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Berkshire Hathaway Inc. Message Board

  • wrightr34 wrightr34 Jan 5, 2004 10:18 PM Flag

    advice on good value investing books

    Could someone tell me other good value investing books that are based on Buffett's principles other than Buffettology, The Intelligent Investor, The Essays of Warren Buffett, and Security Analysis.

    Are the following books any good?
    How to Pick Stocks Like Warren Buffett: Profiting from the Bargain Hunting Strategies of the World's Greatest Value Investor

    The Warren Buffett Way: Investment Strategies of the World's Greatest Investor

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    • I forgot to jump in on on this with my humble opinions.

      "How to be a stock market genius" by Joel Greenblatt, despite the hokey title, offers a good set of strategies for finding undervalued companies that are overlooked by mainstream institutional investors. It's a value investing book focused on spinoffs, mergers, restructurings, rights offerings, etc. I enjoyed it thoroughly and recommend it heartily.

      Marty Whitman's book "value investing" I found to be so dense it was almost unreadable. I just couldn't get anything out of it, it may be my short attention span since I know others enjoyed it....

    • Thanks.

    • bherenou2,

      Like many others I enjoyed the original Money Masters book by John Train, and it helped me a great deal. I also like the free information on the Tweedy Browne website under "reseach and reports." However, there are two books that I want to read that were never written. One would be on John Templeton's investment philosophy and career. The other would be a detailed account of the investments in the original Buffett Partnership, with explanations of what was done and why, and what worked/failed and why. I know the Disney and American Express stories, but I want to know about the smaller stuff too, and the techniques used to identify them. Someone will probably write the Templeton book after he passes on, which is a shame because someone should interview him now.

    • Thanks for all the great suggestions.

      • 1 Reply to wrightr34
      • A couple others that I simply enjoy reading are "The Money Masters" I & II and "The Midas Touch," all by John Train. The original Money Masters book started me off on Buffett in the mid 1980's.

        A persian rug dealer told my folks that, when considering purchase of a rug, if you look at the pattern and it "winks back at you," that's your rug. The Money Masters devotes a chapter to all the guys: Graham, Price, Fisher, Buffett, et al., so you get a nice overview of each master's style. When I read the chapter on Buffett, it winked back at me. That was it. I knew he was my guy.

        "The Midas Touch" goes into more detail because it's just about Buffett. I think that's the book that explains how he got hooked up with Tom Murphy when Murphy and Burke were using Cap Cities to buy ABC, pre-Eisner.

        At any rate, Train is a wonderful writer and these are the books I read time and again about 20 years ago to get my arms around Buffett's investment style and manner.

    • "The Warren Buffett Portfolio" was a key one for me as it explains the reasoning behind focus investing. Many books talk about stock selecting, but few talk about the overall portfolio. And forget modern portfolio theory, that just says that you should own index funds.

    • I would not recommend the Buffettology book.

    • Margin of Saftey - Seth Klarman

      Section III - The Value Investment Process - was the most informative to me. Information on Catalysts, Market Inefficiencies and Institutional Constraints. Also some discussion on investing in financially distresed and bankrupt securities.

      Distressed/bankrupt out of my league, but some folks here are experts. Hint: Hee Haw

    • Do yourself a favor. Forget all the crap with Buffett's name on it - unless he wrote it.

      Next, read "The Theory of Investment Value" (or was it the value of investment theory - a little humor) by John Burr Williams. It's mentioned in the real early letters to shareholders. Sorry Ben, but the truth be told.

      • 1 Reply to electric_booty_land
      • Thank you, electric_booty_land, for mentioning John Burr William's "The Theory of Investment Value".

        � It's mentioned in the real early letters to shareholders. Sorry Ben, but the truth be told. �

        LOL!. I too believe it heavily influenced Buffett's thinking.

        The "Phoenix Insurance" case study, chapter XXIII, pp. 461-507 should be of particular interest to Berkies.

        pp. 474-475:
        "Instead of using either the liquidating value or the earnings per share to find the true worth of an insurance stock, let us follow a more fundamental method of appraisal and view the company as a banking enterprise whose business consists of obtaining "deposits" in the form of unearned premiums, and of investing them in stocks and bonds the income from which the company retains for its own shareholders. If such a business is conducted without underwriting loss, so that all losses and expenses are covered by underwriting revenues, and if all assets of the business are invested in income-yielding securities, then the stockholders can draw off in dividends the entire income from these invested assets, and their stocks will be worth, therefore, the amount of the company's total assets per share."

        Isn't that Berkshire? And remember, Buffett was 7 when this was written in 1937!

        p. 491:

        "If the assets of the company consisted of bricks and mortar, subject to obsolescence, some portion of its earnings, in addition to depreciation, would need to be reinvested in plant to maintain the status quo of earning power, a fact made all too plain by the past experience of industrial enterprises. But since the company is not an industrial company and owns no physical plant save its own office building, and since the cost of keeping its organization up to date is charged not to assets but to expenses, the company would not need to make any provision for reinvestment, or pass any of its earnings to surplus, once it had ceased to grow. Instead, all of its earnings could be distributed as dividends."

        An early definition of maintenance capital expenditures.

    • That book by Phillip Carrett is a classic as well as 100 to 1 in the Stock Market by Thomas Phelps. The best new book is Value Investing by Martin Whitman. All books come with an Oklahoma Guarantee.

    • Although it isn't a "Value Investing" book, I would suggest Phil Fisher's Common Stocks and Uncommon Profits, which Buffett has recommended. After many years of studying Buffett and reading Graham, I'm convinced that Buffett's success can't really be understood without coming to the realization that many of his best investments have been influenced more by Fisher than Graham. Or more accurately, Buffett has been influenced by Munger, who I believe was more influenced by Fisher than Graham.

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