I pick money-managers that adhere to fundamental analysis. They must be long-term investors with at least a five year investment time-horizon, with limited turnover. In short, I invest exclusively with value investors. They are a group of investors that attempt to purchase companies for less than the companies are selling for in the open market. They tend to look for companies that are out of favor and not popular with the crowd. They follow Ben Graham and Warren Buffet’s investment philosophy, coupled with their own thinking and logic. I follow managers that buy stocks for less than half of the companies’ intrinsic values. When the companies’ intrinsic values merge with their quoted prices on the exchanges, the dicipline causes them to sell. Managers that purchase companies for half of what a knowledgeable buyer would pay for the entire company are the money managers that I follow. Managers that keep a close eye on PE ratios, tangible and intangible assets, debt, management, and earnings are especially important to me. The potential profit is made at the time of purchase of these securities and any growth in the company would further add to shareholder value. They are not discouraged by a hostile takeover or break up of the company because if their analysis had any merit this action would theoretically release more shareholder value. I look at the manager’s schooling and pay special attention for managers that have come out of a program out in Wisconsin—Applied Securities Analysis Program. It is a program that has produced many money-masters. The program attracts and selects the brightest minds in finance and have those young minds actually manage real money. To me, a master qualifies as a master if he has successfully outperformed the market averages by ten years or more. A cluster of these “masters” adhere to value investing—in fact most masters are value investors. These guys have gone to different places and have invested in different things but had still achieved great performances. I realize that there are many ways to make and lose money in the market, but the only type of investment I have full conviction on is value investing. They must have a Chartered Financial Analyst distinction, but more importantly, they must be willing to close their fund when it appears that asset bloat is a concern. It signals that they are willing to turn away from lucrative management fees if their fund performance would suffer. They must ‘eat their own cooking.’ Most of their investable funds should be invested in the funds they are managing. Fees must not exceed 1.5-2% of assets.
Posted on: Tue, 01 Apr 2014 22:12:50 +0000
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