Value Investor Outlines Corporate Governance Concerns

Published on
October 31st, 2016
38 minutes

Value Investor Outlines Corporate Governance Concerns

The Interview ·
Featuring David Winters

Published on: October 31st, 2016 • Duration: 38 minutes

David Winters, CEO of Wintergreen Advisers, is one of the greatest exponents of value investing, which seems to have become a forgotten art amid the popularity of indexation and ETFs. And that’s where he sees some major problems ahead for investors, with the high costs and expensive stocks involved in these funds.


  • WM
    Will M.
    6 November 2016 @ 03:32
    Yes, the management fees for Wintergreen seem very high. Very sympathetic to value investing but David Iben and Kopernik look like a better bet.
  • WT
    Will T.
    4 November 2016 @ 18:56
    Lots of potentially good value investors to interview, and it would be great to get more on RealVision but this one was not it. Look to Manual of Ideas, great value focused interviews.
  • HK
    H K.
    4 November 2016 @ 06:12
    High time to get some independent expert from the passive industry on. In recent weeks there were couple of interviews that touched upon ETFs and passive investing in general, making pretty questionable statements - this interview stands out in that regard. In the end, the question is whether a stock picker beats an adequate benchmark over time after expenses with statistical significance. Most don't and then the argument in the interviews go: "wait for the next downturn, when bad things happen, then active will show its beauty". Well, just look at 2008 - the results of active managers there gave a perfect boost for passives. Of course they can move to cash, but that is a different decision, that is an asset allocation decision. Hence, a fair benchmark in that case would be Cash + passive equity exposure and not an index which is per definition always invested 100%. There are for sure implications for market infrastructure when passives are a too high percentage of the market (and I agree that would be a problem, same for HY ETF's) but that is a different matter and currently often mixed in the interviews. Is it really the rationale choice to hand my money to an active manager such as him than focusing on asset allocation, using passive instruments? I doubt it, the interviews give the feeling a wise investor would never use passive.That is against all findings in academia but presented here without asking further questions...
  • RM
    Roberto M.
    2 November 2016 @ 19:38
    Thank you Grant for bringing on something more along this category. However, I can't say I learned a terrible amount and at times it sounded more like a pitch for money than meant for an audience of peers, which may explain the lack of specificity or insight. The bit about expenses I found a bit confusing and don't think he is right. Finally, his enthusiasm for tabacco stocks I found a bit off-putting for obvious reasons and lacking in any redeeming qualities based on this interview. I looked at his site and he has ~34% of his portfolio in the tabacco space (???).
  • BD
    Bruce D.
    2 November 2016 @ 12:27
    Milton, it's time to get Dave Iben back for an encore!
  • PC
    Peter C.
    2 November 2016 @ 01:42
    A valuable element of this conversation is specific investment actions like his stock picks such as Google, Reynolds,.... & why. We need more of this but from quality investors and not from a bottom quartile money manager.
  • BS
    Buy100oz S.
    1 November 2016 @ 19:39
    People say it can't go on like this. I disagree I think it can potentially go on like this for a lot longer then we'd like. If you look around, apart from the few like "Real Vision viewers" the majority completely trust fiat currency. We are so far away from people losing trust in fiat, it would need something on a nuclear scale for them to realise. People fundamentally don't actually realise what they have is intrinsically worth less if there is more of it created. The fed could even get companies to issue zero yield debts to buy up, recently few european companies were successfully issuing negative yielding debt. The game is not up until the government and central banks decide we've done enough. I agree with the whole value thesis however and suprisingly there are opportunities to be found.
  • JR
    Jon R.
    1 November 2016 @ 15:53
    Would have liked to hear how a value mgr can rationalize paying close to 20X earnings for steady, but slow growth companies like RAI or BTI.
  • AH
    Andreas H.
