An Interview with Leah Zell

The daughter of Polish immigrants, Leah Zell graduated Magna Cum Laude from Harvard. She went on to earn a PhD and win the Woodrow Wilson, Fulbright, and Krupp Foundation fellowships, before following her brother, billionaire property magnate Sam Zell, into business.

Leah tells Catherine Robson that keeping her ego in check, being patient and maintaining a team small enough to hold one single conversation at a dinner table, have been the keys to her success.

“Growing up on the cusp of opportunities opening for women was both an advantage and disadvantage,” says Leah. “You got to do things you didn’t think you’d get to do while growing up, but you were also the first woman.”

Leah’s natural tendency to analyse everything has been her key asset in making her mark in the male dominated arena of investing. “A core interest of mine or personality characteristic, is that I analyse everything. I analyse my day, I analyse stocks, my friends. That’s the way in which my mind works. I was fortunate enough to find a variety of outlets for that”

Raised in a family of investors, she had confidence moving money around because she’s been watching people do it all her life. When she moved to Wall Street in 1979, Leah felt as though she was joining the ‘family business’ working in investment management for other people. Then she launched her own funds including Acorn International Fund and in 2008, Lizard Investors. Over that period of time, she’s seen investment markets change.

“The world has become much more professionalised, and this is an industry which is characterised by disruption on a regular basis. You went from bank trust departments, to mutual funds now to hedge funds and the hedge funds are beginning to find that they over promised and under delivered.”

Catherine Robson and Leah Zell

Lizard Investors LLC is an asset management firm that specialises in international small-to-mid-cap equities:

“We don’t look at companies below a $500 million-dollar market cap, because that is more like venture capital and it’s hard to get in and out. Companies bigger than $3 billion dollars become better known with lots of other investment managers following them, so I’d say our sweet spot is in the middle there.”

“We’re organised by opportunity. We’re not organised by geography or sector. We look for fat tails. We look for the stories or the opportunities where there is a mismatch, where for some reason nobody has looked at it or where is this company going to be in three years, when everyone looks at how their next quarter is going to be. We get paid for having patience”.

“Our very best ideas are the ones where the company earns a high return on capital, has opportunities to put that capital to work in the business for a long period, such that the equity grows without need for additional investment. That’s the holy grail of investing.”

On finding and retaining best talent in the businesses, Leah sees value in leading a smaller team.

“I’m a great believer in what I call the dinner table metaphor. Having a small enough number of people around the table so you can have one conversation. I don’t believe having large numbers improves the quality of your output. I also, out of personal experience, think incentives matter and I’ve seen great investors have no emotional intelligence at all on how to manage and incentivise people.”

What’s some of the best advice this pioneer of international small caps gives everyone, even her children?

“Establish a strategic framework of what you want to accomplish and stay focused on it. You don’t want to check your portfolio every week, you don’t even want to look at it, frankly, more than twice a year because all it will do is get you stirred up about things you can’t control,” she advises.

“Take the emotions out of it. Put a rational structure on it and stay the course.”