水不恋云    复制

508-Great Investors: Others in the Hall of Fame
  
  Most successful investors take a few ideas from several others and spin those
  ideas into their own. In the previous lessons, we've highlighted some of the
  greatest investors of our era, however there are certainly many more. In this
  lesson, we'll introduce you to a few more money managers we think deserve a
  spot in the "Investing Hall of Fame." Make sure to look for the common
  investing themes across these superb stock-pickers.
  
  
  Charlie Munger
  
  
  Charlie Munger, vice chairman of Berkshire Hathaway, is often overshadowed by
  his colleague Warren Buffett. However, much of the investment philosophy
  employed by Buffett and Berkshire can be attributed to Munger's influence.
  
  Like Buffett, Munger is from Nebraska. He started his career as a lawyer, but
  through his friendship with Buffett, Munger eventually left his successful law
  career to join Buffett in running Berkshire Hathaway BRK.B. Over the years,
  the two have developed a great rapport, often highlighted during Berkshire
  Hathaway's annual meetings. When shareholders pepper the two with queries
  during question-and-answer sessions, Buffett will give his usual insightful
  thoughts, while Munger answers with his dry witty remarks, often leaving
  listeners in stitches.
  
  Here's one gem from the 2005 shareholder meeting, where Buffett and Munger
  discussed the compensation committees of many boards of directors:
  
  Buffett: I've been on 19 boards, and I've never seen a director to whom fees
  were important object to an acquisition or a CEO's compensation--members of
  compensation committees act like Chihuahuas, not Great Danes or Dobermans.
  [Pause] I hope I'm not insulting any of my friends who are on compensation
  committees.
  
  Munger: You're insulting the dogs.
  
  Munger helped Buffett develop his knack for not only finding undervalued
  stocks, but for investing in strong businesses with strong competitive
  advantages. In other words, business quality truly matters to Munger, not just
  how cheap a stock is.
  
  Munger also urges investors to gain worldly wisdom to become successful at
  stock-picking. This means that investors should not just focus on a few narrow
  topics but expand their horizons to understand many different subjects. For
  example, an engineer should learn accounting to understand how a business can
  make a profit. Likewise, a good financial analyst shouldn't just crunch
  numbers but also learn how the machines in a factory work. This worldly wisdom
  helps investors gain knowledge about the way things work in a broad sense,
  which in turn helps them to better understand the economics of a certain
  business. With worldly wisdom, investors can stay focused on what matters
  while others are running for the doors due to a short-term blip. In other
  words, the worldly wisdom Munger preaches can help savvy investors profit from
  others' shortsightedness.
  
  
  Bill Miller
  
  Few investors have melded the growth and value schools of investing better
  than Bill Miller, manager of the Legg Mason Value Trust LMVTX mutual fund.
  Some value-investing enthusiasts disagree that Miller is one of their own.
  While his practice of valuing stocks on the underlying businesses is
  acceptable, Miller has made some questionable "value" plays. Some famous
  examples include America Online (which later became part of Time Warner TWX),
  Dell Computer DELL, and Amazon.com AMZN. Though none were of the traditional
  "value" mold, all these stocks made substantial price gains after Miller
  bought them.
  
  Critics characterize Miller as a growth investor in a value investor's
  clothing, but a look into his thought process reveals Miller's knack for
  seeing value where others don't. This ability has allowed the Legg Mason Value
  Fund to beat the S&P 500 for over a dozen consecutive years--a remarkable
feat.
  
  Like any value investor, Miller looks for businesses with strong competitive
  advantages that are trading below his estimates of the firms' worth. He uses a
  discounted cash-flow model to determine intrinsic value. Unlike many value
  managers, however, Miller is willing to make fairly optimistic assumptions
  about growth, and he doesn't shy away from owning companies in traditional
  growth sectors. In his fund, pricey Internet stocks rub elbows with
  bargain-priced financials and turnaround plays. Miller will also let favored
  names run, allowing top positions to soak up a large percentage of assets.
  This portfolio concentration may fly in the face of modern portfolio theory,
  but Miller isn't one to accept the conventional wisdom.
  
