In the second quarter, David Einhorn’s Greenlight Capital sold tech stocks in order to buy retail shares, according to a public filing of its holdings as reported in a recent article in Barron’s. The article notes that the filing is merely a snapshot of the fund’s holdings at a moment in time and is therefore “an imperfect picture of Einhorn and Greenlight’s investing thesis.” But the fund’s second-quarter purchases of Gap, Best Buy, and TJX Companies,… Read More
A recent Barron’s article profiles value investor Fred Copper, lead manager of the Columbia Overseas Valuefund, who has learned that the best way to beat his benchmark (the MSCI EAFE Value index) is to “not invest like it.” Copper has adopted a more flexible definition of value than some of his peers, based on his belief that traditional style benchmarks for value funds include a significant amount of cyclicality–meaning they include stocks that are sensitive… Read More
By Jack Forehand (@practicalquant) — Since I was twelve years old, I have been very active in competitive sailboat racing. It is a great respite from the world of managing quantitative investing portfolios that I exist in during the week. And it offers me an opportunity to be outside, work together with other people in a team, and stimulate my mind with the tactics and strategy that are involved. When I was younger, my experience with… Read More
A Barron’s article from July outlines an interview with Charles De Vaulx of International Value Advisers (IVA) in which the fund manager offers insights on various topics related to the markets. According to the article, the firm “won’t buy anything that isn’t at a big discount to intrinsic value” and “have lately struggled to find attractive investments.” De Vaulx noted that the market is exhibiting two “intriguing phenomena.” The labor markets have tightened but without… Read More
Ben Graham’s tome The Intelligent Investor still sells over 100,000 copies a year as investors of all stripes look to learn the value-investing way. But as Warren Buffett once said, value investing is “is simple, but not easy”. The truth is, the vast majority of investors will never be able to become value investors as defined by Ben Graham for the reasons outlined below. This is not a critique, but rather an exercise in illustrating… Read More
Legendary investor Bill Miller says there’s a smarter way to value-invest than just picking cheap stocks, according to a recent article in CNBC.com. Running his own fund after decades at Legg Mason, Miller looks for companies focused on “high returns on invested capital and free-cash-flow growth, as well as large market opportunities. That helps small and large investors alike distinguish stocks that are undervalued from those that are simply cheap.” While the article notes that… Read More
Sumzero, an online research platform for professional investors, recently conducted an interview with noted value investor and author Mohnish Pabrai, founder of Pabrai Investment Funds (a group of hedge funds modeled on Buffett’s original partnerships), which manages over $800 million. Here are highlights of the interview: Current state of value investing: According to Pabrai, the principles and approach of value investing will not change significantly. That said, he pointed out that markets will go through… Read More
Many investors have “drifted away from the hallmark of value investing championed by the likes of Benjamin Graham and Warren Buffett: actively picking stocks the market has overlooked.” This according to a recent Wall Street Journal article. Some critics say that the metrics typically used to identify value stocks have not held up in the market’s nine-year bull run—which has been punctuated by passive investing strategies and tech growth—and these trends have “pushed more investors… Read More
By Jack Forehand (@practicalquant) — When you look up a word in the dictionary, you expect to get a pretty clear definition of what it means. There obviously is gray area with some terms and some have multiple definitions, but in general a word’s definition will give you a pretty clear understanding of it. When it comes to investing, it is common to take that mentality and assume it also holds. The reality, however, is that… Read More
The man who made “safe and cheap” a value investing mantra passed away earlier this month, according to a recent Bloomberg article. Whitman created the Third Avenue Value Fund in 1990 and, according to the article, during his tenure (ending in 2012) the fund earned an average return of 12 percent (versus 9 percent for the S&P 500). In 1990, he was named Morningstar’s mutual fund manager of the year. Raised in the Bronx, Whitman used… Read More