In a recent WealthTrack interview, legendary value investor Jean-Marie Eveillard talked about the difference between Benjamin Graham’s and Warren Buffett’s value philosophies, and explained where his own approach falls on the value spectrum.
Eveillard says that on one side of the value spectrum is Graham, who used a deep value approach that involved looking for firms whose adjusted book values were significantly above their share prices. Buffett, on the other hand, was concerned about price, but more concerned about quality. Buffett would rather hold a comfortable business at a questionable price than a questionable business at a comfortable price — a notion that would have made Graham “turn over in his grave,” Eveillard joked. He says Buffett’s approach is more time consuming but potentially more lucrative. Eveillard says he started his career as a Graham-style value investor but shifted to a Buffett-type approach. He talks about the current environment, saying that there are few Graham-type value available, while the high-quality Buffett-type stocks have become pricey. He also discusses why he thinks value investors — typically a bottom-up-focused group — should also be looking at top-down issues today.