Matthew Fine - Buying Gray Clouds and Building Resilient Portfolios

**Tano Santos** (0:01)
Welcome to a new episode of the Value Investing with Legends podcast. My name is Tano Santos. I'm the Robert Heilbrunn Professor of Asset Management and Finance at Columbia Business School and the Faculty Director at the Heilbrunn Center for Graham and Dodd Investing.
I'm here with my co-host, Michael Mauboussin, an Ajan Professor at Columbia Business School and also a faculty member at the Heilbrunn Center. Michael, how are you?

**Michael Mauboussin** (0:25)
I'm doing great, Tano. We're recording this toward the end of our semester, which is always a bittersweet sensation. But at least for our group, it's been a terrific semester, great students, wonderful guests, so lots of fun. So it's, again, bittersweet as usual.

**Tano Santos** (0:39)
I know that your students are now submitting their stock pitches, and I know because they send them to me.
There's some good stuff. So I just got one on Spotify that looks to me like a lot of fun by my TA, Roberto, who's a great guy. So, yeah, now we're getting to the end. My students are working on their stock pitches for the 5x5x5 that's on Russo's student portfolio. So it should be a lot of fun to spend a weekend reading their cases. And that's it for the academic year. Amazing how fast these things go by. But it was a good year, no, Michael?

**Michael Mauboussin** (1:14)
Great year. Fabulous year.

**Tano Santos** (1:16)
So we have a great episode today. I had the opportunity to interview our guest in the past CIMA conference, which is the Columbia Student Investment Management Association Conference that we organize every year, someday in February. And it was a wonderful conversation, a bit of short. So we wanted to have that conversation in the podcast.
It was wonderful for many reasons, but in particular because it indulged my curiosity regarding investing in Europe, in Japan, in American markets, in particular in European banks, no less. I was very keen on understanding European banking during the Eurozone banking crisis and it was rewarding to hear our guest speak so eloquently and so clearly about them. In addition, he comes from one of those legendary names in Value Investing. So it is always fun to connect with those great names and reflect a little bit in the great history behind Value Investing. So Matthew Fine of Third Avenue Management, welcome to the Value Investing with Legends podcast.

**Matthew Fine** (2:20)
Tano, thank you, Michael. Thank you for having me. This is great.

**Tano Santos** (2:23)
We're delighted to have you here. So Michael, as I was saying, is the portfolio manager of the Third Avenue Value Strategy portfolios, including the Third Avenue Value Fund and related separately managed accounts. He also leads the Third Avenue International Value Strategy. He's a principal of the firm and serves as a member of the Third Avenue Management Committee. He joined Third Avenue in 2000 and began working with international team to identify investment opportunities in the wake of the Argentine crisis in 2001 I cannot think of anything more fun than that. I'm already jealous thinking about that part of our conversation. He was promoted to Senior Research Analyst in 2008, became the PM of the International Value Fund in 2014, and assumed responsibilities for the Third Avenue Value Fund in 2017 So a remarkable level of experience. He holds a BA in economics from Hamilton College, and he's a member of the Economic Club of New York. So a lot of fun conversations. I'm sure he's been a witness to that. So welcome, Matt, to the Value Investing with Legends podcast. Thank you, Tano. So we always start a little bit with the beginning of your career. So why don't you tell us about your early life? Where do you grow up? Or whether there's any investment background in your family?
And a little bit what took you to this life in investment management? Yeah.

**Matthew Fine** (3:39)
So I grew up in Hartford, Connecticut, and I had no connection whatsoever, nor did my family, to financial markets or investing.
I would say that I was an entrepreneurial kid. I always had some kind of entrepreneurial scheme going on, and I came from an entrepreneurial family, but not at all related to investing. And I really got into economics in high school and decided that I wanted to pursue an economics degree. And I did do that, as you mentioned, at Hamilton College. But I realized in the process that it wasn't so much economics that I was interested in as much as investing.
And keep in mind, or be aware, that I graduated from Hamilton in 1999, which meant that I was in the late 1990s, in the middle of a rip-roaring bull market in US stocks, which of course helped peak my interest in investing. I just wanted to become an investor, although I had no idea what that meant. I had no idea what kind of investor I wanted to be or how to go about it. But it was the peak of the dot-com bubble. So in needing a job and wanting to become an investor, I started interviewing and I weaseled my way into an interview at Third Avenue. It was even then very difficult to get a buy-side job for a recent undergraduate. And after going to the interview at Third Avenue, I went uptown to the apartment. I was staying in at the time, my friend's apartment, his parents' apartment, and his father became aware of where I had been that day at the interview. His father, being a very seasoned investor, experienced investor in his own right, pulled me aside and said, if those people, Marty Whitman's firm, is gracious enough to offer you a job, you'd be an idiot not to take it.