Though he didn’t get as much attention as some of his fellow Benjamin Graham disciples, Walter Schloss produced an impeccable investing track record. And, he did it with a simple, patient approach, writes Norman Rothery in Canada’s Globe and Mail. 

From 1955 to 2002, Schloss’s investment partnership averaged annual returns of 16% — “and that was after deducting Mr. Schloss’s performance fee of 25 per cent of profits,” Rothery writes. “He generated these outstanding returns by methods that seem almost painfully straightforward. He started by looking for stocks trading at new lows both over the last year and over the last several years. He then winnowed down these candidates by looking for companies with simple, understandable business models and little debt that were trading below book value. He reviewed each company’s financial statements over the last 10 to 15 years and tried to avoid firms with greedy or unethical management and those with products that seemed likely to fail.”

Schloss, who passed away earlier this year, often held over a hundred stocks in a very diversified portfolio, Rothery says. He adds that while Schloss’s approach isn’t intricate or complicated, not many people follow it. “The problem may be people’s reluctance to buy stocks that aren’t obvious winners,” he says. “The outlook for value stocks is generally poor and most people won’t buy unprofitable companies after they’ve declined.”