Leslie P. Norton | Barron’s | 11.24.2012
Although value investing is undergoing one of its periodic lapses in favor, Rosenwald knew it could beat the market over the long haul. He had only to point to nine of Graham’s successful protégés, discussed by Buffett in an influential 1984 article titled, “The Superinvestors of Graham-and-Doddsville.”
Waiting for the market to come around to your way of thinking is a long game, and Rosenwald has it in his genes: His grandfather was Graham’s financial-services analyst. When Jamie was 12, Grandpa Rosenwald made him fill out spreadsheets, using graph paper and a slide rule, as an exercise in assessing company valuations. A couple of years later, he made Jamie read Fred Schwed’s jeremiad against Wall Street, “Where are the Customers’ Yachts?”
THE LESSONS STOOD ROSENWALD in good stead. Dalton, with $2 billion under management, runs value-oriented hedge funds, and its principals have a reputation for investing in profitable contrarian situations—California apartment buildings after the savings-and-loan crisis, Shanghai real estate after SARS, and distressed mortgages. Now they are backing a fund investing in apartments in hard-hit markets such as Las Vegas. “In chemistry terms, Jamie is the activation energy,” says a fund manager who asked not to be named. “When a reaction should happen, he’s the catalyst.”
Rosenwald steered a fund investing in Japanese management buyouts that produced nice returns despite a tough slog. Eventually, he merged it into Dalton Asia, which he runs with his young co-manager, Tony Hsu. Since its January 2008 inception, Dalton Asia is up 45%, versus a 23% decline in the MSCI Asia Pacific benchmark.
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