We Build Better Portfolios!
Benjamin Graham was the father of modern-day security analysis. He co-authored the investment bible Security Analysis and also wrote
The Intelligent Investor way back in 1949 when Bill was but two years old. Bill has always been a Graham disciple and learned so much about
value investing early in his career.
In Chapter Seven of The Intelligent Investor, Graham recommends three approaches to what he labels
"enterprise investing." Two of those
don't fit our America's Finest Companies® investment concept, but the third one does: seeking our large, relatively unpopular companies that appear
to be temporarily out of favor with investors.
Graham wrote, "If we assume that it is the habit of the market to overvalue common stocks which have been showing excellent growth or are
glamorous for some other reason, it is logical to expect that it will undervalue
-- relatively, at least -- companies that are out of favor
because of unsatisfactory developments of a temporary nature. This may be set down as a fundamental law of the stock market, and it suggests an
investment approach that should prove both conservative and promising.
"The key requirement is [to] concentrate on the large companies that are going through a period of unpopularity. The large companies have a
double advantage over the others [like small caps]. First, they have the resources in capital and brain power to carry them through adversity and
back to a satisfactory earnings base. Second, the market is likely to respond with reasonable speed to any improvement shown." (fourth revised
edition, 1973, page 79)
Quarterly fee: $1,500 or 0.3125% (1.25% annually) of managed assets, whichever is higher
"To be successful as a value analyst [you need] first, reasonable good intelligence; second, sound principles of operation; third, and most
important, firmness of character."
–Benjamin Graham, 1974