Tracing my Value Investing path through London Business School

by Adesoji Solanke, MBA2018 and Mo Ibrahim Scholar

On July 3 2019, legendary professor of Value Investing at London Business School (LBS), Eddie Ramsden, announced the winner of the “Silver-Bull Award”. This goes to the winner of the best performing long idea from the class of the previous year. I won, having pitched Games Workshop Group (GAW:LN – slides here) which returned c.70%! But this post is not so much about the awards as it is about sharing my experience discovering and immersing myself in the LBS value investing community – one I knew very little about before commencing my MBA programme in 2016. I highlight below my experience with different pillars of this community and hope it excites another value investing aficionado out there:

1) Stock pitch competitions: Three times a year, the LBS Investment Management Club (IMC) runs a stock pitch competition. For value investing enthusiasts on the MBA, getting an executive role in the IMC in your first year is seen as a golden stamp. The most desired role is that of an Analyst on the Student Investment Fund (SIF, GBP500k AUM at the time) and the primary way in is via the competition. Therefore I participated in the fall 2016 stock pitch competition, submitting a pitch for Guaranty Trust Bank’s GDR (GRTB:LN). There were four finalists, five judges (from T. Rowe Price, MFS, Schroders, Orbis and Investec), as well as a full auditorium. I won on the night and subsequently joined the SIF. Over the next year I saw GRTB double in price and fondly recall a judge wondering how I could dare pitch a Nigerian bank in the middle of an oil price downcycle. I probably retorted – that’s what value investing is all about! This was my baptism into the value investing community at LBS.

2) Matthias Riechert’s Value Investing Forum: A value investing alumnus of LBS who now manages his own fund, Matthias Riechert, runs a forum with five select students each term to discuss value investing principles and work on live case studies. I was one of the select five in term 1, participating in what was a great learning and relationship building experience. We did case studies on Metro Bank (MTRO:LN) and J D Wetherspoons (JDW:LN), went out kicking the tires et al. Beyond the thought provoking sessions we held together in the evenings, Matthias has built a great network of former participants over the years who meet regularly. We once had Tim Martin, founder and chairman of JDW, spend hours with us discussing the business and how he approaches capital allocation. Other top speakers include: Norman Rentrop, Rob Vinall, Reimar Scholz, Dr. Mathias Saggau, Pat Dorsey etc. That these were phenomenal learning experiences outside of the standard LBS curriculum is an understatement.

3) Visiting Warren Buffett twice in Omaha: Thanks to encouragement from Matthias who had been attending for a number of years, I made my first trip to Omaha for Warren Buffett’s May 2017 annual shareholders meeting. It all felt unreal as my career venture into equity research was inspired by my readings of Warren Buffett during internships when I was 17 years old. In addition to seeing Warren and Charlie up close, other highlights of the weekend include meeting former hedge fund manager Whitney Tilson, hanging with founder of The Investors Podcast, Preston Pysh, and attending Robotti & Company’s investor session. Separately, the LBS IMC often gets invited to Omaha every year to meet with the sage himself. 20 students were selected from LBS to visit in December 2017 and I was one of those who spent over three hours with Warren. I believe there were 20 students each from 10 different schools i.e. at least 200 people. After spending the morning visiting Nebraska Furniture Mart, we spent two hours asking Warren a wide range of questions, subsequent to which we took group photos then visited some other businesses including diamond retailer, Borsheims (perhaps I considered buying a stone!) and dinner at Gorat’s. Overall a great experience though it appears that my group may have been part of the last student visit ever to see Warren. Oh well, I guess you can aim for the next AGM.

4) The Value Investing Course: This is taught by Professor Eddie Ramsden. The reputation of this course at LBS precedes it and for me it was definitely my best – insightful, challenging and very hands-on. The course admits only 20-25 students (across programmes) in each class, which is held twice a year. You spend the first five weeks working on a range of assignments and the latter five doing a deep-dive on one stock, potentially working with a fund to mentor you along the way. I chose Games Workshop Group (GAW:LN).

  • How I found this company I scarcely recall but I know I first prayed to God then ran a screen on Capital IQ, eventually screening for companies that were simple enough to understand, trading at “cheap” valuations, had low debt, strong cashflow generation and an easily understandable capital allocation strategy.
  • I spent many late nights (sometimes till 7am) fine-tuning my thesis, visited multiple stores, spoke with former management, journalists and competitors on different continents etc. I also got into the gaming hobby, spending multiple evenings hanging with deeply affectionate fans to understand their passion and even painted some miniatures myself. For a company that had only one analyst coverage, I probably did the most extensive primary research on the business.
  • I pitched GAW as a BUY (GBP45.0 TP) during the final class to an audience including judges from asset management firms and hedge funds, and many value investors.
  • So convinced was I of the investment case that I sent my report to the company chairman and Warren Buffett, attended the 2018 shareholders meeting in Nottingham (where I met the CEO, toured the facility, spoke with employees and hobbyists etc.), and subsequently had an hour long coffee chat with the Chairman.
  • In a nutshell, GAW performed tremendously well over the next year, returning c.70% (ripping through my target price) and winning me the Silver-Bull award for my cohort.
  • NB: My good friend, Chuen-Howe Gooi, who was with me in Matthias’s value investing forum (see point 2 above), won same award in the previous cohort for his Ocado (OCDO:LN) idea, up +129%!

In summary, these were my experiences in some of the cardinal pillars of a thriving value investing community at London Business School. It’s one that many students pass through LBS without knowing much about; more like if you’re not looking for it you wouldn’t find it. Beyond the above, there are many other routes for experiential learning for the value investing enthusiast, including: volunteering at value investing conferences such as the London Value Investors Conference, participating in inter-school stock pitches in Europe and across the Atlantic, internships and multiple high profile speaker events.

Tacking my Value Investing path through LBS

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