Education: Never
went to college. He took a night course
from Ben Graham at the New York Institute of Finance.
Method: Looks
up the numbers and reads the annual reports.
He focuses on the ‘margin of safety’.
He is enormously diversified, owning well over 100 stocks. He ignores all the externals and simply says
that if a business is worth a dollar and he can buy it for 40 cents then
something good may happen to him. He is
far less interested in the underlying business than Warren Buffett.
Character: Independent
thinker. No one can exert influence on
his investment ideas.
Record: S&P
28 ¼ year compounded gain 887.2%
WJS
Limited Partners 28 ¼ year compounded gain 6,678.8%
WJS
Partnership 28 ¼ year compounded gain 23,104.7%
S&P
28 ¼ year annual compounded rate 8.4%
WJS
Limited Partners 28 ¼ year compounded rate 16.1%
WJS
Partnership 28 ¼ year annual compounded rate 21.3%
Investor 2: Tom
Knapp
Education: He
was chemistry major at Princeton. He
then took a non-credit night course in investments from David Dodd at
Columbia. This interested him so much
that he enrolled in the Columbia MBA course and took investment courses from
Dodd and Graham.
Method: Formed
Tweedy, Browne Partners with Ed Anderson and bought a wide variety of
businesses. They bought full control of
businesses as well as making passive investments.
Record: S&P
total return for a 15 ¾ year period 238.5%
TBK
total return for a 15 ¾ year period 1,661.2%
TBK
Limited Partners total return for a 15 ¾ year period 936.4%
S&P
15 ¾ year annual compounded rate 7.0%
TBK
15 ¾ year annual compounded rate 20.0%
TBK
Limited Partners 15 ¾ year annual compounded rate 16.0%
Investor 3: Warren
E. Buffett - Buffett Partnership, Ltd.
Education: Warren
attended the prestigious Wharton School at the University of Pennsylvania for
three years. He then transferred to the
University of Nebraska. There he read Benjamin Graham's The Intelligent
Investor.[1]
He
obtained a Master's degree in economics in 1951 at Columbia University,
studying under Benjamin Graham, alongside other future value investors
including Walter Schloss and Irving Kahn.[2]
Method:[3] Something he can understand. He looks for something in his “circle of
competence”.
He doesn’t understand what Car
Company, software or chemical company will win 10 years from now. But he does understand that Snicker’s Bar
will be the number one candy bar in the U.S. just as it has been for the last
40 years.
Durable Competitive Advantage
A business that will dominate
for what appears to be forever.
An Honest and Able management.
A price that he wants to pay.
Record: Dow
cumulative return 1957 – 1969 152.6%
Partnership
cumulative return 1957 – 1969 2,794.9%
Limited
Partners cumulative return 1957 – 1969 1,502.7%
Dow
annual compounded rate 1957 – 1969 7.4%
Partnership
compounded rate 1957 – 1969 29.5%
Limited
Partners compounded rate 1957 – 1969 23.8%
Investor 4: Bill Ruane, Sequoia Fund
Education: Harvard
Business School. He then took Graham’s
investment class at Columbia. Buffett
asked him to manage his partner’s money when he was closing the Buffett
Partnership in 1969.
Method: Selects
securities based on discrepancies between price and value.
Ruane
is a focus investor with 90% of the funds portfolio in less than 30 stocks.
Record: S&P
500 total return 1970 – 1984 270.0%
Sequoia
total return 1970 – 1984 775.3%
S&P
500 compound annual return 1970 – 1984 10.0%
Sequoia
compound annual return 1970 – 1984 17.2%
Investor 5: Charlie
Munger
Education: Harvard
Law. Munger was convinced by Buffett to
become a value investor.
Method: Munger
uses a discount-from-value approach and his portfolio is very concentrated in
few securities. The high concentration
lends to a very volatile record.
Record: Dow
total return 1962 – 1975 96.8%
Partnership
total return 1962 – 1975 1156.7%
Limited
Partners total return 1962 – 1975 500.1%
Dow
average annual compounded rate 1962 – 1975 5.0%
Partnership
average annual compounded rate 1962 – 1975 19.8%
Limited
Partners avg. ann. compounded rate 1962 – 1975 13.7%
Investor 6: Rick
Guerin, Pacific Partners
Education: He
was a math major at USC . Munger convinced him that investing was the
career for him.
Method: Discount-from-value
approach
Record: S&P
19 year (1965 – 1983) compounded gain 316.4%
Limited
Partners 19 year compounded gain 5,530.2%
Partnership
19 year compounded gain 22,200.0%
S&P
19 year annual compounded rate 7.8%
Limited
Partners 19 year annual compounded rate 23.6%
Partnership
19 year annual compounded rate 32.9%
Investor 7: Stan
Perlmeter, Perlmeter Investments
Education: He
was liberal arts major at the University of Michigan. He had advertising agency in the same
building as Buffett’s partnership. After
discussing the value approach with Buffett he quit advertising and started a
partnership.
Method: Discount-from-value
approach
Record: Total
Partnership percentage gain 8/1/65 – 10/31/83 4,277.2%
Limited
Partners percentage gain 8/1/65 – 10/31/83 2,309.5%
Annual
compound rate of gain Partnership 23.0%
Annual
compound rate of gain Limited Partners 19.0%
Annual
compound rate of gain Dow Jones Industrials 7.0%
Investor 8: Washington
Post Company, Master Trust
Investor 9: FMC Corporation Pension Fund
