Monthly Book Reviews
River Road’s investment team members share the books they’re reading.
The author traces PIMCO’s history from a sleepy unit inside a large life insurance company to the world’s largest bond manager. Bill Gross revolutionized the fixed income market in the 1970s with the notion that bonds didn’t just have to sit in vaults until maturity, but could be traded effectively. The book spends considerable time digging into PIMCO’s unique and obsessive culture that led to the firm’s impressive track record. Along the way, it becomes clear that Gross eccentricities, which likely were the driving force behind the performance results, became a firm-wide issue as the team around him evolved over time and struggled to manage his unique temperament. The book is well written, easy to read and a guidebook on how not to run an asset management firm.
The author is the longest serving chair of Harvard’s Department of Astronomy and a noted theoretical physicist with a focus on astrophysics and cosmology. His reputation and track record make it difficult to dismiss his claims that a Hawaiian telescope spotted the first interstellar object, known as Oumuamua, ever detected in our solar system on October 19, 2017. It is clear that Loeb views science like many investors approach the stock market – as a ‘detective story’. Like any good value investor, he urges us to expand our notion of what’s possible and follow Heraclitus of Ephesus’s advice that “if you do not expect the unexpected, you will not find it.” Maybe some investors won’t appreciate the connection between space exploration and stock picking (it is a bit of a stretch), but we certainly found the author’s passion to seek out the truth as inspiring.
The Man Without a Face: The Unlikely Rise of Vladimir Putin
by Masha Gessen
Written by a Russian journalist living in Russia, the book provides valuable insights into Putin’s bloody path to absolute power in Russia. The author reviews Putin’s unlikely rise from an undistinguished KGB bureaucrat in St. Petersburg to his reign as president of the world’s largest land mass and stockpile of nuclear warheads. She details the difficulty investors like Bill Browder (we reviewed his book back in 2020) have had operating in the country. The book has aged well as it ends with the Russian invasion and annexation of Crimea in 2014 and hints at troubles to come in Ukraine, which remains an important topic for global markets today. (armscontrol.org) (bbc.com)
There are probably hundreds of books written about Warren Buffett. The team has read many of them, but this one sticks out as being unique. Buffett started buying Berkshire Hathaway in 1962 and took control in 1965. The author provides financial details and interesting tidbits behind some of the important early transactions that propelled the company beyond its textile mill roots. Cost-cutting, tax loss carry-forwards, share buybacks, and stock purchases all contributed to the early Berkshire transformation. The purchase of National Indemnity and See’s Candy – the combination of float, a value focus, and excellent businesses – were the key raw materials for the Berkshire compounding machine.
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