The Little Book of Value Investing

Found the book an easy read (about 1hr) explains value investing clearly even for someone who had no real knowledge of the topic.

An investment book with not a single table or chart but which in its just over 160 mini book pages distills the lifetime experience of a seasoned US value investor, who applies a global mindset and in his younger days followed in the footsteps of Ben Graham and Warren Buffett in terms of his initial work experience? Yes, that is exactly what makes this such a pleasurable and valuable read plus an easily learnt education in the basic concepts of value investing and the skillset needed which the writer believes anybody with general investment awareness can apply. Many of the other reviewers take issue with that there is nothing new - the truth is that the book is an excellent exercise in distillation of all his knowledge for people new to the concepts or needing an easy revision course. As the author states several times it is ultimately one of patience and accepting that this is a long term investment approach with "lumpy" performance in realising steady profits rather than graph like upward trends or "star manager" short term approaches and the related volatility they carry, given how the market values shares before recognising their true value by re-rating or being the subject of a bid. The author has been a value based investor for nearly 40 years and is a partner in a successful US firm Tweedy Browne that only follows this approach. While some of the examples may seem likely to recur easily again (the more conservative accounting followed in certain non-US jurisdictions and the undervalue that produces) there is enough that is still current and valid to make this little tome a very valuable reference work for using by many amateurs like myself. Its mix of matter of fact examples and non-technical jargon make it a real and valuable find.

If you don't think this book is all you need to invest intelligently, you will NEVER find one.Why? I have read Ben Graham's book; Warren Buffett's essay; John Neff on investing; David Dreman; Seth Clarman, "margin of safety"; Value Investing Today; Marty Witman's book; Brandes' Value Investing; David Swensen's....etc, and hundreds of annual reports form value guys..trying to find some "magic formula". What I rearned..there is no such formula!!!!!! What did I realize? 1) there is only a range for intrinsic value, and you want to buy when the price is below or near the lower end of the range. "roughly right, than precisely wrong", "margin of safety". 2). Use various models to figure out the range, DCF (used by Private Cap Mgmt, Longleaf), P/E multiple, P/B mulitple etc, and importantly apraisal multiple (M & A or buyout). Be conservative on variables....safe to use normalized earnings, margin, growth rate...etc....power of reversion to the mean.....optimism is the enemy. 3). Read 10 years of annual, and all the companies in an industry...and you will develop industry/company specific knowledge base....and you will know "roughly" when a company is under/over priced....comapre to historical average.....wait for the obvious pitch.. 4). Lastly and most importantly...do your work and number crunching...no magic formula!!!!! and you learn while doing your work....read a lot like Buffett and Munger and all other value guys do.

There are a lot of best selling "value investing for dummies" type books out there these days, but most of them recycle the same old cliches while underestimating the reader's ability to comprehend complicated investing approaches. The Little Book of Value investing does neither. It is professionally written by someone who'se been in the game a long time and is willing to share important lessons without dumbing them down too much. I thoroughly enjoyed my first read of this book and find myself regularly flipping through it to generate new investment ideas.

In the interest of full disclosure, it's best I state that I've been an extremely satisfied investor in the Tweedy Browne Global Value Fund for over a decade. The fund never does outstandingly well, but it also very seldom loses money. Over time, my initial investment has done surprisingly well. This book should not surprise anyone who has read Tweedy Browne's shareholder letters, but it does a great job of synthesizing Tweedy Browne's investment philosophy, while also providing more in-depth discussion of how to research stocks and understand financial statements. Chris Browne is a Benjamin Graham disciple, and his firm was labeled as on of the "Superinvestors of Graham and Doddsville" by Warren Buffett. This book might be characterized as a shorter, more readable version of Graham's "The Intelligent Investor." It's important for anyone who might buy this book to understand what it is, and what it is not. This is a primer on value investing as applied to individual equities, not an in-depth treatise on how to invest, allocate assets, etc. The goal of this book is to show why value investing works, how it works, and how to implement an investing process. It does not, nor is it intended to, provide in-depth discussion about how to value companies or financial statements or how to assess competition. Keep in mind that this is a 180-page book that takes 2-3 hours to read. Experienced investors might find parts of this book to be somewhat basic. However, starting with the chapter entitled "Sifting Out the Fool's Gold," it really imparts a lot of information that everybody should know (in that case, how to tell if a stock that meets screening criteria is really a value stock or a dud). The chapters about financial statement analysis and how to analyze a company's future prospects were well-written and provide an outstanding roadmap to analyzing a company that even more experienced investors would do well to heed. The 16-point checklist in Chapter 14 ("Send Your Stocks to the Mayo Clinic") is an excellent way of examining a company to determine its competitive position and future prospects. In my opinion, that checklist and the related discussion alone are worth the price of the book. The discussion on insider buying and selling was particularly interesting. Although this is part of many investor's decisions, the book demonstrates just how important insider buying can be as a value signal. I intend to pay more attention to insider buying as a result. One particularly interesting aspect of this book is its discussion of international value investing. That overview should provide investors with examples of why value exists overseas, but most investors probably can't master the intricacies of non-US accounting methods. This is a great book for less-experienced investors, and contains a number of nuggets that may be of use to even highly experienced investors. Readers who want a more depth might like Martin Whitman's two books or "

OK, I'm a value sort of guy. I look for bargains when I shop. But getting a bargain doesn't always mean `cheapest.' Cheapest can be a crummy product at a deservedly low price. Value is getting a good product at a fair price, and who among us doesn't want that? If I run my life like that, why not my investments? Well, I'm a `whatever it takes' sort of investor. Not a pro, but experienced and better than average. And, as I look back over my own investing, the one investment style that has outperformed all others is 'value.' In the parlance of investing, as Chris Browne explains, value investing is buying good stocks not only at a fair price, but at bargain-basement prices. In "The Little Book" he shows us how to do it. If you're an experienced investor, the first few chapters may drag a bit as Browne lays the foundation, outlining the virtues of value investing and explaining how to determine a company's worth using common and not-so-common indicators. He also tells us how value stocks come to be `values' and when to invest in `value.' But this is good stuff and an important precursor to showing us how to uncover prospective value stocks, which he gets right into in chapters Six through Ten. Along with these, chapters Eleven through Fourteen are the meat of the book. Here we learn how to determine which of our suspects are truly values that are likely to make us money, the winners, and which of them are deservedly cheap, the losers, and are going to stay that way. In the remainder of the book, Browne continues making a case for value investing, adding related conventional and not-so-conventional market wisdom, and contrasting value with other investing styles. Chapter Seventeen is entitled "It's a Marathon, Not a Sprint" and is subtitled "It's time in the market, not market timing, that counts." Indeed, that's what this is all about. Value investing is buy-and-hold with a twist. You buy historically good companies when the price is low relative to what the company is worth and hold until the price appreciates to nearer its true value. This can take some guts, but there is virtually nothing in the world of investments that will reap greater rewards over the long haul. Browne points out that value investing is also one of the better ways to hedge your bets, smoothing out the rough spots and market corrections, and he backs those claims up with real world numbers. I really like this book and wish it had been written twenty years ago. But, I will warn you that this is not another one of those I-made-money-in-the-market-you-can-too books, written by someone who no longer trades, instead making a fortune doing nothing but hyping and selling get-rich-quick schemes. Nor is Browne one of those guys who rolls up his sleeves and screams into the TV camera. He is a practitioner. Better yet, he is a practitioner with a stellar thirty-five year track record in value investing. Even so, he's humble, a quality that makes his work here accessible. Browne learne