They hired me after business school, and I worked there until I left with my boss to be his junior partner at a startup hedge fund called Arklow Capital.
I left Arklow and founded Bandera Partners with my partner, Greg Bylinsky, in 2006. We own about 15 stocks, with 3 or 4 of them accounting for a large percentage of our portfolio. As for deciding to write the book: I started teaching investing at Columbia Business School in 2011, and the students were always asking for book recommendations.
“Dear Chairman” has been praised by luminaries including Warren Buffett, Carol Loomis, former SEC chairman Arthur Levitt, former Fed chairman Alan Greenspan, Fed Ex CEO Fred Smith, and Charles Schwab, chairman of the Charles Schwab Corporation. So, after college, I played music for a few years – not very successfully – before going to business school at Columbia.
I was lucky enough to take Joel Greenblatt’s Security Analysis class, and it really resonated with me.
These activists get all the attention and headlines, but the voting shareholders behind the scenes play a huge role in my book. In Benjamin Graham’s time, most public companies had concentrated shareholder bases comprised of founders and strategic investors.
When he targeted Northern Pipeline company, for instance, the Rockefeller Foundation owned about 25% of the company, and Graham spent considerable energy appealing directly to them.
Proxy campaigns in this period were like political campaigns – newspaper advertisements, appearances on TV news shows, that kind of stuff. Starting in the 1960s, share ownership began to re-concentrate in the United States, this time into the hands of fiduciary investors like pension funds and mutual funds.
I went to school in 2001 and that was a boom time in the hedge fund business.
I took an unpaid internship during school at a distressed debt hedge fund owned by Mellon bank.
Which of the activism cases covered in your book, is the most significant in your view, and caused the biggest change, in favor of minority shareholders?
Jeff: Well, to me, Ross Perot’s intervention at General Motors ($GM) was the most significant.
The second chapter of my book is about a famous battle over control of the New York Central railroad.