CBS: Graham & Doddsville Fall 2014

[dcollon]

Fall 2014

 

http://www8.gsb.columbia.edu/valueinvesting/sites/valueinvesting/files/Graham%20%26%20Doddsville_Issue%2022_Fall%202014.pdf

 

[bizaro86]

Thanks!

[Kraven]

After reading the interview with Wally Weitz I wonder why anyone would invest in his funds instead of just buying Berkshire directly.  He's like Buffett's Mini Me.  Might as well go direct to the source and not pay a fee.

[AzCactus]

Kraven, I completely agree.  The other thing is his returns have not been that great---barely beating the S&P 500 since 2000.

[yadayada]

THat guy gottfried is interesting. Is there a way to publicly track his holdings?

[Guest 50centdollars]

THat guy gottfried is interesting. Is there a way to publicly track his holdings?

 

Besides the ones he mentions at VIC, I don't think so. The guy doesn't even have a website.

[jay21]

THat guy gottfried is interesting. Is there a way to publicly track his holdings?

 

Besides the ones he mentions at VIC, I don't think so. The guy doesn't even have a website.

 

Yes, I was very impressed with his interview. If anyone has more info on him, please share. His returns have been great as well:

 

"Since inception, we've generated net returns of 21% a year. That compares to 13% for the TSX Composite Index in Canada, where the vast majority of our portfolio has been invested over the years. We've beaten the index by about 8% annually while averaging 24% cash."

 

Recent VIC presentation:

 

http://www.valuewalk.com/2014/09/guy-gottfried-radar-underfollowed-gems/

[Guest 50centdollars]

THat guy gottfried is interesting. Is there a way to publicly track his holdings?

 

Besides the ones he mentions at VIC, I don't think so. The guy doesn't even have a website.

 

Yes, I was very impressed with his interview. If anyone has more info on him, please share. His returns have been great as well:

 

"Since inception, we've generated net returns of 21% a year. That compares to 13% for the TSX Composite Index in Canada, where the vast majority of our portfolio has been invested over the years. We've beaten the index by about 8% annually while averaging 24% cash."

 

Recent VIC presentation:

 

http://www.valuewalk.com/2014/09/guy-gottfried-radar-underfollowed-gems/

 

Gottfried pitched these two stocks a few days ago at capitalize for kids.

 

http://www.marketfolly.com/2014/10/guy-gottfrieds-presentation-on-tree.html

[oddballstocks]

One thing I've noticed from these newsletters which struck me recently.  It seems as if everyone's answer to "how do you find ideas" is to say "we are different, we don't screen for stocks"

 

So if all value investors are doing the same different thing of not screening then maybe using a screen is truly different?  Food for thought.

[Kraven]

One thing I've noticed from these newsletters which struck me recently.  It seems as if everyone's answer to "how do you find ideas" is to say "we are different, we don't screen for stocks"

 

So if all value investors are doing the same different thing of not screening then maybe using a screen is truly different?  Food for thought.

 

Further to that they paint a picture as if the way they find ideas is the equivalent of wearing a tuxedo and drinking tea with their pinky in the air while screening is like digging ditches.

[indythinker85]

THat guy gottfried is interesting. Is there a way to publicly track his holdings?

 

Besides the ones he mentions at VIC, I don't think so. The guy doesn't even have a website.

 

Yes, I was very impressed with his interview. If anyone has more info on him, please share. His returns have been great as well:

 

"Since inception, we've generated net returns of 21% a year. That compares to 13% for the TSX Composite Index in Canada, where the vast majority of our portfolio has been invested over the years. We've beaten the index by about 8% annually while averaging 24% cash."

 

Recent VIC presentation:

 

http://www.valuewalk.com/2014/09/guy-gottfried-radar-underfollowed-gems/

 

Gottfried pitched these two stocks a few days ago at capitalize for kids.

 

http://www.marketfolly.com/2014/10/guy-gottfrieds-presentation-on-tree.html

 

For the board here is a screenshot from his letter of returns - cant reveal more as he has a small base of ppl receiving this info and dont want anyone to get in trouble

[jay21]

One thing I've noticed from these newsletters which struck me recently.  It seems as if everyone's answer to "how do you find ideas" is to say "we are different, we don't screen for stocks"

 

So if all value investors are doing the same different thing of not screening then maybe using a screen is truly different?  Food for thought.

