Morninstar Interviews Professor Bruce Greenwald

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value investing from graham to buffett
Bruce Greenwald

By co-blogger sandesh Trivedi

Bruce Greenwald is director of research at First Eagle Funds. He is also the Robert Heilbrunn Professor of Finance and Asset Management at the Columbia Business School. Greenwald is academic director of the Heilbrunn Center for Graham & Dodd Investing. He received the Columbia University Presidential Teaching Award. More than 650 students take his courses every year in subjects including value investing, economics of strategic behavior, globalization of markets and strategic management of media.

 Greenwald has authored several books. He wrote a phenomenal book on value investing titled Value Investing: From Graham to Buffett and Beyond ,and has written several other books on topics including globalizationcompetition and media companies.

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Below is an interview Morningstar conducted with Bruce Greenwald:

Part I: Why First Eagle Favors Amex Over Citi

Amex may not offer as much upside potential, but the risk of permanent capital impairment is almost nil, says Professor Bruce Greenwald, director of research at First Eagle. Professor cites two reasons for favoring Amex over other financials. One is that their credit card defaults are falling and the second is that they are shrinking their loan portfolio and that is generating a huge amount of cash. As a result the chance of them raising equity capital is almost nil in this case.

Full transcript of Part I

Part II: The Most Extraordinary Thing About This Market

Investors are again being offered an extraordinary opportunity to put capital to work in high-quality companies at a good price, says Columbia professor Bruce Greenwald.

Greenwald made a case for investing in companies like Coca-Cola, Johnson & Johnson, American Express, and Wellpoint and talks how these companies will continue to do well in an inflationary or a deflationary environment by raising prices.

Full transcript of Part II

Part III: Opportunity Even When the Market’s Not Cheap

Index investors may be cautious when the Shiller P/E is high, but specific and extraordinary opportunities can still be had, says the Columbia professor and First Eagle director of research.

Full transcript of Part III

Part IV: Greenwald Wouldn’t Bite on Apple

At current prices, Apple is hugely expensive given its vulnerabilities, says the Columbia professor and First Eagle director of research. Regardless of the quality of a company if one pays a dollar for something worth 50 cents then he is losing money right away. Also apple doesnt have any competitive advantage either in the form of economies of scale or strong customer captivity.

Full transcript of Part IV

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  1. Current AAPL PE is 21 forward PE is 16 and 25 $ of cash/share in hand. How is Apple overvalued? Also, the missing part is that apple has currently the only platform A4 chip + Iphone OS that can compete with Intel+MS Web experience. It’s also really hard to see that ppl would move away from the apple experience – once you get an Ipod you don’t buy an alternative, you upgrade to the next ipod. What are your thoughts?

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