Christopher Davis - Investing with Curiosity

SPEAKER_1 (0:00)

Value Investing is more than an investment strategy. It's a fundamental way of thinking about finance.

Welcome to Value Investing with Legends, a podcast hosted by Tano Santos, the David L and LCM. Dodd Professor of Finance at the Hellbrunn Center for Graham and Dodd Investing at Columbia Business School. Our mission today is to promote the study and practice of Graham and Dodd's original investing principles and to improve investing with world-class education, research and practitioner academic dialogue. In this podcast, you will hear from some of the world's greatest investors, their views on the investment management industry, how they develop their investment process and how they see the field changing over time. To learn more and to subscribe to this podcast, please visit grahamanddodd.com.

Tano Santos (0:50)

Welcome to a new episode of the Value Investing with Legends podcast. I'm your host, Tano Santos, the David and Elsie Dodd Professor of Finance at Columbia Business School, and the Faculty Director at the Hellbrown Center for Graham and Dodd Investing.

My guest today is Christopher Davis, the Chairman of Davis Advisors. Mr. Davis oversees approximately $30 billion of client assets for both individuals and institutionals worldwide.

Mr. Davis joined Davis Advisors in 1989 as a financial analyst and has been the portfolio manager of the firm's flagship fund, Davis New York Venture Fund, since 1995 The Davis New York Venture Fund is, of course, one of the most venerable funds in the industry, fast approaching its 50th anniversary. There are few names in the industry with a pedigree and reputation of Davis Advisors, the independent investment management firm founded in 1969 by Shelby Davis.

Few firms embody the basic principles of value investing as neatly as Davis Advisors. Christopher Davis, welcome to the Value Investing with Legends podcast and thank you very much for being here.

Christopher Davis (1:49)

Thank you, Tan.

Tano Santos (1:50)

So I want to start a little bit with your origins. Of course, you grew up in a household where investments were in the air, so to speak, but I want to understand a little bit your origins. How do you get into the investment business? What were your readings? What was your investment philosophy? What is that you pick up by yourself, obviously from your distinguished father and grandfather? How did that come about? I mean, how do you end up in the investment business?

Christopher Davis (2:12)

Well, there was something unusual about both my grandfather and father. My grandfather and father were successful investors. And the thing that was unusual about them was that they were so delighted, so naturally curious and so energized by the profession that I remember going to meet my father at the train station. And he would be coming out of the city and you'd watch these gray commuters getting off and looking like Willy Loman with their heavy briefcases.

And my dad getting off the train was just exuberant. He always had something he wanted to tell.

And I think the reason is that very early, and this goes really back to my grandfather, that there was a recognition that stocks aren't pieces of paper that are traded. They aren't even securities, all of this jargon, that they're really ownership interests in businesses. So this idea that you were studying businesses, you were studying entrepreneurs, leaders, ideas, patents, services, reactions, everything was relevant. And it was just impossible that he could sit on a train for an hour, an hour and a half and not have found something that delighted him or intrigued him and that he immediately wanted to share when he got off, whether we were six years old or 16 years old, that passion was contagious.

Tano Santos (3:22)

I see. So that's wonderful in a way, because I think that curiosity for the business, that curiosity for understanding how firm works is really contagious. I think just the comings and goings of the market in a way, they're kind of fun, but they're not that interesting in themselves.

What is interesting is what is the underlying business that all of a sudden get completely out of whack when it comes to valuation, because of course Mr. Market is getting out of whack. So I can imagine that being quite fun.

Christopher Davis (3:47)

Even what you say about it to be funny, it's a little bit like learning a language. I think one of the problems I think is when people decide that they're interested in investing, it's like wanting to read great novels in French. And so you think, well, I'll enroll in a French class, and you start conjugating verbs, and you start learning the subjunctive.

And it's lifeless.

And if instead you just go to France for a period of time, and you're immersed, and you see it as a living language, all of a sudden you realize the language is a tool to understand something about culture, and life, and art, and beauty. And business, in a sense, is like that. I think very often people start with the jargon and the grammar, the language of business, which is, of course, accounting and so on. But they miss the arc of business. They miss business as a verb. And so they get it backwards. And I think that turns so many people from the outside off.