversation.
Charlie Munger was his mentor. He sits on the board of Coke and on Berkshire Hathaway. I thought this conversation was spectacular. I think you will also, with no further ado, my sit down with Chris Davis.

**Chris Davis** (0:53)
It's always good to be with you. Thank you so much.

**Barry Ritholtz** (0:56)
So, before we get into your career, Master's degree with honors from the University of St. Andrews in Scotland? Like, how did that come about?

**Chris Davis** (1:08)
Well, and one of the things that confuses people is, I actually don't have an undergraduate degree. I only have the Master's degree.

**Barry Ritholtz** (1:16)
Wait, so did you go to an undergraduate college?

**Chris Davis** (1:21)
Well, what happened is I went to St. Andrews. I originally only intended to go for a year.
I wanted to be a veterinarian. That's a long side story. And I had worked at the Bronx Zoo. I had worked at the Humane Society.

**Barry Ritholtz** (1:34)
So the original plan wasn't, dad's a fund manager, grandpa's a grant fund manager. I guess I'm going to be going to the family business. That was not the plan.

**Chris Davis** (1:44)
Definitely not, but I give both of them credit.
They felt that all of their kids should be financially literate. And so every kid worked for my father or for my grandfather at some point and learned, because they just felt like, look, you'll have money over time. It's not taught in schools, just the basic fundamentals of investing. And if you, God help you turn on the TV, you're going to get a totally distorted view of what investing is.

**Barry Ritholtz** (2:15)
A fire hose of nonsense.

**Chris Davis** (2:16)
Exactly. And so we all had this grounding, but you know, for example, my smartest sibling without question is my sister, my younger sister, but she's a small town doctor. But boy, does she, she understands investing. She's very thoughtful and how she's managed her financial affairs. So we owed that root, but we all thought we were going different paths. She was interested in medicine and I was interested in veterinary medicine. And so I was going to go to Cornell and I was very young for my high school class and I was very late hitting puberty. I mean, I was five feet tall my senior year in high school. That's when I broke five feet. So, you know, you can imagine what this looked like. But my scores and grades were okay. And so Cornell took me into their pre-vet program.
But the woman that ran it said, look, this is a seven year program. It's intense. Why don't you take a year off, like a gap year?
So I proposed that to my father. He said, we don't do that in our family. Like, you can go study, but there's no like year off, like to go ski or find yourself.

**Barry Ritholtz** (3:27)
Did you skip a grade? Or you like me, the back of like October, November, December. So you're a young relative to the rest of the family.

**Chris Davis** (3:33)
No, I had skipped a grade sort of early because I, bizarrely, I didn't, nobody in my family believes this now, but I didn't talk until quite late. So they had sort of, and then when I started talking, they jumped to me up. And it never stopped since then. But anyway, so I had this year period and it was the first year that the University of St. Andrews was interested in taking direct applications from students where they dropped the requirement to have A levels or O levels, the sort of British entry exams. Mostly because they wanted the Yankee dollar. You've got to remember, Thatcher had just become Prime Minister. She was slashing the public support of the Scottish Universities.
So I applied. There were, I think, eight of us Americans that came in that first year. And they had a program where after two years, you could apply into the honors program, which would allow you to concentrate on just one subject. And I ended up picking two.
But needless to say-

**Barry Ritholtz** (4:41)
What were the two?

**Chris Davis** (4:42)
It was philosophy and theology.

**Barry Ritholtz** (4:44)
Huh, very interesting.

**Chris Davis** (4:46)
I picked my freshman year thinking, well, when I go back to Cornell, I'm going to be filled up with organic chemistry and biology and anatomy and so on. So I may as well pick things that I would never, I'll never get to study again. So I picked things like medieval history, philosophy, theology.