Successful Deep Value Investors We Can Learn From

Jeroen Bos

Jeroen Bos is one such investor that I look up to. Coming from a brokerage background, the man saw the efficacy of net current asset value investing when he executed some of Peter Cundill’s trades as a broker. Peter even asked him to scour the markets for some of these net nets which others won’t touch. Eventually, he wrote a book and was spotted by a fund manager for his talents. If I am not wrong, he manages around $20 million in investment funds today. I have mentioned before in my books that the net current asset value approach is good for portfolios of a certain size of less than $20 million. Beyond that, one has got to have other tools to skin the cat.

But back to Jeroen Bos. While his track record has not beaten the relevant benchmarks as I have seen lately, I believe this is an anomaly in a debt fueled economy over the last decade. A period of extremely low interest rates have created a speculative bubble and this is seen in FANNG stocks and the NASDAQ.

So I have seen some of Jeroen’s picks and would say that many of his picks are what I would have selected myself, except that I was looking at markets such as US, Singapore, Malaysia, Japan and Korea mostly. So if you really want to learn more about Jeroen Bos, buy his books. They are a great read and I think you will learn quite  bit from the man.

Seth Klarman

Another investor that I look up to is Seth Klarman. This man has a track record that is the envy of many.  His track record stands at 16% annualised returns since inception. His portfolio consists of distressed debt, undervalued equity in the form of low price to book stocks and also real estate and cash. The  value of his portfolio is worth in excess of $10 billion. And one of the reasons why he is so successful in investing is his incessant focus on the price-value gap of his investments. He insists on a margin of safety in all his investments. Also, his ability and fortitude to capitalise on “shock” events which are understood by few is an opener even for the most astute of investors. For example, Seth Klarman actually invested in Enron bonds when most bond fund managers were sitting on the sidelines for this one.

Peter Cundill

Peter Cundill is another one of my favourite investors of all time. As mentioned before, he regularly used Jeroen Bos as his broker to provide him information on the markets and act as a sniffer for deep value stocks. If I recall clearly, he says that every time he was always wrong when he departed from using the liquidation value analysis. That says a lot about a man that has beaten the markets quite substantially over time. It is a pity that he passed on too soon. In any case, his life is worth remembering and he definitely left a legacy and is an inspiration to many deep value investors the world over.

Christopher Browne

And then you have got Christopher Browne. While Christpher Browne has passed on, his stock picks were the stuff of legend. In the earlier years of the Tweedy Browne Global Value Fund, they compounding at rates of more than 10% per annum and they were usually rated as the top 10% of fund managers in the world. The Tweedy Browne philosophy of investing was simple. They would typically buy net nets, low price to book type stocks in various industries worldwide. It is not uncommon to see them holding onto stocks from other countries such as Japan and Korea. They are not averse to scan the globe for truly undervalued securities. In fact, many investors consider Tweedy Browne to be a strict adherent to Benjamin Graham’s philosophy of value investing.

Warren Buffett

Warren Buffett is another famous deep value investor. It is just that these days, he is known more for parroting the phrase ‘wonderful company at a fair price’. And this is due to the fact that Buffett’s portfolio by virtue of Berkshire’s size is so large that he cannot meaningfully deploy his funds deep value securities. Even so, his best days were his earlier years, the years in which he focused a large part of his effort on finding Ben Graham type bargains.

Walter Schloss

Of course, we have got Walter Schloss. Another of Graham’s disciple that made good with his stock picking skills. He was famous for compounding money at over 15% per annum for over 4 decades. And he did it by sticking mostly to net current asset value investing and low price to book type of stocks. I have written one too many times on Walter Schloss and by now, most would have read about him so I don’t need to say very much except that he is the real deal.

Benjamin Graham

Last but not least, we have got Benjamin Graham. How can I not mention the legend of all legends here? It would be completely rude to ignore Benjamin Graham here. He is the man who has done it all. From statistical arbitrage, merger arbitrage to low price to earnings stocks and low price to book stocks, this is the man who pioneered a codified approach to value investing. He was also fond of the net current asset value approach and claims to have compounded money at 20% annually using the approach.

Don’t take my word for it. What I would say is do your research and find out for yourself if deep value investing does work. Most of these extremely successful investors can trace their lineage to Benjamin Graham who is really the pioneer of it all. If so many of them come from the same “village” so to speak, it is no longer just coincidence. They must have something that really works.

As always, thank you for reading. May you be blessed with prosperity, health and happiness! And all the best to your investing!

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Junkyard Net Nets From Japan : Leader Electronics Corporation 6867 > 100% Profit In 6 Months

A 10 Bagger Net-Net – A Look Back At Barratt Developments PLC : A Net-Net In 2008-2009

Paying Up For Growth: You’d Better Know What you Are Doing

Books On Net Current Asset Value Investing : Case Study Driven

These books which I have written are case study driven and discuss strategies, mindsets and situational approaches to employing the net current asset value strategy. The net current asset value strategy is a simple but profound one. I would describe it as a strategy that is asymmetrical in potential payoffs and a strategy that forces an investor to be contrarian, when an investor uses it purposefully. While some stocks would undoubtedly go bad, a good number of stocks will increase 3 times, 4 times, 5 times and up to 10 times at times. That is also the reason why it would make sense to diversify to avoid what gamblers would call gambler’s ruin.

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I have been an investor for 15 years now and my journey has meandered from Warren Buffett to Ben Graham. My start, like many, really was the naive idea that Buffett's skills could be replicated in some fashion. I was proven wrong when some of the supposed stock picks that I chose had dismal performances. Then, I learnt that it is no point trying to be someone I am not. Gradually, through failure and some success in deep value investing, my approach towards stocks gradually shifted to an approach based around Graham's techniques. So, I give credit where credit is due and to Ben Graham, I and many other investors around the world, owe him a great deal. So, if you want to read up on biographies, read about Ben Graham. His seminal work, Security Analysis is a gem. My books are just rich interpretations of what he has taught.

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