The Little Book That Could
The diminutive category of “little books” by value investors is getting a bit crowded with the recent release of Christopher Browne’s Little Book of Value Investing. Browne, a charter member of the lucky sperm club, works at the eponymously named firm Tweedy, Browne Company LLC, which is one of the more stable and successful buyside shops on the street. Solid citizens all around in our eyes.
Morningstar offers up an explanation of the investment genre, if you will, practiced by Browne and his slow money group...which reminds us of the Ohio State football teams under Woody Hayes...three yards and a cloud of dust. Not very sexy, but it gets the job done and builds dynasties.
Morningstar concludes with an excerpt from the book, where the silver spoon himself offers up a nugget of advice that, if followed, should keep the benjamin’s flowing to his firm.
Browne states the following…
I prefer funds where the individuals running the fund are also the owners of the investment management firm.
If the firm is run by mutual fund marketers and salespeople, they may have more interest in gathering assets than managing the money well. The marketing types also tend to be short-term focused, which puts pressure on the manager to make short-term investment decisions that may not be in your best interests. Money managers who also own their firm are freer to make long-term investment decisions, as only a client can fire them. These managers just have to convince their clients to stay around during some period when relative performance lags.
The secret to winning in the investment business is to pick good managers and stick with them.
The granddaddy of little books, Joel Greenblatt’s The Little Book that Beats the Market might lose market and mind share to Browne’s book in the months ahead but avid investors unfamiliar with Greenblatt’s methodology might peruse his “magic formula” site, which we find to be an interesting tool for ferreting out investment opportunities.
Of course, long suffering growth stock groupies might find well intentioned friends or relatives leaving copies of these tiny value-oriented tomes under the tree this holiday season. These folks should probably re-gift, or better yet toss the book like a midget into the fireplace. Then pour yourself a hearty slug of Don Julio.
Sooner or later the worm will turn your way.
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