John Burbank on the Importance of Macro

We had the pleasure of sitting down with John Burbank, managing member and chief investment officer of Passport Capital, in San Francisco.

John has built a reputation as a value-oriented investor with a keen eye for the macro dimension. He served as an equity analyst at JMG Triton Offshore from 1999-2000. He was director of research at ValueVest from 1996-1998. He held various management positions in start-up companies and was active as a private investor from 1992-1996. John holds an MBA from Stanford Business School and a B.A. from Duke University. We spoke with him about top-down versus bottom-up investment approaches, as well as risk, which John considers to be a third and often ignored dimension.

The following transcript has been edited for space and clarity.

MOI Global: It’s a pleasure to have with us John Burbank. The question of macro versus micro in investing has intrigued a lot of value investors, and you stand out as a success of combining macroeconomic analysis with fundamental research. Before we get into your approach, I’d be curious how you got interested in investing.

John Burbank: I went to Stanford Business School, only because I worked in China — taught English there in 1988 — and realized that the Chinese had no choices in life, really, back then. I took some investing classes at business school. I liked what it made me learn about the world. My first job was in 1996 for a hedge fund, after spending about a year and half on my own.

MOI: You look to identify durable, secular changes not reflected in asset prices. What leads to these mispricings? Why wouldn’t secular changes be reflected in asset prices?

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