Nov 29, 2019
Today’s conversation is with Matthew McLennan, head of the
Global Value team and a portfolio manager of the Global Value,
International Value, US Value and Gold strategies at First Eagle
Investment Management, where host Tano Santos also works as a
Senior Advisor. Matt is interested in the field of education,
and he is a trustee of the Trinity School in New York City. He
serves as co-chair of the Board of Dean’s Advisors of the Harvard
School of Public Health and as a board member of the University of
Queensland in the United States of America. He is also a trustee of
the Board of Directors for the Library of America.
After sparking his interest in investing in boarding school,
Matt went on to study at the University of Queensland where he was
given a unique opportunity to take part in the management of a $10
billion pool of capital at the Queensland Investment Corporation.
This was to be the first of many successful career moves as that
experience positioned him perfectly to join the Goldman Sachs team
in Sydney. After rising through the ranks at Goldman Sachs, Matt
joined First Eagle in the heart of the global financial crisis and
where he once again proved the importance of fundamentals,
selectivity, and patience.
On this episode, Matt and I talk about what sparked his interest
in investing, why learning how to think is more valuable than
specific finance theory, his investment approach, the role of
temperament in investing, his career at Goldman Sachs, how joining
First Eagle during the global financial crisis ended up being a
blessing in disguise, why you shouldn’t try to predict market
activity, and so much more!
Key Topics:
- Why theFirst Eagle Investment Management Foundation Scholarship
was created (3:09)
- How the First Eagle fellowship will benefit the recipient and
the firm (4:07)
- Matt’s early life growing up in a small town in Australia
(6:04)
- Looking at his parent’s land as a metaphor for the power of
selectivity and patience (7:08)
- How a boarding school investment club sparked Matt’s interest
in investing (7:40)
- Matt’s opportunity to work in asset management for a large
capital pool (9:23)
- Why learning how to think was more valuable to Matt than
specific finance theory (10:33)
- How the state of the markets in the 80s provided an interesting
environmental backdrop for Matt during his studies (11:34)
- How working with the Queensland Investment Corporation helped
to shape Matt’s investment philosophy later in life (12:51)
- Matt’s investment approach and the role of temperament
(14:18)
- Leaving the backyard to join Goldman Sachs (16:12)
- The role of mentors at Goldman Sachs in developing Matt as a
value investor (17:14)
- Why you need to consider the two important assets missing from
the balance sheet (17:54)
- How the market’s perspective on value investing changed during
Matt’s career at Goldman Sachs (20:00)
- Why the late 90s was a difficult time to be a value investor
(21:33)
- The reason that joining First Eagle was appealing for Matt
(23:43)
- How joining First Eagle during the global financial crisis
ended up being a blessing in disguise (26:54)
- Why instead of trying to predict market activity you should
take advantage of markets after the fact (29:20)
- Matt’s perspective on measuring growth (32:06)
- How Matt identifies potential investment ideas (34:54)
- Why Matt invests in businesses with scarce intangible assets
(35:51)
- The challenge you face when buying companies in competitive
industries (36:46)
- The role of specialized knowledge in investment analysis
(38:53)
- Why First Eagle reinforces a culture where continuous learning
is valued (40:47)
- How First Eagle decided on hedging with a real asset
(43:02)
- The usefulness of gold as a hedge in comparison to other
commodities (45:12)
- Matt’s views on the current unusual state of the markets
(48:51)
- The right portfolio response to the current state of the
markets (53:47)
- Why Matt attributes a lot of the success of passive investing
to the poor approach taken by some active managers (58:04)
And much more!
Mentioned in this Episode:
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