Episode Summary
Executive Summary: Anna Santos opens the new season by framing a volatile backdrop—growth stock corrections, inflation/stagflation, and the Russia-Ukraine war—then interviews Alison Fish of Piscina about her path from McKinsey to value investing. Fish explains Piscina’s research process, emphasis on business fundamentals over macro forecasting, and how they manage emerging-market risks via country discount rates, position sizing, currency-aware forecasting, and portfolio guardrails. The conversation ends on ESG as a value-creation opportunity and why wide valuation spreads make the current environment attractive for long-term value investors.
Main Topics: Season opener: market and geopolitical backdrop (Priority: 5/5): Anna sets the stage with a reset in markets, the inflation/stagflation debate, and the shock of the Russian invasion of Ukraine, positioning the episode as a guide to navigating uncertainty. Alison Fish’s career path and investing philosophy (Priority: 5/5): Fish describes moving from psychology and drama to McKinsey and then to Piscina, explaining how consulting trained her to identify the key issues in businesses and how value investing resonated immediately. Piscina’s research process and stock sourcing (Priority: 5/5): The firm uses an internally built screening tool based on 10 years of history and mean reversion to narrow the universe, then relies on fundamental research and industry specialists to select ideas. Emerging-market value investing and country risk (Priority: 5/5): Fish explains why value can work especially well in emerging markets, how Piscina incorporates country risk through DCF discount rates by domicile, and how portfolio guardrails prevent concentration. Currency, liquidity, and business resilience (Priority: 4/5): The discussion covers why Piscina generally does not hedge currencies, how it bakes FX effects into earnings estimates, and why cash generation, leverage, and balance-sheet strength matter when liquidity dries up. Russia, position sizing, and crisis management (Priority: 5/5): Fish recounts Piscina’s experience with Russia, emphasizing that cheapness alone is not enough when systemic risk rises; position sizing and restraint reduced damage despite painful exposure. ESG as an active-investing opportunity (Priority: 4/5): Fish argues that ESG should not mean only buying 'good companies' but also engaging with problem companies to improve outcomes and potentially unlock equity upside.
Key Arguments: Consulting experience translates well to investing because it teaches analysts to isolate the few issues that actually drive outcomes in a business. Value investing is especially effective in emerging markets because fear and uncertainty widen valuation spreads more than in developed markets. Piscina’s screening tool is a narrowing mechanism, not a substitute for fundamental work; alpha comes from selecting a subset of the cheapest stocks. Country risk matters more in emerging markets than in developed markets, so Piscina adjusts discount rates by country of domicile in DCFs. Portfolio construction is a core risk-control tool: exposure limits, position sizing, and sector/country guardrails protect against tail risks. Currency risk is handled in earnings forecasting and position sizing rather than through costly hedging. Geopolitical shocks are hard to forecast, so the firm focuses on business resilience, leverage, liquidity needs, and what management can do in a crisis. Russia illustrated the importance of knowing that cheap markets can remain cheap for the same macro reason; even good businesses can become uninvestable. ESG can be approached as an active-value strategy: buy the companies where improvement is possible and engage management to drive change. Current valuation spreads create a favorable opportunity set for value investors, and the cycle may still have room to run.
Data Points: Podcast season delay: New season after a delay caused by school changes and curriculum rollout - Anna explains the break due to Columbia Business School’s move and the first year of the new value investing curriculum. McKinsey tenure: 2 years - Fish says she spent two years at McKinsey before moving into investing. Piscina firm size at hire: $2.5 billion - Fish recalls joining when the firm managed about $2.5 billion. Piscina AUM today: More than $50 billion - Anna introduces Piscina as a major value-oriented investment firm. Emerging markets universe: 1,500 stocks - Piscina’s screen starts with roughly 1,500 EM stocks. Cheapest quintile: 300 stocks - The screen narrows the EM universe to the cheapest 20%. Portfolio holdings: Roughly 50 stocks - Fish notes the portfolio owns about 50 of the screened names, not all 300. Russia exposure before crisis: About 4% - Fish states the portfolio had about 4% in Russia at the start of the year. Russia position cap: 10% - Piscina decided not to let Russia exceed 10% of the portfolio, despite cheapness that could have justified 20%. Potential Russia weight: 20% - Fish says Russia’s cheapness could have implied a 20% weight under the process maximum. Current Russia exposure at invasion: A little over 3% - By the end of February, around the time of the invasion, Russia exposure had fallen slightly above 3%. Value cycle duration: About 5 years - Fish says historical value cycles tend to last around five years. Value cycle inflection: November 2020 - She says the cycle turned in November 2020 and value started working more strongly. First-quarter 2020 spreads: Blew out - Fish references the extreme widening of valuation spreads during the COVID shock. Country discount rates: Adjusted once a year - Piscina updates country-specific discount rates annually using a three-year average spread measure.
Pivotal Quotes: "we look at ourselves as people buying businesses, not trading stocks" — Alison Fish: Fish explains Piscina’s research culture and why it prioritizes fundamental business understanding over market trading. "when a business is suffering through a moment of temporary pain, it's not as if the whole business is worth less, but the market sometimes behaves as though it is" — Alison Fish: She summarizes the core value-investing logic that underpins the firm’s philosophy. "we don't hedge. It's costly." — Alison Fish: Fish explains Piscina’s approach to currency exposure and why hedging is generally not used.
Implications: Listeners should takeaway that in emerging markets, long-term value comes from fundamentals, disciplined screening, and strict risk management—not macro prediction. The episode also suggests ESG and geopolitical disruption can create opportunities when approached as business-analysis problems.
About Value Investing with Legends
Value investing is more than an investment strategy — it's a fundamental way of thinking about finance. Value investing was developed in the 1920s at Columbia Business School by professors Benjamin Graham and David Dodd, MS '21. The authors of the classic text, Security Analysis, Graham and Dodd were the very pioneers of their field and their security analysis principles provided the first rational basis for investment decisions. Despite the vast and volatile changes in the economy and securities markets during the last several decades, value investing has proven to be the most successful money management strategy ever developed. Value investors' success over the second half of the twentieth century proved not only the validity of the value approach, but its preeminence over even the most widely taught and practiced modern investment theory, which was developed in the 1950s and '60s and remains dominant even today. Our mission today is to promote the study and practice of Graham & Dodd's original investing principles and to improve investing with world-class education, research, and practitioner-academic dialogue. In this podcast you will hear from some of the world's greatest investors, their views on the investment management industry, how they developed their investment process and how they see the field changing over time.