I recently came across three articles that I think are must reads.
Marty Whitman, legendary manager of Third Avenue Funds, has over 50 years of experience under his belt. Most value investors know that he describes his value philosophy as investing in businesses that are ‘safe and cheap’. In a recent Financial Post article, Ian Lapey, designated successor to Whitman on the Third Avenue Value Fund, describes how Third Avenue defines cheap by tweaking Ben Graham’s famous net-net formula. Read the article here.
As a student at Columbia Business School, I helped to launch the student run newsletter Graham and Doddsville. My successors did an outstanding job interviewing Bruce Berkowitz for the most recent issue. It is interesting to contrast Third Avenue’s focus on asset value with Berkowitz’s focus on cash flows. Jean-Marie Eveillard says that value investing is a ‘wide tent’. While different investors arrive at intrinsic value using different methods, they are all searching for the same thing: businesses selling well below their estimate of intrinsic value. You can read the Graham and Doddsville interview here.
For more on Bruce Berkowitz, see his interview in the recent issue of Outstanding Investor Digest here.