  A more recent example of Miller's value/growth mix is his purchase of Google
  GOOG, a rapidly growing Internet search engine. While many investors shied
  away from this stock due to valuation concerns, Miller scooped up shares
  during its IPO. The stock doubled quickly after the company went public. While
  it's still too early to tell where Google will be five or 10 years down the
  road, this purchase was done in classic Bill Miller fashion--investing in a
  wildly profitable company that few investors understand or appreciate.
  
  
  Marty Whitman
  
  Marty Whitman is a vulture of a value investor. Whitman, manager of the Third
  Avenue Value Fund TAVFX, can usually be found rummaging through the rubble of
  distressed stocks--those of beaten-down companies, some on the brink of
  insolvency. But most of Whitman's depressed stock plays eventually turn around
  for the better. The key to Whitmanesque stock-picking: Buy companies that are
  cheap (presumably because of some temporary issue) and safe, and hold on to
  them.
  
  Whitman is a value investor after Benjamin Graham's own heart. Like Graham,
  Whitman looks for stocks that are dirt cheap, but the two investors use
  different measuring sticks. Graham used a company's price/book ratio to
  determine whether its stock was cheap. He generally wouldn't buy a company
  unless its stock was trading for less than 1.2 times book value per share.
  
  Whitman takes a different approach. He focuses on a company's takeover value,
  or how much he thinks a buyer would pay to buy the whole company. Whitman
  doesn't like to use book value because he says it overlooks too many
  intangibles. For instance, a money-management firm can use its reputation and
  relationships to gain additional business. Its reputation and relationships
  are assets, so to speak, but they don't appear as such on a company's balance
  sheet. According to Whitman, takeover value accounts for such intangibles.
  
  Whitman combs through a company's financial statements to figure out what he
  thinks the business is worth. He then checks to see whether the company's
  balance sheet has remained strong in spite of setbacks in the business. He
  will generally pay no more than 50% of what he thinks a buyer would pay to
  acquire the whole firm.
  
  It can take a long time to unlock the value of a beaten-up stock. As long as a
  company is safe and cheap, Whitman is willing to wait.
  
  
  Bill Nygren
  
  Bill Nygren is the manager of the Oakmark Select OAKLX mutual fund. He joined
  Harris Associates, advisor to the Oakmark funds, in 1983. After a stint as
  director of research for Harris Associates for most of the 1990s, Nygren began
  managing the Select fund in early 2000, near the height of the technology
  bubble. Value investing is always tough, but even tougher when a bubble exists
  in stock prices. During these times, the undervalued stocks usually stay cheap
  for a long time, while the expensive "hot stocks" of the moment keep going up.
  When Nygren took over, Oakmark's investors were jumping ship trying to take
  advantage of ever-increasing Internet and other technology stocks. By sticking
  to his guns, however, Nygren eventually proved that his methodology of buying
  growing, but undervalued firms pays off in the long run.
  
  Nygren buys stocks that are trading at discounts to their estimated private
  market values. To estimate a company's intrinsic value, Nygren and his
  colleagues use discounted cash-flow analysis and look at comparable
  transactions, among many other factors. When picking stocks, Nygren likes to
  look for companies he believes the market underappreciates, perhaps because of
  a short-term difficulty. In a speech given in early 2005, Nygren described his
  investing philosophy using a variation of the 80/20 rule, a strategy made
  famous by his former portfolio holding, Illinois Tool Works ITW. Nygren said
  he looks for stocks where 80% of the commentary about a company revolves
  around a piece of business that contributes only about 20% of the profits.
  When he finds a situation like this, it is likely the market is undervaluing
  the firm.
  
  Such is the case with Nygren's largest holding (at the time of this writing),
  Washington Mutual WM. Much of the news about WaMu is about the company's
  troubled mortgage business, while most of the firm's profits come from the
  highly profitable and growing retail banking business. Nygren believes that
  once the market realizes its misplaced focus, WaMu's stock should appreciate.
  Only time will tell if Nygren is correct, but as a long-term buy-and-hold
  investor, Nygren can wait.
  
