Walter Schloss – Part five: Making Money out of Junk
The first few parts of this series on Walter Schloss, have looked at the legendary investor’s background, how he got into deep value investing and how he went about finding suitable investments.
However, as of yet, I’ve not looked into any case studies, or investments Walter Schloss made, the reasons why and what results they yielded for his portfolio. And with over 100 stocks in his portfolio at any one time, there are certainly plenty of examples to pick from over Walter Schloss’ six decades of deep-value history.
Luckily, Walter Schloss wasn’t shy. He gave plenty of interviews and lectures over his career. One such interview, entitled Making Money Out of Junk, was published in the August 15 1973 issue of Forbes magazine and it gives us a real insight into Walter Schloss’ deep-value philosophy.
Making Money out of Junk
Book value per share and the price to book, or P/B ratio are two of the most important financial metrics in the deep-value investors’ arsenal. Walter Schloss begins his interview with Forbes by talking about the importance of these figures, but more importantly Walter Schloss comments on the reliability of these figures and they can often understate the replacement cost of assets.
Read the whole article at Valuewalk.com.