Value Investing

Investing By Design: CFA Presentation

Investing By Design: Sh*t. Guess I’m Going To Buffalo. by Broyhill Asset Management

In January of this year I got a call from Doug to come and speak to the Society. . . I did my best to turn him down.

And Doug did his best to tempt me. What got my attention was all of the wonderful Frank Lloyd Wright architecture in Buffalo. Which gave me a ”brilliant” idea – if he could find a way to host the event at one of these homes, I would make the trip.

The very next day, I get another call from Doug with the ”good” news. He had confirmed the Martin House! I said, ”Sh*t. Guess I’m going to Buffalo.”

I started my career with JPM in NY in the late 9os. Times were good. I earned my CFA charter after undergrad and worked my way up JPMorgan’s investment management business until 2005 when I moved to North Carolina to join the Broyhill Family Office. Ten plus years later, I’m enjoying life in NC and loving work as the Chief Investment Officer of Broyhill’s Family Office. I think we have the best job in the world. I feel incredibly fortunate to come to work everyday with a passion for what we do.

But let me ask you a question. Think back to your childhood for a moment. On the playground as a kid, how many of you dreamed of being an investment manager growing up?

I can tell you I certainly did not. I dreamed of becoming an architect. I had a drafting table by middle school and took drafting classes through high school. I was one of 30 or so students selected for Penn State’s architecture program and later interned for a firm based out of a Frank Lloyd Wright home in New Jersey.

50 today is a special day for me. I get to talk about my two greatest passions.

As a freshman architecture major, I was a little obsessed with FLW. I visited Fallingwater at least half a dozen times while studying in PA. But the 9os tech bubble was in full force and my left brain ultimately overpowered the right (more on that in a moment). 50 I made the switch from architecture to finance. And just in time for the tech bubble to burst. It was a difficult period to be managing money. But it also burned an important lesson into my young brain – preservation of capital is key to survival in this business.

As it turns out, the history of Wright’s Martin House has its own connection with Wall Street. The home was built between 1903-1905 for Darwin D. Martin, a Chicago business man. Apparently, times were good for the Martin’s as their home was one of the largest built by FLW.

But as we have all learned by now in this business, markets are cyclical. Good times are inevitably followed by bad times. The early 190os were no exception. The Martin’s lost their fortune in the 1929 crash and couldn’t find a buyer for such a large home so the house was left empty and abandoned for years. Thankfully, it has since been restored, giving us an opportunity to explore the parallels between architectural design and the investment process.

Investing By Design: CFA Presentation

I think what appealed to me about architecture was the combination of creativity and problem solving it required.

Frank Lloyd Wright’s Fallingwater is a magnificent example of this combination. The creativity in design combined with the engineering knowledge required to bring a design to life.

Luckily for me, this combination of skills has applications outside of architecture as well. Successful investing requires creativity in problem solving and independent thinking. It requires a child-like curiosity. And it requires the humility to know when you are wrong. Or as Wright once said, ”Early in life / had to choose between honest arrogance and hypocritical humility. I chose the former and have seen no reason to change.”

My home office today is littered with Lego Architecture sets. A yet-to-be-assembled Cut Assemble model of Wright’s Robie House rests on the table in my office. But the majority of my time is now spent constructing different types of models.

On the surface, it’s probably not entirely clear what these models have in common. When most folks imagine what we do as investment managers, they probably envision a bunch of math nerds sitting around building elaborate financial models in Excel.

For the first several years of our marriage, my wife just told people I ”did math” for a living whenever she was asked. I’m not sure she has a different answer today.

Investing By Design

Investing By Design

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