  
  Ralph Wanger
  
  Ralph Wanger, semi-retired manager of Columbia Acorn Fund LACAX, searches for
  smaller stocks he believes have yet to be uncovered by Wall Street. Before
  investing in a company, Wanger looks for companies that are financially strong
  and have significant growth opportunities ahead of them. These are obvious
  criteria that most investors look for. However, while many small-cap growth
  investors are willing to overlook valuation for the upside potential of a
  stock, Wanger believes that growth should only be purchased at a reasonable
  price.
  
  Markets often overvalue growth stocks, so this is an important point. On the
  plus side, however, the small companies Wanger looks for have often largely
  been ignored by the Wall Street analysts, thus many investors are not aware of
  potential opportunities. Since fewer investors are paying attention to smaller
  companies, the chance of finding an undervalued stock is more likely.
  
  Rather than employ a top-down approach to investing, where investors first
  analyze macroeconomic trends such as GDP growth in a certain country, Wanger
  employs the ideas of investing according to themes. For example, if Wanger
  believes the population in China is becoming increasingly wealthy, he may look
  for consumer-goods makers that sell high-end items in the country.
  
  Wanger isn't afraid to go against the trend either. In the late 1990s, many of
  his small-growth peers posted huge returns by betting that already high stock
  prices would be carried higher still by a wave of investor enthusiasm for
  technology stocks. (This is the so-called "greater fool" strategy.) That
  tactic, of course, was laden with risk, and many funds paid a huge price.
  
  Amid it all, Wanger did what he always has: He sought out sound businesses
  with strong earnings and cash flows that appeared cheap. That tactic held
  Wanger's fund back in 1999, but he was eventually proved correct. From March
  2000 through April 30, 2001, the fund gained 16.8% on a cumulative basis,
  while his typical small-growth peer lost a cumulative 31%. However, Wanger
  isn't in our Hall of Fame just for a few years of performance. A $10,000
  investment in the fund in June 1970 would have grown to just less than $1.3
  million if held through May 2003, around the time he stepped down from
  day-to-day duties. In contrast, the same money invested in the S&P 500 Index
  would have grown to just more than $400,000.
  
  
  Bill Ruane
  
  The late Bill Ruane, who passed away in October 2005, kept his head when most
  others lost theirs. Ruane had been managing the Sequoia Fund SEQUX since 1970,
  and with great success. A $10,000 investment in the fund back in 1970 would
  have been worth $1.7 million at the end of 2004. At many times, Ruane's
  investing strategy mirrored Warren Buffett's, and not by coincidence. Both of
  these great investors studied under Ben Graham at Columbia University, and
  even worked for him for a while. That's why such terms as "intrinsic value"
  and "margin of safety" often showed up in Ruane's vocabulary. Given this, it's
  clear to see why, at the time of this writing, Berkshire Hathaway was the
  largest holding in the Sequoia Fund.
  
  Ruane looked for companies with sound finances and strong franchises, buying
  only the few whose stocks traded below their intrinsic values. Further, Ruane
  wasn't afraid to buck traditional money management trends when necessary. For
  example, while many managers were scrambling to chase hot stocks to fend off
  underperformance, Ruane's fund would often sit on a pile of cash when he
  believed stock prices were too high. This strategy certainly served
  shareholders well over time.
  
  Ruane may have sat on the sidelines when stocks were overheated, but when he
  believed strongly in a stock, he was willing to bet big. For example,
  Berkshire Hathaway at times made up around 30% of the fund's assets. Other
  companies also often made up a big piece of the Sequoia pie. Ruane was usually
  comfortable with these large positions because of the wide margin of safety he
  required before investing. Even if things turned bad temporarily, the margin
  usually acted as a cushion, preventing any significant losses--this is value
  investing at its best.
  
  
  The Bottom Line
  
  There are certainly other investors who deserve a spot in the Investor's Hall
  of Fame; however, the common threads remain the same. Each of the investors
  we've mentioned, and several others, are not afraid to challenge the
  conventional wisdoms of investing. Each looks for solid companies that have
  strong competitive advantages and looks to invest in these companies for a
  long period of time. And of course, the price they pay for their investments
  matters. In our opinion, these stock-pickers are on to something.