Preview Mode Links will not work in preview mode

Value Investing with Legends


Oct 29, 2021

In a world of plentiful capital and compressed yields, activism and being the agent of one's returns is a way forward.

 

Transformational activism in particular is centered around a deep commitment and trusting relationship between the investor and the company. This multi-dimensional approach forgoes short-term solutions like financial engineering and instead focuses on working with great leaders to put together the right people, resources, and strategies for long-term results.

 

Few firms exemplify the value creation associated with shareholder engagement and activism better than ValueAct and today I’m joined by Mason Morfit, Chief Executive Officer and Chief Investment Officer of ValueAct Capital.

 

Mason Morfit is a Partner, the Chief Executive Officer and Chief Investment Officer of ValueAct Capital, a governance-oriented investment fund with over $14 billion in assets under management. ValueAct has a very highly concentrated portfolio and one of its partners has served on the Boards of Directors of 44 public companies over the life of this great activist fund. Mason himself has served as a director of Microsoft Corporation, Valeant, Bard, Immucor, and many other companies.

 

In this episode, Mason and I discuss why he became interested in the psychological aspect of economics, how the activist investor landscape has shifted, the difference between transactional and transformational activism, the value of a learn-teach relationship, and so much more!

 

Key Topics:

 

  • The advantages of Mason’s experience growing up as an outsider (2:30)
  • What drew Mason to studying economics and psychology (3:48)
  • Working in the health care group at Credit Suisse First Boston in the late 90s (5:37)
  • Mason’s introduction to activist investing (7:24)
  • Activist investing in the time of the imperial CEO (9:42)
  • How corporate scandals and Sarbanes-Oxley changed the landscape for ValueAct (10:44)
  • 20 years of network and relationship building (12:54)
  • The immense value of documentation and knowledge sharing (13:50)
  • Defending against self-attribution bias (15:24)
  • The inherent problems with a public company board (17:48)
  • ValueAct’s role in mitigating against bureaucratic biases (18:24)
  • Integrating the work of board committees (19:37)
  • Psychological paradigms that emerge based on corporate history (22:18)
  • Shifting paradigms that no longer work (24:14)
  • Differentiating between transactional and transformational activism (28:15)
  • Finding opportunities in interesting times (30:36)
  • ValueAct’s mission (31:38)
  • The key ingredients of ValueAct’s successes (34:37)
  • Creating a learn-teach relationship (35:46)
  • How the learn-teach relationship helps with organizational diagnosis (37:44)
  • Creating an environment that empowers truth (39:38)
  • The changing Japanese corporate governance landscape (41:25)
  • Olympus as a case study of ValueAct’s expansion into Japan (43:31)
  • ValueAct’s unique approach to investing in the Japanese market (47:45)
  • Why activism today is more relevant than ever before (49:53)
  • Shifting opportunities for an activist investor (51:51)
  • Creating 21st century global champions (54:04)
  • The disproportionate reward of disruptors at the expense of incumbents (55:27)
  • Mason’s book recommendations (57:14)
  • And much more!

 

Mentioned in this Episode:

 

 

Thanks for Listening!

 

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

 

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!