Graham And Doddsville

On October 29, 2005 Joe Nocera penned an article for The New York Times called The Heresy That Made Them Rich.

A FEW weeks ago, Columbia Business School held its 15th Annual Graham & Dodd Breakfast. The guest speaker was Jean-Marie Eveillard, a successful (and now retired) mutual fund manager, who used to beat the market regularly by adhering to the ”value investing” principles first articulated by the great investor Benjamin Graham and his co-author, the Columbia professor David L. Dodd, in their 1934 classic, ”Security Analysis.”

“The more things change, the more they stay the same way.”

Still, the Columbia program — and value investing in general — feels a little like a cult. Despite the obvious success of people like Mr. Buffett and Mr. Gabelli — and the studies that seem to bear out that success as something more than luck — it is not yet fully accepted by either mainstream Wall Street or mainstream academia. In his remarks at the breakfast, Mr. Eveillard said he thought that maybe 5 percent of professional money managers are true value investors.

See:  “The Heresy That Made Them Rich” (New York Times, 10/29/05)

The students of Columbia Business School just released the Spring 2013 Issue of Graham and Doddsville.

The new issue features Li Lu of Himalaya Capital, Preston Athey of T. Rowe Price, and Paul Isaac of Arbiter Partners.  In addition, this issue is packed with stock pitches from Columbia Business School MBA students, including ideas from the Pershing Square Challenge and the annual Moon Lee Prize.

Congratulations to the 2012 – 2013 second-year graduating editors Jay Hedstrom (CBS ’13), Jake Lubel (CBS ’13), and Sachee Trivedi (CBS ’13) on an outstanding job.  We also want to wish Richard Hunt (CBS ’14) and Stephen Lieu (CBS ’14) good luck as they assume the role of CSIMA Co-Presidents.

Keep up the great work CBS!

Check out the latest issue of Graham and Doddsville here.

See the Pershing Square Challenge winning pitch on Hertz here.

Read past issues of Graham and Doddsville here.

The 8th Annual Spring Value Investing Congress will be held May 6 & 7, 2013 at the Wynn Hotel in Las Vegas. 

If you haven’t registered, Whitney and John have decided to reinstate the Early Bird Discount for 24 hours ONLY. This is an extraordinary offer – $1,400 LESS than what others will pay later to attend the Congress – so I hope you’ll take advantage of it before it disappears!

The Las Vegas Value Investing Congress will have more speakers than ever before, in a powerful new format. You’ll gain a huge amount of practical investing wisdom and leave with many actionable investment ideas.  The lineup for this spring’s congress includes First Pacific Advisors’ Steven Romick, D3 Family Funds’ David Nierenberg, Centaur Capital’s Zeke Ashton, Rational’s Guy Gottfried, Robotti & Company’s Isaac Schwartz and Mittleman Brothers’ Chris Mittleman, just to name a few.

To register at this deeply discounted price go to www.ValueInvestingCongress.com/24HourSpecialOffer and use discount code S13GD9. You must register by midnight tomorrow (Thursday, March 28th) to take advantage of these savings.

The students of Columbia Business School have released the 17th issue of Graham and Doddsville.

The Winter 2013 issue of Graham and Doddsville features Barry Rosenstein and Scott Ostfeld of Jana Partners, Frank Martin of Martin Capital, Russell Glass of RDG Capital, Daniel Krueger of Owl Creek Asset Management and Adjunct Professor at Columbia Business School and Jon Friedland of Amici Capital (formerly named Porter Orlin).

More great work from Columbia Business School!  As I say each time, keep up the great work CBS!!!

Check out the latest issue of Graham and Doddsville here.  For past issues click here.

As far as I know, this video premiered at the Columbia Student Investment Management Conference held on Friday, February 1, 2013. This is the first live footage of Benjamin Graham that I have ever seen and includes interviews with Warren Buffett, Irving Kahn, Benjamin Graham, Jr., Charles Brandes and many others.  More phenomenal work from The Heilbrunn Center for Graham and Dodd Investing and Columbia Business School.

On November 1, 2011, Charlie Rose interviewed Superinvestor Seth Klarman for the Facing History and Ourselves New York Benefit Dinner.  If you have not seen this interview, it is fantastic.

One of my favorite nuggets is the following (see 25:30):

Warren evolved through 3 stages:  He went from buying cigar butts and getting the last few puffs for free, to buying great businesses at really cheap prices, to buying and holding great businesses at so-so prices.  And maybe even this new area of buying weird securities from crappy businesses at better than market prices – like B of A preferred or whatever… I’m still in phase one.  We’re still buying cigar butts, there’s a good business there in buying them and it’s a lot of fun.

I think Warren captured the idea himself in his 1964 (sic) article The Superinvestors of Graham and Doddsville and in it he talks about – value investing is like an innoculation – you either get it right away, or you never get it.  And I think it’s just true.  I actually think there’s just a gene for this stuff.  Whether it’s a value investing gene or a contrarian gene.

When asked why we trade, many of us would answer with traditional, rational responses. We see an undervalued company. We like a business, a brand or a strategy. Or, it’s the flip side: We’re selling because we may think the fundamentals point to trouble. We see an investment that looks overvalued.

As we know, most people follow the herd.  But what about contrarian investors – the ones featured on this blog – who consistently move against the herd?

It’s what the academics describe as a relatively new intersection of financial economics, psychology, and evolutionary biology including new interpretations of mutation. And the upshot, to me at least, is that we may not be as deliberative as we might think when it comes to trading decisions. In other words, we’re wired to trade a certain way.

According to Andrew Lo of MIT and Thomas J. Brennan of Northwestern claim that science evolution may explain both the herd mentality and also a contrarian one.

In other words, many of us are bound to the pack. A minority of us break away from it.

Both behaviors are necessary from an evolutionary standpoint because they’re necessary for the species to survive.  Every species needs its normal populations and its mutants.

I think I was just called a “mutant.”  I guess if that puts anywhere near the same group as Warren Buffett and Seth Klarman, then I am proud to be a mutant.

Click here to read the entire article The missing link of investing: Science may explain why we trade at MarketWatch.com.

Click here to see An Interview with Seth Klarman and Charlie Rose.

Click here to learn more about Seth Klarman.