Klarman Warns of Risks to Investors

Risk is the most important consideration when investing, and investors are being too trusting. This according to a recent Business Insider article reporting on a client letter from hedge fund manager Seth Klarman. The hedge fund manager (who oversees approximately $30 billion) shares his view that, when share prices are low (as they were in 2008 and early 2009), risk is “usually quite muted while perception of risk is high.” By contrast, however, he argues that… Read More

Francis Chou is a Patient Investor

Regarded as one of the savviest value investors in the world, says a recent article in Canadian Business, Francis Chou thinks the market is overpriced right now, but will come down–and he’s willing to wait. The article notes Chou’s early career as a Bell telephone technician (1979) during which time he became fascinated by the idea of value investing. Since then, the article says, Chou claims he’s been “doubling his money about every five and… Read More

Margin of Safety: How Misconceptions Could Hurt You

NYU finance professor Aswath Damodaran focuses on myths associated with the concept of “margin of safety” (MOS) in a recent post on his Musings on Markets blog. MOS is thought of as a tool for value investors to protect themselves against uncertainty. Ben Graham brought the term into value investing and Seth Klarman has argued that investors gain the margin of safety by “buying at a significant discount to underlying business value and giving preference… Read More

Manager with Growth (and a Hint of Value) Drives Long Term Returns

  Stocks of some large cap growth names may look expensive at current levels, but Aziz Hamzaogullari, manager of the top performing Loomis Sayles Growth Fund still sees plenty of opportunity. Hamzaogullari’s growth approach has a hint of value investing in it as well. Specifically, he “looks for companies that can generate sustainable and growing profits. But he will only invest in their stocks when they sell at a significant discount to estimated intrinsic value.”… Read More

The “Seven Immutable Laws of Investing”

In a recent white paper, GMO’s James Montier takes an interesting look at what he says are “The Seven Immutable Laws of Investing”. The first rule, on which Montier spends the most time, invokes the late, great Benjamin Graham: “Always Insist on a Margin of Safety”. Montier writes: “Valuation is the closest thing to the law of gravity that we have in finance. It is the primary determinant of long-term returns. However, the objective of… Read More

De Vaulx Talks Economy, Wal-Mart, and Margins of Safety

Top value manager Charles De Vaulx recently discussed some areas of the market he’s high on in an interview on Bloomberg Television. De Vaulx says he’s cautious about the current environment, and talks about some of the key economic factors he’ll be keeping an eye on in 2011, including interest rates. He also discusses how Benjamin Graham’s “margin of safety” concept plays into his investment strategy. [youtube=http://www.youtube.com/watch?v=lX5Nv6i3gCQ]  

Do Value Investors Really Add Value? Yes, Study Says

Does value investing work? A recent study of Canadian equity markets indicates that it does. The study, “Do Value Investors Add Value?” is authored by George Athanassakos, the Ben Graham Chair in Value Investing at the The University of Western Ontario’s Richard Ivey School of Business. It examined equity returns in the Canadian markets from 1985-1999 and 1999-2007, using a methodology that identified “value” stocks as those with the lowest price/earnings and price/book ratios, and… Read More

Royce on Long-Term Possibilities, More Bank Closures, and Margin of Safety

Chuck Royce, chief investment officer of The Royce Funds, tells Forbes.com that he sees “tremendous” possibilities in the stock market over the next three to five years, and says that America will make it through the current financial crisis and have a “wonderful” future. “I think that we are a major — we can’t forget this — we’re a major world power,” Royce told Steve Forbes. “And although the dollar has definitely had its issues… Read More