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Tag: Value investing

Seth Klarman’s Value Advice

Seth Klarman’s Value Advice

Seth Klarman is one of the best value investors of all time. He founded his Boston based hedge fund Baupost in 1983 and since inception, the fund has produced returns of around 20% per annum for investors despite the fact that its cash weighting frequently exceeds 30%. See also: Warren Buffett Describes How To Pick Stocks Klarman’s book on value investing, Margin of Saftey has been out of print for many years, but demand from investors seeking to learn from his…

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Why You Need To Diversify: The Chance Of Finding A Winning Stock Is Just 7%

Why You Need To Diversify: The Chance Of Finding A Winning Stock Is Just 7%

  Investing can be a great way to make your money work harder for you. Over the past 100 years, US and UK equities have returned around 7% to 9% per annum. £100 a month invested at 9% per year will grow to approximately £1.2 million over five decades. However, most investors fail even to make market average returns because it’s so difficult to pick stocks. How to make the most of your skills The world’s best investors have made…

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Diversification: What Is It Good For?

Diversification: What Is It Good For?

The investing world can be a complicated place. There are two main approaches to portfolio management when it comes to concentration. The first approach is broad diversification, favoured by value investors such as Benjamin Graham (Graham’s advice of having a well-diversified portfolio of 30 or more deep value stocks) and more recently Noble Prize winning economist Harry Markowitz in his Modern Portfolio Theory, and Dr John Lintner, both of whom strongly advocated diversification. On the other hand, there’s the highly concentrated…

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Should You Buy A Company After A Dividend Cut?

Should You Buy A Company After A Dividend Cut?

First published at ValueWalk.com Should you buy a company after it has cut its dividend? That’s the question Morgan Stanley’s analysts have tried to answer in a European Equity Strategy research note sent to clients today and a reviewed by ValueWalk. Morgan’s research has been prompted by renewed investor interest in dividend cuts. Against a depressed earnings base, the market’s dividend payout level looks high in a historical context and the median stock’s payout ratio is close to a 20-year…

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Benjamin Graham’s 11 Rules For The Appraisal Of Common Stocks

Benjamin Graham’s 11 Rules For The Appraisal Of Common Stocks

Below is a carbon copy of Benjamin Graham’s lecture notes on his 11 rules for appraising stocks. You can find a copy of the original set of notes here, although they are essentially illegible. The original document misses off the final rule, number eleven, which is mentioned elsewhere. OUTLIER OF NOVEMBER 6TH LECTURE Benjamin Graham RULES FOR APPRAISAL OF COMMON STOCK FOR INVESTMENT PURPOSES Appraised Value is determined by (a) estimating the Earnings Power (b) applying the appropriate multiplier (c)…

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Steven Kiel Of Arquitos Capital On Looking For Prospective Investments

Steven Kiel Of Arquitos Capital On Looking For Prospective Investments

This is an excerpt from an interview I did with Steven Kiel of Arquitos Capital for ValueWalk back in September. Arquitos is modeled on the partnerships managed by Warren Buffett from 1956-1969. The fund uses a bottom-up, company-specific approach, identifying situations where significant mispricing exists. And this approach has, so far, yielded some highly impressive results. Arquitos Capital’s annualized return since launching on April 10, 2012 to the end of June was 33.2%. To the end of June, Arquitos Capital was up 2.5% for 2015….

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Are Stocks, Bonds And Real Estate Really At ‘Peak Valuation’?

Are Stocks, Bonds And Real Estate Really At ‘Peak Valuation’?

Benjamin Graham was known for his love of using historic data to analyze companies and historic market trends. Graham like to use long-term data series’, stretching across several decades, to come up with the most reliable figures. Both Deutsche Bank and Credit Suisse have taken a similar approach to data analysis and the two banks put together research documents every year that look at the long-term asset returns. Deutsche Bank released its annual Long-Term Asset Return Study a few days ago. The bank used 200…

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Value Vs. Glamour Stock Returns

Value Vs. Glamour Stock Returns

First published at ValueWalk.com “What happens when value and glamour stocks miss earnings expectation targets? Although, as expected, prices for glamour stocks have historically fallen, prices for value stocks have gone up — even when business fundamentals deteriorated, based on results found in this study of global equities. These results suggest the superior returns delivered by value stocks may not be a result of positive developments relative to expectations, but instead are more likely due to a gradual and corrective reversal…

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The 6 General Principles Of Value Investing

The 6 General Principles Of Value Investing

First published at ValueWalk.com What are the fundamental principles of value investing and how should you interpret them? Joseph Calandro, Jr., a Managing Director of a global consulting firm, Fellow of the Gabelli Center for Global Security Analysis at Fordham University, author of Applied Value Investing, and a Contributing Editor of Strategy & Leadership, published a paper earlier this year that seeks to answer this question. I should say now that this is only a brief summary of the paper…

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Credit Suisse: Family Run Firms Generally Outperform Over Time

Credit Suisse: Family Run Firms Generally Outperform Over Time

First published at ValueWalk.com Public family controlled firms are always a grey area for investors. In many cases, the minority shareholders have little control over management’s decisions. However, there is evidence to suggest that a controlling family can be a good thing, after all, their fortunes are tied to the success of the company. On the other hand, there have recently been a number of high-profile family-owned corporate collapses and management control concerns have led minority investors to question whether the…

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