Charles Martineau

This is a resource page on value invest­ing. First, I have to admit something…I am not really a value investor…yet! Value invest­ing is the “method­ol­ogy” of invest­ment that I appre­ci­ate the most and I wish prac­tice value invest­ing as a pas­time (I want 50% of my port­fo­lio to derive from value invest­ing). But, let’s face it… I am a PhD finance stu­dent! So you know like me that there are few finance researchers that are suc­cess­ful investors or actu­ally talk about their own per­sonal finance expe­ri­ence. Have you ever heard a researcher in finance brag­ging about their suc­cess­ful invest­ments? Not much right? In my case, I started to invest at the end of my bach­e­lor stud­ies – quite late I have to say – but that is when I had enough money to open an account with a dis­count bro­ker and to really buy and diver­sify a port­fo­lio (you don’t need much actu­ally to start with…let’s say $5,000?). Dur­ing my mas­ters, I had received few bur­saries that allowed me to save more money and invest. I first started invest­ing my money in index funds such as short-term bonds, emerg­ing mar­kets, broad Chi­nese mar­ket (not cov­ered in tra­di­tional emerg­ing mar­ket index funds), inter­na­tional MSCI, and the U.S. stock mar­ket. My first pur­chase of an actual stock was Wells Fargo — after a sud­den drop in the mar­ket. There wasn’t much ratio­nal analy­sis behind this pur­chase. I was only tak­ing advan­tage of a sud­den, some­what irra­tional, drop in the mar­ket. You know like me that Wells is a solid busi­ness as we speak (accord­ing to Buffett).

Over the course of my bach­e­lor and mas­ter stud­ies, I read some books and blogs on value invest­ing. Despite the fact that my research spe­cialty that I wish to develop through my PhD has noth­ing to do with value invest­ing, I want to share all the great resources that I found and will con­tinue to find on the sub­ject. I also do this for my future stu­dents… I wish I had a pro­fes­sor that would have done the same : )

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How to get acquainted with value invest­ing? (very briefly…)

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First and fore­most you must read “The Intel­li­gent Investor” by Ben­jamin Gra­ham. This step is cru­cial! Next, I would jump on read­ing mul­ti­ple blogs on the sub­ject of value invest­ing. Many give insights on their suc­cess­ful invest­ments, ana­lyze var­i­ous stocks using the value invest­ing method­ol­ogy and show you their steps of analy­sis, pro­vide you with resources to eval­u­ate your own stocks, give you mul­ti­ple insights on which stock that you should pay a close atten­tion to, and more impor­tantly learn from their mistakes!

Key Blogs:

The Frog’s Kiss – very detailed and well writ­ten analy­sis of stocks

Odd­ball Stocks – detailed and super clear analy­sis of net-net stocks (and other types). Also pays close atten­tion to inter­na­tional stocks. One of my per­sonal favorite blogs

Above Aver­age Odds Invest­ing – very pop­u­lar and detailed analy­sis of stocks

Barel Karsan – cov­ers var­i­ous top­ics on value investing

Clas­sic Value Investors – cov­ers var­i­ous top­ics on value invest­ing, pro­vides inter­views with finan­cial man­agers, and some stock analysis

Old School Value (OSV) – One of my per­sonal favorite web­site on value invest­ing. Pro­vides analy­sis, var­i­ous insights, and more impor­tant the author of this site devel­oped an amaz­ing value invest­ing tool to ana­lyze stocks (more on that later)

Long-Term Value

Value Uncov­ered

Tools of analysis

Once you get the habit of pay­ing a close atten­tion to these blogs (use Google Reader to keep track of blogs!) I highly sug­gest you to turn to Old School Value stock analy­sis tool for $137 (really good invest­ment – trust me!). For indi­vid­ual like us who can’t really put our hands on Cap­i­tal IQ or Bloomberg – this is the best tool out there. And to some extent, I am will­ing to say that OSV stock analy­sis tool beats both Cap­i­tal IQ and Bloomberg for its sim­plic­ity and on other aspects (price, etc.)

I would also sug­gest two stock screen­ers. Many use the Finan­cial Times stock screener avail­able (free) and a paid stock screen­ing tool (min $24 per month) from Screener.co

Key steps to fol­low in your val­u­a­tion… basi­cally how to invest!

A very good tuto­r­ial on how to invest in terms of what step to fol­low in your research and val­u­a­tion of stocks is pro­vided on the OSV web­site by the author’s friend Ernie. This tuto­r­ial is like a men­tal map­ping of the steps to fol­low to increase your chance of suc­cess with your investments.

Addi­tional Resources

“Val­u­a­tion Mul­ti­ples: A Primer” is doc­u­ment writ­ten by UBS in 2001 on val­u­a­tion mul­ti­ples. It is clear, con­cise, and cov­ers if not all the key val­u­a­tion mul­ti­ples: how to use the mul­ti­ples in the val­u­a­tion of a stock, their lim­i­ta­tions / draw­backs, etc.  This doc­u­ment was found by OSV and Jae Jun (the author of OSV) declares that this is the best val­u­a­tion doc­u­ment available!

Fur­ther readings…

Ben­jamin Gra­ham and David Dodd – Secu­rity Analy­sis … a mas­ter­piece! I would sug­gest how­ever the 1951 edi­tion avail­able here sim­ply because you don’t need to go through the accompanied-CD for the appendices.

Many have told me that I must read this fol­low­ing book:

Seth Klar­man — Mar­gin of Safety: Risk-Averse Value Invest­ing Strate­gies for the Thought­ful Investor

This book is out of print, really hard to find, but is avail­able on the web in PDF (you have to search!). I haven’t read this one yet but I will!