    1 November 2016 @ 08:50
    To sum up: I like the interview!
  • AH
    Andreas H.
    1 November 2016 @ 08:48
    Well the thing is, even I am a super bull for the next 12-18 Months and I do not agree with the bears (which are still the majority here) on RV and I am a systematic trader while most here trade discreationary: 75% of my computer based ranking is based on value (only 25% momentum). And the results are great (backtest and actual results!), so I think value investing hard to implement but very rewarding if you know what you do!
  • SF
    Simon F.
    1 November 2016 @ 08:41
    Grant ought to interview Terry Smith of Fundsmith for some incicive perspective on this space. It also wont make us go to sleep.....
  • FM
    Fraser M.
    1 November 2016 @ 06:23
    Please don't go tabloid! Value Investor 'Slams' Corp Governance. I didn't see or hear any slamming. Also on the banned list; 'hits out at', 'furious', 'the 5 things we learned about'...
  • TW
    Tom W.
    1 November 2016 @ 02:14
    I would like to have had a better quantified explanation on why ETF’s expenses are higher than their expense ratios indicate. Also, I don’t agree that ETFs have eroded corporate governance. Executive greed and lax government oversight have enabled the erosion of corporate governance.
  • NS
    Nico S.
    31 October 2016 @ 23:06
    How wrong is this interview. To say that 10 bps is over charging when his fund has atrocious expenses. Typical rhetoric from an active manager who can't beat the market.
  • MW
    MIKE W.
    31 October 2016 @ 23:03
    I appreciate that Grant/RVTV is making the move into interviewing more folks of the value/fundamental equity persuasion, but - and I say this as a value investor and an asset allocator - Wintergreen is certainly NOT a manager to whom I'd entrust my capital. So-so performance not justified by fees, so-so (i.e. lazy) process, questionable judgement in his conflict with Buffett, shallow team bench with no clear succession or checks & balances on Winters' decisions, and suboptimal portfolio construction.
  • SS
    Saira S.
    31 October 2016 @ 20:37
    This is the performance of Wintergreen fund WGRNX: and the managers have the audacity to charge 1.92% expense for this & then complain about index funds & ETFs. Shocking!
  • CM
    C M.
    31 October 2016 @ 20:01
    10bps ETF mgmt fee; yes. SOE dilution at 2.5% and 1.6% for FCF to offset dilution... Huh? Is he suggesting that HIS companies have no SOE? This make no sense and is flawed thinking. Yes, there is crowding and a bubble forming in the largest companies due to mkt cap weighting of ETFs, but his SOE argument is absurd.
  • HJ
    Harry J.
    31 October 2016 @ 20:01
    At last someone with common sense! I put money with wintergreen.
  • TS
    Tim S.
    31 October 2016 @ 19:22
    Throwback old school style. May be the future of the market and "discovered" again by the masses.
  • DS
    David S.
    31 October 2016 @ 18:15
    Good value investing interview. I like the activism when a company's management went rogue. Mr. Winters likes cash for flexibility. What is his current cash position and high/low over last ten years as a measure of current risk? What is his gold position to see if he sees gold as a value investment? Has this changed over the years? Thanks, DLS
  • JL
    Jacob L.
    31 October 2016 @ 15:29
    Being value-oriented myself I hate to be the thumbs-down guy but this was very far from being cutting edge stuff. I didn't learn one new thing personally (except that beer is being transported on motorcycles in Vietnam) and it seems to me this interview was intended as a sales pitch to a pension fund manager with below average investment knowledge. Perhaps I am being overly harsh here but it seems to me David was not addressing the crowd that this was intended for and he didn't grab the many opportunities provided by Grant to go off the beaten track but decided instead to stick to generalities we all know. I'd love more value stuff though.
  • NR
    Nuno R.
    31 October 2016 @ 15:28
    Refreshing to discuss smart value investing over the usual short-term, momentum trading, CNBC on steroids "fast-money" type of bullshit.
  • HA
    Hamed A.
    31 October 2016 @ 15:23
    i wanted to like this interview. felt like grant did his best to get something original out of this guy, but it was same general broad lip service that was zero value add for me. shame it had potential, but nothing new to see here
  • rr
    rlw r.
    31 October 2016 @ 14:20
    Remembering 'value', way wise words