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The Art of Value Investing


giofranchi
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[amazonsearch]The Art of Value Investing[/amazonsearch]

 

I have read not so "exalting" things about Mr. Tilson on this board… Many of you probably don’t think he is really a very good investor. I don’t know him well, so I cannot judge. What I do agree with is Mr. Montier’s comment on the book:

 

I often judge a book by how many times I get my highlighter out and dog-ear pages. On that metric, this book is wonderful – simply packed with insight from some of the best long-term investors. Everyone will learn something from this book.

 

Imo, one of the best compendium of value investing wisdom out there. :)

 

Cheers!

 

giofranchi

 

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We try not to have many investing rules, but there is one that has served us well: if we decide we were wrong about something, in terms of why we did it, we exit, period. We never invent new reasons to continue with a position when the original reasons are no longer available.

--David Einhorn, Greenlight Re

 

 

giofranchi

 

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The real secret of investing is that there is no secret to investing. Every important aspect of value investing has been made available to the public many times over, beginning with the first edition of Security Analysis. That so many people fail to follow this timeless and almost foolproof approach enables those who adopt it to remain successful. The foibles of human nature that result in the mass pursuit of instant wealth and effortless gain seem certain to be with us forever. So long as people succumb to this aspect of their natures, value investing will remain, as it has been for 75 years, a sound and low-risk approach to successful long-term investing.

--Seth Klarman, The Baupost Group

 

giofranchi

 

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We usually hold less than 20 positions at a time, so no one would ever say we’re a place to put all your money, but we behave as if that’s what people have done. So we think it’s reasonable to have some cash around for emergencies – as Buffett says, why risk what you need for that which you don’t need?

We used to think having cash was a byproduct of not having enough to do. But the older I get, the more I see it as a strategic asset. It allows us to take advantage of those great opportunities that come up from time to time. We’re just behaving like the companies we like to invest in.

--Bruce Berkowitz, Firholme Capital

 

giofranchi

 

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One conclusion I made from our 2008 and early 2009 experience being more unpleasant than I would have liked is that I needed to better incorporate my world view into individual security selection, with the goal of trying to minimize future unpleasantness. We’re focused on better connecting the dots between the overall economic environment and the opportunities or pitfalls facing individual businesses. In 2008 we were looking at trees and didn’t see the forest.

--Chuck Akre, Akre Capital Management

 

giofranchi

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I would assert the biggest reason quality companies sell at discounts to intrinsic value is time horizon. Without short-term visibility, most investors don’t have the conviction or courage to hold a stock that’s facing some sort of challenge, either internally or externally generated. It seems kind of ridiculous, but what most people in the market miss is that intrinsic value is the sum of all future cash flows discounted back to the present. It’s not just the next six months’ earnings or the next year’s earnings. To truly invest for the long term, you have to be able to withstand underperformance in the short term, and the fact of the matter is that most people can’t.

--David Herro, Harris Associates

 

giofranchi

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The first thing I look for si that the business is currently profitable, which means generating good returns on capital without the excessive use of leverage. I was tempted in my youth by turnaround stories or betting on new product or service offers, where you could hit the ball out of the park if things got fixed or the new product took off. But I've had enough failures pursuing those types of ideas that I've for the most part lost the stomach for them. From a performance standpoint, I'm more focused on what something is than what it can be.

-- Thomas Gayner, Markel Corp.

 

giofranchi

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Thank you, Giofranchi.

 

Tilson is a very good journalist of value investing.  For some reason or reasons, often discussed on this board, he hasn't been able to produce good returns.  His situation is reminiscent of the saying:

 

"Those that do, do.  Those that don't, teach."

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Thank you, Giofranchi.

 

Tilson is a very good journalist of value investing.  For some reason or reasons, often discussed on this board, he hasn't been able to produce good returns.  His situation is reminiscent of the saying:

 

"Those that do, do.  Those that don't, teach."

 

Am I missing something?  His fund has returned 177% since inception 1999, versus 36% for the S&P - T2 partners fund.  That seems pretty good to me - top 1%. 

 

Of course it is not up to our standards here. :-X

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[amazonsearch]The Art of Value Investing[/amazonsearch]

 

I have read not so "exalting" things about Mr. Tilson on this board… Many of you probably don’t think he is really a very good investor. I don’t know him well, so I cannot judge. What I do agree with is Mr. Montier’s comment on the book:

 

I often judge a book by how many times I get my highlighter out and dog-ear pages. On that metric, this book is wonderful – simply packed with insight from some of the best long-term investors. Everyone will learn something from this book.

 

Imo, one of the best compendium of value investing wisdom out there. :)

 

Cheers!

 

giofranchi

 

Probably the main reason is, that Tilson lacked integrity while investing in Fairfax. At first, he behaved like a kitchen cockroach jumping on the tail end of the short and distort campaign, and some time later after realizing how wrong he was, he changed his mind going long. Have you ever seen some bipolar Buffett.

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"Those that do, do.  Those that don't, teach."

 

Oh, no! … Now that I have started the very first cycle of lessons about value investing at the Politecnico of Milan, I should warn my partners that chances are I will underperform dramatically in the future …  ::)

 

giofranchi

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  • 4 weeks later...

When this book first arrived it was not what I was expecting but as I read into it was much better.  The book's format took a little getting used to in that there are topics and many investors take on each topic.  This format lends itself to providing the raw data of ideas where you have put together the ideas into your own narrative or story about each investor or groups of investors.  It also provided me with which investors follow my style of investing so I found a few more folks to copy investment ideas/industries from.

 

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