Interview Of Rama Krishna Of ARGA Investment Management
A. Rama Krishna, CFA, is the creator and Chief Investment Officer of ARGA Investment Management. He was previously President, International of Pzena Investment Management and Managing Principal, Person in Executive Committee, and Portfolio Manager of its operating company in NY. He led the development of the firm’s International Value and Global Value strategies and co-managed the Emerging Markets Value strategy, in addition to handling the U.S. Large Cap Value strategy in his early years at Pzena.
Prior to signing up for Pzena in 2003, Mr. Krishna was at Citigroup Asset Management, where he was Key Investment Mind and Official – Institutional and International, and represented the asset management business on the Citigroup Management Committee. He also straight maintained the Global Emerging Markets Equity strategy. Prior to Citigroup, Mr. Krishna was Director of International Equity Research, Portfolio Manager, International Main and Equities Investment Official, Emerging Markets Equities at AllianceBernstein in New York, Tokyo and London. He spent some time working at Credit Suisse First Boston also, first as an Equity Research Analyst and ultimately as Chief Investment Strategist and Director – Equity Research, in New York, Singapore and Tokyo.
Mr. Krishna earned a joint M.B.A./M.A. Asian Studies with a Japan Specialization from the University of Michigan in 1987 and a B.A. Mr. Krishna received the Prize Fellowship in Japanese Business and the University Fellowship at the University of Michigan as well as the Middlebury College Scholarship. He was on the MSCI Editorial Advisory Board and is a Chartered Financial Analyst.
Until I visited business college in the 1980s, I didn’t know that the role of the investment research analyst even existed. Then I discovered you actually get compensated to analyze and critique other’s businesses. Well, that seemed like a great deal of fun-and I wanted to apply the many useful learnings from business college in an intellectually rigorous career.
I began on the sell side because I wanted to comprehend businesses. After about five years, one of my clients-now AllianceBernstein-asked me to become listed on them to help build their research and manage portfolios in global, international, and emerging market strategies. Located in New York first, in Tokyo and London then, I led and built Alliance’s international research team, along with controlling investment portfolios. I found my intuition about the profession were right-investing was very challenging and dynamic. Much later, when I had some career flexibility, I made a decision to return to what got me in to the business: investment research.
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All I needed learned strengthened the need for research in building customer portfolios. I knew I wanted to bring together a team of people with the same investment beliefs. That’s why I started ARGA. G&D: How would you describe ARGA and its investment idea? ARK: ARGA is organized around some enduring ideas that drive our investment decisions.
First, as traders, we think of investing in companies, not stocks. Second, the value is thought by us of companies is determined by their long-term cash flow power and dividend-paying apability. Third, our research analysts focus on understanding longterm company fundamentals, not analyzing investor sentiment. And fourth, our profile construction demonstrates the magnitude of the discount to reasonable value of which we buy in, as well as the risk that the forecasts might not be correct.
By incorporating these concepts into ARGA’s valuation-based investment process, we take feelings out of investing. The procedure results in our investing in currently unpopular companies and industries often. The long-term advantages of this contrarian approach have been documented by a true number of studies. G&D: How exactly does ARGA implement its investment approach?