14: Dr. George Athanassakos on Value Investing: From Theory to Practice

I am excited to have Dr. George Athanassakos on the podcast to talk about his new book, Value Investing: From Theory to Practice. In this episode, Dr. Athanassakos discusses his thoughts on investing in Greece, why he thinks we are in a golden age for value investors, and his five questions to determine if you are a value investor.

Investing the Templeton Way with Lauren Templeton is a podcast that explores the world’s most intriguing investment topics from the overseas markets to mastering our own minds. Gather investment wisdom and educate yourself as you listen to interviews with exclusive managers, executives, and entrepreneurs on a wide range of engaging topics.

Meet George Athanassakos

Dr. George Athanassakos is a Professor of Finance and the Ben Graham Chair in Value Investing at the Ivey Business School, which he joined in July 2004. He is also the Founder and Managing Director of The Ben Graham Centre for Value Investing, which he launched in 2006, and the Founder and Managing Director of the Center for the Advancement of Value Investing Education, which he launched in 2008. Prior to joining Ivey, Dr. Athanassakos spent a number of years at various research-related positions with banking and trust companies in Canada and Greece, and taught at York University and Wilfrid Laurier University, where he was professor of Finance and Founder & Director of Laurier’s Financial Planning Program. He has a BA in Economics and Business Administration from The School of Industrial Studies of Thessalonica, Greece, and an MA in Economics, an MBA and a PhD in Finance from York University. The Financial Planning Standards Council has bestowed Dr. Athanassakos with the FP CanadaTM Fellow distinction for his outstanding contribution to furthering FPSC’s mission and for advancing the financial planning profession. Dr. Athanassakos is also a Fellow of the Quality Shareholder Initiative at the Law School of George Washington University in Washington, DC. He is the only Canadian to receive this distinction.

Dr. Athanassakos has been ranked among the top 10 researchers in Canada by research published in Financial Management and among the top 10 Canadian professors by the Globe and Mail. He has researched extensively the institutional attributes of the Canadian capital markets, the effect institutional trading and analysts’ forecasts have on stock market performance, stock and bond market anomalies and bond and equity valuation issues. He has prepared studies on the Canadian capital markets and industry analyses for Greece and Canada. His cases have been published in Canadian Cases in Financial Accounting, Cases in Hospitality Management and Case Research Journal.

Dr. Athanassakos has offered seminars on traditional valuation and/or value investing valuation to Canadian and US valuator societies, and in Australia, Austria, Chile, Colombia, Cyprus, Denmark, France, Finland, Greece, Italy, Lichtenstein, South Africa, Spain and United Kingdom. He is recipient of teaching awards, such as the Ivey’s Teaching Innovation Award and Western University’s USC Teaching Honour Roll, and of numerous research grants from University and Government departments, as well as winner of numerous first prize awards for best research papers, including three times winner (1991, 1994, and 2003) of the Toronto Society of Financial Analysts’ Best Research Paper Award Competition. Dr. Athanassakos has served as a member of the Board of Directors of the Financial Planners Standards Council of Canada, a member of the Board of Directors of the Canadian Institute of Financial Planners, a member of the Editorial Board of the Canadian Investment Review, a member of the Research Advisory Board of the Canadian Securities Institute and Clarica Financial Services Research Center, and the VP-Membership and President of the Multinational Finance Society. He has also been in the Program Committees of the Eastern Finance Association, European Financial Management Association, Midwest Finance Association, Multinational Finance Association, Northern Finance Association and Southern Finance Association conferences, among others and served as the Chair and Organizer of the 1999 Multinational Finance Conference in Toronto, Ontario, the Ben Graham Centre’s Symposium on Intelligent Investing (since 2007) in Toronto, Ontario, Greece and London, Ontario and the Ben Graham Centre’s Value Investing Conferences (since 2012) in Toronto, Ontario. He is currently an editor-in-chief of the Journal of Business and Financial Affairs, an Editor of the Multinational Finance Journal, an editor of the International Journal of Economics and Business Administration, a member of the Editorial Board of the European Research Studies Journal, a member of the Academic Advisory Board of the Financial Planners Standards Council and a member of the Board of Trustees of the Multinational Finance Society.

