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FIRST ANNUAL SYMPOSIUM ON VALUE INVESTING

Intelligent Investing: Value vs. Growth - Traditional vs. Fundamental Indexing

The Ben Graham Centre for Value Investing at the Richard Ivey School of Business, The University of Western Ontario hosted a symposium for practitioners on Intelligent Investing on May 25, 2007 at the Board of Trade, First Canadian Place, Toronto.

The goal of the conference was to explore different investment philosophies and techniques, while also debating best practices in investing and portfolio management.

The conference featured Mr. Prem Watsa, Chairman & CEO of Fairfax Financial Holdings Lts. as the keynote speaker. Other speakers included Dr. George Athanassakos of the Richard Ivey School of Business, Dr. John Bart, Founder of Canadian ShareOwner, Mr. Howard Atkinson, President of Horizons BetaPro ETFs and Mr. Rob Arnott, Chairman of Research Affiliates, LLC.

Video of the presentations is available in the Burgundy Asset Management Resource Centre.

The conference received significant national media attention with articles in the Toronto Star, Financial Post and Globe & Mail. It attracted over 75 people from the investment industry as well as many individual investors, and was referred to by conference participants as “a milestone in Canadian investment history”.

    

Prem Watsa, Chairman & CEO, Fairfax Financial Holdings Ltd. spoke at Ivey's First Annual Intelligent Investing conference in Toronto.

 

Professor George Athanassakos, Ben Graham Chair in Value Investing at Ivey, speaks with conference participants following Ivey's first annual Intelligent Investing conference.

 

Dr. Athanassakos organized the program and coordinated the conference and its agenda. Dr. Athanassakos opened the conference with the following remarks:

"The Ben Graham Centre for Value Investing, one of only two similar centers in the world, focuses on researching and educating future business leaders and investors in the investment style made popular by Benjamin Graham in the early 1930's. It serves a critical role in coordinating applied research at the University, in linking the activities of faculty and students with practitioners and in undertaking activities which are mutually beneficial to the University, the Industry and investors in general. My mandate as the holder of the Ben Graham Chair in Value Investing was to develop a program on value investing and have done so. With this program we are breaking new academic ground at The Richard Ivey School of Business, as we are advancing Value Investing from a strictly trade profession to an academically rigorous subject.  We are also making history, as this is a unique program not only in Canada, but around the world. We are the first University in Canada to offer such a program and the second in the World after Columbia University, where the pioneer of this particular style of investing, Benjamin Graham, taught.

My vision for the centre is three pronged:

First, the development of future business leaders. This not only includes the offering of electives in the degree programs (HBA and MBA), but also includes executive education and executive development programs. It also includes cases, books and readings, a library with video of Value Investor lectures and practitioner visits and two databases - one of Canadian Value Investing funds and the other of company financials and financial market statistics. Second, the development of intellectual capital. This includes academic and practitioner research published and at the working paper stage, as well as a list of all those carrying out research in the field. It will also eventually grow to include a PhD program and PhD students. Third, spreading the word about value investing to the broader community that includes practitioners. This includes seminars, conferences and competitions. When it is completed, the Centre will also support a student managed Value Investment fund run by students with real money that will be raised via donations. The conference falls within this third mandate of the centre.

When Wells Fargo Bank was creating the FIRST major S&P 500 Index fund, back in the 1970s, the bank’s investment committee reportedly balked at buying 19 out of the 500 S&P stocks, because these companies appeared to be in serious financial trouble. The first S&P 500 index was actually created with 481 stocks – and the excluded 19 stocks, as a group, went on to consistently and decisively outperform the S&P 481.

One can look at this anecdote, in one of two different ways:

1. It is really tough to outguess the market even if you think you could not possibly be wrong; so if you can not beat the market join it! Alternatively,

2. If you want to beat the market you should go against the herd, conventional wisdom and human nature to extrapolate.

This is what makes a conference such as this one interesting and educational.

Conventional wisdom would suggest that an investment conference hosted by the Ben Graham Centre for Value Investing would be home to discussing the merits of Value Investing. However, we are firm believers that Intelligent Investing requires independent thinking that goes beyond a partisan point of view. We recognize that investors face complex challenges in making investment allocation decisions, and so our goal is to start a debate on investing and investment management rather than simply adhering to any particular point of view. To this end, the conference brings together four speakers, distinguished in their field, who will share with us their perspectives and philosophies on active vs. passive investment management.

In the morning session, yours truly Dr. George Athanassakos, The Ben Graham Chair in Value Investing and Dr. John Bart, president of Shareowner, will share their views on active management and discuss the merits of value vs. growth investing, while in the afternoon session, Mr. Howard Atkinson, president of Horizons Beta Pro ETFs and Mr. Rob Arnott, Chairman of Research Affiliates, will share their philosophies on passive management and discuss traditional vs. fundamental indexing."

Dr. Athanassakos closed the meeting as follows:

"A few years ago it was easy to discuss management styles for common stocks. One was a passive manager or an active manager. The passive manager held a market index. The active manager did something else. Things have gotten a bit more complicated as the discussion today has shown. The line between passive and active management has become increasingly fuzzy. You heard many different views and philosophies today. However, despite the diverse range of investment philosophies and convictions you heard, there seems to be a consensus resulting from the today’s presentations, which is for investors to do their homework, and take a long term view and disciplined approach to the markets. Thank you very much for joining us today. I hope the sessions gave you some insight into the various investment philosophies and which are best for your personal style and temperament."