Welcome back to a new season of the show! Our first conversation is going to be a little different as we’ll be talking about this year’s picks for the 5x5x5 Russo Student Investment Fund. Joining me today is Tom Russo, who designed and funded this first-ever student investment fund at Columbia Business School in 2014, and students James Shen and Freda Zhuo, whose portfolio picks have performed particularly well.

The 5x5x5 fund is run by the students of the Value Investing course at Columbia Business School, with ideas being submitted by the students each year. Five students are selected with five ideas that will be held in their entirety for five years. At the end of five years, the inflation-adjusted original amount is invested back into the fund and any other gains will be used to support scholarships for traditionally under-represented members of the class. As we enter year six of the fund, we’re taking a deeper look at the performance of the fund.

On this episode, Tom, James, Freda and I discuss how the 5x5x5 fund is more valuable than others, why James and Freda selected the particular companies for investment, what they have learned since investing in those companies, overall observations of the past 5 years of the fund, and so much more!

Key Topics:

Why the 5x5x5 fund is more valuable than other student-run funds (1:35)
The higher purpose of the fund (2:42)
How Nuance Communications attracted James’ attention (3:41)
What James learned from his initial research into Nuance (4:43)
The changes James has seen in the months since the initial investment was made (5:57)
Why investors should be on the lookout for companies making the transition to cloud-based software (6:42)
Getting comfortable with a long investment horizon (8:16)
Nuance’s competitive advantages over new players entering the market (9:24)
Why Freda became interested in investing in Aon PLC (11:09)
What Freda has learned about Aon since investing (12:12)
How Freda maintained confidence in Aon despite the hit caused by COVID-19 (13:05)
Significant developments in the insurance industry due to COVID-19 (14:32)
Aon’s risk management advantage (17:58)
Why Aon’s customer-centric model gives them an extra edge in client retention (20:28)
How Aon mitigates disintermediation risk (23:00)
Using new technology as an advantage for Nuance communications (25:49)
How Aon covers risks internally (28:15)
The redistributive nature of the shock caused by the pandemic (31:57)
Observations from the past five years of the 5x5x5 fund (33:09)
What to consider when constructing a resilient portfolio (36:22)
Tom’s review of the fund and participants (40:47)
And much more!

Mentioned in this Episode:

5x5x5 Student Investment Fund
- James Shen’s Write-Up of Nuance Communications
- Freda Zhuo's Write-Up of Aon Plc

Thanks for Listening!

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Learning from Five Years of the 5x5x5 Russo Student Investment Fund

Value Investing with Legends