Chuck Bath: The Evolution of a Value Investor

The Long View

Morningstar

Finance, Dan Lefkovitz, Amy Arnott, Entrepreneurship, Investing Leaders, Jeff Ptak, Investors, Christine Benz, Influential Investors, Careers, Long-term Investing, Financial Services, Business, Investing, Morningstar

4.5 • 775 Ratings

🗓️ 18 March 2020

⏱️ 46 minutes

🔗️ Recording | iTunes | RSS

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Summary

The noted Diamond Hill manager discusses the shorter durations of competitive advantages, how low inflation has curbed firms' pricing power, and what he considers to be the market's 'sweet spot.'

Transcript

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0:00.0	At Jackson, we've created a digital retirement planning experience with you and mine.
0:05.5	Visit jackson.com to explore our easy-to-understand resources and user-friendly tools
0:10.1	that are designed to enable financial professionals and clients to plan a path to financial freedom.
0:15.5	Jackson is short for Jackson Financial Incorporated, Jackson National Life Insurance Company, Lansing, Michigan,
0:20.5	and Jackson National Life Insurance Company, Lansing, Michigan,
0:24.0	and Jackson National Life Insurance Company of New York, purchase New York.
0:31.5	Please stay tuned for important disclosure information at the conclusion of this episode.
0:37.1	Hi, and welcome to the Longview. I'm Christine Ben's Director of Personal Finance for Morningstar, Inc.
0:40.7	And I'm Jeff Battack, Global Director of Manager Research for Morningstar Research Services.
0:45.8	Our guest on the podcast today is Chuck Bath, a portfolio manager who has logged a tremendous record over nearly 40 years. Since 2002, Chuck has been lead manager of Diamond Hill
0:51.3	Large Cap, a $6 billion fund that earns a gold rating from Morning
0:55.1	Star's analyst team. Chuck also co-manages the bronze-rated Diamond Hill Long Short Fund. Prior to
1:01.7	joining Diamond Hill, he steered nationwide fund to outstanding returns during 17 years at the helm.
1:07.2	An accountant by training, Chuck uses a patient value-oriented approach that seeks out
1:12.4	companies with above-average returns on capital that are trading below his estimates of intrinsic
1:17.2	value. Chuck, welcome to the Longview. You bet. Thank you. So let's talk a little bit about your
1:23.3	strategy for people who are not familiar. Your strategy is often described as relative value.
1:29.3	Can you explain what that means for people who aren't steeped in the various shades of value investing?
1:34.3	Yes, certainly. And by the way, I like the title, the long view, because that's very central to how we
1:38.8	invest, taking a long-term perspective. But in terms of how we view value, it is that a discount to intrinsic value,
1:46.1	not necessarily just a statistically inexpensive price relative book value or earnings. And why does
1:52.1	that matter is because in calculating our estimate of intrinsic value, we include things such as
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