Dr. Athanassakos has published in numerous journals including Journal of Banking and Finance, Applied Financial Economics, Journal of Business Finance and Accounting, Journal of Financial Research, Financial Analysts’ Journal, Canadian Journal of Administrative Sciences, Journal of Economics and Business, Review of Financial Economics, Multinational Finance Journal, Advances in Futures and Options Research and others. His books include Derivatives Fundamentals (available through the Canadian Securities Institute), Equity Valuation: A Guide to Discounted Cash Flow and Relative Valuation Methods and Value Investing: From Theory to Practice – A Guide to the Value Investing Process. Dr. Athanassakos has also written articles for the Financial Post and currently writes, as a guest columnist, about investments and economic and financial topics in The Globe and Mail, Canada’s largest daily newspaper, and the Canadian Investment Review.

George’s Beginning in Greece

As a young child in Greece, Dr. George Athanassakos knew he was entrepreneurial—a passion which ran in his family. He started his first business in the construction industry while he was at university. It was not until he met Prem Watsa, the CEO of Fairfax Financial, in 2004 that he learned about value investing and investing with the right process.

“I always say that value investing, and stock picking works if you have the right process and the right temperament.” - George Athanassakos [5:23-5:35]

The Golden Age for Value Investing

People are saying that value investing is back, but Dr. Athanassakos believes that it never left. The last 30-40 years have been a period of globalization, which has allowed for the movement of capital and new ideas. Many jobs moved to low-wage environments like China and India, and union power went down in North America. Low inflation and interest rates increased profit margins for companies.

Dr. Athanassakos believes that the period of globalization is now over due to the pandemic, war in Ukraine, supply chain problems, increased security concerns, and other factors. Companies are now encouraged to bring their production back to North America, and we are seeing higher wages and increased union power.

George’s Five Questions to Determine if You’re a Value Investor

George determined these questions by interviewing around 19 value investors and summarized their views into the following:

Do you buy a new car every few years? Most Value Investors say no because automobiles are almost always depreciating assets.
Are you lowkey? Most value investors are asocial, shy, and humble. They do not enjoy living in metropolitan cities with too much noise.
Would you like to buy a stock that has fallen to a 50-year low? Value investors would diversify the risk and use due diligence and valuation to identify the good low P/E stocks and then if you have a margin of safety to either buy or do not buy.
Do you think that a high IQ is a key to success in investing? Warren Buffett says, “what we do is simple, but not easy.” Successful people are intelligent, have a good frame of mind, and learn to make good decisions.
Do you think there is a formula to achieve good investment results? The correct answer is to use correct processes, not strict formulas.

“It seems to me that most value investors have common characteristics: they are patient, disciplined, and they think long term. That's why I think value investing is a profession, whereas money management is a business. ” -George Athanassakos [30:28-30:42]

George’s New Book, Value Investing: From Theory to Practice

Dr. Athanassakos recently released a book that follows a holistic approach to valuation that brings together finance, accounting, strategy, economics, and psychology.

“It is very different from a typical modern portfolio theory approach taken by academic investment books that use formulas, techniques, and a quantitative approach, trying to cut corners to further meta-analysis, and believing that markets are efficient and that due diligence is a wasted effort.” - George Athanassakos [33:31-33:49]

The book is unique because it is focused on fundamental analysis and uses real-time examples to make the text come alive. His hope is that this book becomes a stepping stone to facilitate the adoption of university-level value-investing courses around the globe.

The January Effect in 2023

Dr. Athanassakos also writes for the Globe and Mail and recently wrote a piece about why we might not see “The January Effect” in 2023. The January Effect is a belief that stocks have a higher return in the month of January as opposed to other months.

We are not seeing the strength of The January Effect in 2023 as we have in other years because the last quarter of 2022 had a more negatively sloped yield curve. However, that does not mean that value investors will not be able to find good stocks this year, especially if they follow a bottom-up investment method.

George’s Opinion on Corporate Culture and Investing

Athanassakos believes that corporate culture has a big impact on the success or failure of an acquisition. He looks at how CEOs behave and whether or not they are respectful to their shareholders. He looks for calm and humble CEOs rather than aggressive ones. How do they answer questions that analysts ask them out of the blue? Do they have an ego? Do they understand the business and industry in a way that gives them a competitive advantage?

The Investing Environment in Greece

Athanassakos believes that Greece needs a more business-friendly government. He foresees a recession in Europe this year and is not excited about the Greek market. However, there are some good quality stocks that one can find in Greece and some companies that are at the forefront of new ideas. The European market is a great market for stock pickers.