 

Further to that they paint a picture as if the way they find ideas is the equivalent of wearing a tuxedo and drinking tea with their pinky in the air while screening is like digging ditches.

 

IDK, I didn't really get that sense. I liked this quote:

 

"It's so difficult to find truly compelling ideas that you have to take them any way you can get them. When I find some way of simplifying the process of locating bargains, I'm unapologetic about reusing it for as long as it works."

[oddballstocks]

One thing I've noticed from these newsletters which struck me recently.  It seems as if everyone's answer to "how do you find ideas" is to say "we are different, we don't screen for stocks"

 

So if all value investors are doing the same different thing of not screening then maybe using a screen is truly different?  Food for thought.

 

Further to that they paint a picture as if the way they find ideas is the equivalent of wearing a tuxedo and drinking tea with their pinky in the air while screening is like digging ditches.

 

IDK, I didn't really get that sense. I liked this quote:

 

"It's so difficult to find truly compelling ideas that you have to take them any way you can get them. When I find some way of simplifying the process of locating bargains, I'm unapologetic about reusing it for as long as it works."

 

Sure, I'm not talking about Gottfried in particular, just these newsletters in general.  This observation has been from a number of them over the past few years.

[AzCactus]

Oddball---I would say that even if the guys interviewed by the newsletter are not screening for stocks, there are probably many managers who control larger sums of money who exclusively screen for stocks.  The issue with a screener is (and I know this is obvious) anyone could do it.  So the skill to a large degree is probably how the numbers are analyzed.  There are also the qualitative issues (management, moat of business) that are harder to quantify.

 

 

[Tim Eriksen]

I think screening works well for the highly diversified quantitative approach looking for net-nets or below book value stocks.  Since I think Guy looks at things more like I do (micro and small caps with low risk, low PE combined with improving earnings), screening is not very fruitful. To me, the more you move toward the qualitative end the less valuable screening is. 

[Otsog]

Wait, so 'Graham & Doddsville' isn't a new sitcom airing on CBS this Fall?

 

 

[oddballstocks]

Sounds like this thread just confirms my view, no one screens.

 

I agree that specific screens can be done by anyone.  So how are people finding ideas, just bumping into things?  I will do extremely broad screens or go through lists of stocks A-Z.  But I don't think anyone else is doing that either.

 

Are most professionals just listening for ideas from others and copying them?  Is that why we get crowded trades?

 

Here's the question.  If you don't screen for stocks how do you get a starting point of things to look at?  If you say "I look for stocks in the news" isn't that a screen?  Or "52 week low list" isn't that a screen?  Or all Biotech stocks, isn't that a screen?

 

Am I crazy?

[merkhet]

I think people differentiate between quantitative and qualitative screens -- looking for stocks in the news is probably a qualitative screen -- but when people say "I don't screen" it probably means that they don't screen on quantitative factors like low P/E or low P/B, etc.

[AzCactus]

I think it depends on how broad you define the word "screen."  Having a screen to weed things out is different to me than having a screen to allow stocks in.  So based on Tim's criteria "micro and small caps with low risk, low PE combined with improving earnings" I would think that stocks that do not meet it are out.  However, that does not mean that stocks that do meet it are automatically in.  Tim could probably clarify in more depth if I'm even on the right path or not.

 

David

[LC]

I have a few screens set up that I use. They've definitely become much more broad over time (thanks in part to your advice, Nate). Something like fat gross margins and low/no debt. Then I just go from there, see what looks interesting or companies that I haven't seen before. Do some reading etc. it opens the door. Even having stocks in your portfolio is somewhat of a screen. Owning BAC opens you up to competition from other TBTF banks. JPM, WFC, etc. You become invested in what they're doing, who is doing what better, etc. Then you compare those to community banks (Nate, you again) and see what offers the most compelling investment opportunity. So it's kind of stream-of-consciousness a bit, bumbling around between traditional stock screens, industries, business models, etc.

[Kraven]

Wait, so 'Graham & Doddsville' isn't a new sitcom airing on CBS this Fall?

