The following podcast originally appeared on June 23, 2021, on the Meb Faber Show. The episode was recorded on June 9, 2021. The podcast is posted here by permission of the Meb Faber Show.

In episode 323, Meb Faber welcomes guest, John Montgomery, founder and Chief Investment Officer of Bridgeway Capital Management, a $5 billion quantitative manager that donates 50% of its profits to charity.

Viewers will hear what made John leave a job in the Transit sector to start a quantitative investment firm. We walk through what drew him to a rules-based approach and then touch on different factors, including size, value, and low volatility. We even touch on Bridgeway’s ultra-small cap strategy and how it captures the small-cap premium.

As we wind down, we hear about the firm’s unique structure, which includes donating half its profits to charity with the goal of ending genocide.

Please enjoy this episode with Bridgeway Capital Management’s John Montgomery.

  • 1:18 – Intro
  • 2:12 – Welcome to our guest, John Montgomery
  • 4:09 – Early career inspiration; Silent Spring (Carson)
  • 5:23 – John’s first investing classes
  • 6:47 – Insights into the benefits of quantitative methods
  • 9:06 – Transitioning from hobby to career
  • 11:41 – Foundations of Bridgeway Capital Management
  • 12:44 – John’s ultra-small company strategy
  • 18:38 – Bridgeway’s evolving research approach
  • 20:44 – John’s fascination with low-volatility investing
  • 22:10 – Blending different factor exposures
  • 25:04 – Bridgeway’s rules on leverage
  • 28:22 – The Great Depression: A Diary (Roth)
  • 29:22 – Preparing yourself for lean times
  • 31:05 – The importance of risk management
  • 32:03 – John’s asset allocation strategy
  • 38:53 – Bridgeway as an enduring firm
  • 43:19 – Bridgeway’s giving culture
  • 45:09 – Bridgeway Foundation
  • 46:18 – To Stop a Warlord: My Story of Justice, Grace, and the Fight for Peace (Davis)
  • 47:47 – Helping child soldiers come home
  • 54:15 – John’s most memorable investments
  • 56:34 – Planning your exit
  • 58:02 – Learn more at Bridgeway.com

Disclosures

The opinions expressed here are exclusively those of Bridgeway Capital Management (“Bridgeway”). Information provided herein is educational in nature and for informational purposes only and should not be considered investment, legal, or tax advice.

Investing involves risk, including possible loss of principal. In addition, market turbulence and reduced liquidity in the markets may negatively affect many issuers, which could adversely affect investor accounts. Value stocks as a group may be out of favor at times and underperform the overall equity market for long periods while the market concentrates on other types of stocks, such as “growth” stocks. International stocks present additional unique risks including unstable, volatile governments, currency risk and interest rate risks.

Diversification neither assures a profit nor guarantees against loss in a declining market.