Phil Ruvinsky - Sustainable Competitive Advantages in Technology

**Michael Mauboussin** (0:01)
Welcome to a new edition of the Value Investing with Legends podcast. My name is Michael Mauboussin, and I'm an adjunct professor at Columbia Business School and a faculty member at the Halbron Center for Gram and Dot Investing. My co-host, Tano Santos, the Robert Halbron Professor of Asset Management and Finance at Columbia Business School and the Faculty Director at the Halbron Center couldn't join us today, but we'll be back soon.
Today, we continue with our theme on technology, barriers to entry, and competitive advantage.
Recent episodes have reviewed why large technology companies have distanced themselves from the pack, how to apply competitive strategy frameworks to digital businesses, and what regulation around the world might mean for the prospects of digital companies. In this discussion, we turn to an investor who has to take all these factors into consideration in order to make profitable portfolio decisions. To invest successfully, it's not just the results, the businesses will produce, but whether the market properly anticipates those results. We are delighted to welcome Phil Ruvinsky. Phil is a managing director and part of the Fundamental Equity Division of BlackRock's Portfolio Management Group. He is the head of the Fundamental US. Growth Team and lead portfolio manager of the BlackRock Capital Appreciation and Focus Growth Funds, the BlackRock MidCap Growth Fund, BlackRock Innovation and Growth Trust, and the BlackRock SMID Growth Fund.
Prior to joining BlackRock in 2013, Phil was a sector head and research analyst at SureView Capital from 2010 to 2013, where he was the head for the global internet, media, and telecom sectors. He began his investment career with UBS Global Asset Management in 2002, where he was a portfolio manager and investment analyst with primary research responsibility for internet, consumer, and health care sectors. Phil started his career as an attorney for Skatt & Arps. Phil earned a bachelor's degree in economics from the University of Texas, a law degree from the University of Michigan, and an MBA from Columbia Business School. Phil, it's always exciting to have an alumnus back as a guest. Welcome, Phil, and thank you very much for being here. We're really looking forward to talking to you today, and we've got a lot of ground to cover. Let's start at the beginning. Can you just tell us a little bit about your early life and how and why a guy who was a trained lawyer pivoted to becoming an investor?

**Phil Ruvinsky** (2:27)
Yeah, thanks, Michael. Thanks for having me on the podcast. Yeah, so I grew up in Texas and I went to college in Texas, and I knew I was interested in business and strategy and companies.
It seemed like a good idea at the time to go to law school and work in corporate transactions. I started at Skadden Arps, like you said. It was a great experience. Knew it wasn't for me. Worked on some amazing deals like the ASM lithography. IPO, for example.
And having completed that, I realized I hardly knew what the company really did despite putting in hundreds and maybe thousands of hours on the transaction, right? So I knew I wanted to understand companies at a deeper level. And so this was the end of the Internet bubble, like 99, 2000
So I decided to go to business school to switch careers and sit out the bear market, I guess, to some extent. It turned out my timing wasn't that great. The bear market was prolonged, as you remember, in 9-11, of course. And so it was a really terrible time to try to change careers. Luckily, a guy named Lawrence Camp, whom you've met, he was the head of the growth investing group at UBS as a management. He gave me a shot. And that's how I became an investor.

**Michael Mauboussin** (3:38)
And did you find that business school did help you prepare to become an analyst and eventually a portfolio manager? Did that introduce the skills that you needed to add to your toolbox?

**Phil Ruvinsky** (3:47)
Yeah, absolutely. The law school gave me some critical thinking skills and understanding both sides to an argument, things like that. The business school was really formative to me. I was super excited about companies and stocks and just understanding businesses, but I didn't really have a true north. And I certainly got that in business school and specifically classes like yours, of course, and Professor Greenwald's and just critical to my informative crystallizing what I wanted to do as an investor.

**Michael Mauboussin** (4:14)
So let's talk about investment philosophy a bit, just to state the obvious, generating excess returns for fund holders is a challenging task. You have mentioned that you hand new employees a couple of books when they start.