 

It is actually.  It will be a dramedy set in present time at the value investing class at Columbia.  Bruce Greenwald will be played by Danny Aiello.  There will be a room full of students, but the primary ones will be played by Zac Efron, Kirsten Dunst and John Cho.  Each episode will have a flashback to the early days of value investing at Columbia.  It will be shot in grainy color so that people know it's supposed to be from the olden days.  Ben Graham will be played by Wallace Shawn. 

 

In the first episode there's a hilarious misunderstanding as the Zac Efron character is overheard telling some of the others he has to "get me some coke".  The others, believing he has a drug problem, arrange for an intervention only to find out that he really was just talking about buying KO.  Crisis averted the gang go out for cherry cokes and burgers to celebrate the fact that there isn't actually a drug addict in their midst.

 

Early reviews have come in positive.  USA Today says it the "funniest thing to happen to investing since . . . well, there's never been anything that funny about investing until now!"

[Tim Eriksen]

I think it depends on how broad you define the word "screen."  Having a screen to weed things out is different to me than having a screen to allow stocks in.  So based on Tim's criteria "micro and small caps with low risk, low PE combined with improving earnings" I would think that stocks that do not meet it are out.  However, that does not mean that stocks that do meet it are automatically in.  Tim could probably clarify in more depth if I'm even on the right path or not.

 

David

 

What I mean is I cannot recall the last time I went to a site and entered certain parameters in hopes of finding a good stock or even a narrowed list to start going through. Nor do I go through 52 week lows.  I would not consider looking at what is the news or what another manager owns, or key words such as buyback spin off, deregistration, etc.  as screening.  I read a lot of earnings releases and eventually I will find something attractive.   

[cobafdek]

I think people differentiate between quantitative and qualitative screens

 

I think it depends on how broad you define the word "screen." 

 

The "Timeliness" rankings in Value Line are interesting in this regard.  Some people consider it a screen, but others don't because there are proprietary "quality" and momentum factors added.

 

 

It seems as if everyone's answer to "how do you find ideas" is to say "we are different, we don't screen for stocks"

 

So if all value investors are doing the same different thing of not screening then maybe using a screen is truly different?  Food for thought.

 

In public interviews, the professional money manager HAS to say this, even if he unconsciously doesn't believe it.  He has to justify the existence of his business, that his process adds value to simple indexing or a mechanical quant approach.

 

I recall an old Money magazine story about a retiree who went to the public library every week.  He held all the stocks listed on the 2 pages in Value Line that were ranked 1 or 2 by Timeliness.  Any stock that dropped off the list he sold, and bought any new listing.  He beat the S&P by 5+% annually long-term.  He also beat Value Line's own funds, which cherry-pick individual stocks based on their Timeliness rankings, and have expense ratios > 1%.  This is more than good-enough investing for most people, and very humbling to many of us board members.

 

So I doff my hat to the guys with the guts to manage outside money publicly.  Hope springs eternal, and Buffett-like returns will occur, but extremely rarely.

[Guest notorious546]

what did you guys think of the student's write up on country wide plc?

[Kraven]

I think people differentiate between quantitative and qualitative screens

 

I think it depends on how broad you define the word "screen." 

 

The "Timeliness" rankings in Value Line are interesting in this regard.  Some people consider it a screen, but others don't because there are proprietary "quality" and momentum factors added.

 

 

It seems as if everyone's answer to "how do you find ideas" is to say "we are different, we don't screen for stocks"

 

So if all value investors are doing the same different thing of not screening then maybe using a screen is truly different?  Food for thought.

 

In public interviews, the professional money manager HAS to say this, even if he unconsciously doesn't believe it.  He has to justify the existence of his business, that his process adds value to simple indexing or a mechanical quant approach.

 

I recall an old Money magazine story about a retiree who went to the public library every week.  He held all the stocks listed on the 2 pages in Value Line that were ranked 1 or 2 by Timeliness.  Any stock that dropped off the list he sold, and bought any new listing.  He beat the S&P by 5+% annually long-term.  He also beat Value Line's own funds, which cherry-pick individual stocks based on their Timeliness rankings, and have expense ratios > 1%.  This is more than good-enough investing for most people, and very humbling to many of us board members.

 

So I doff my hat to the guys with the guts to manage outside money publicly.  Hope springs eternal, and Buffett-like returns will occur, but extremely rarely.

 

Along those same lines there was this great story.

 

http://gemfinder.com/buffett-yeah-thatll-work/