Welcome to the 27th edition of Value Investor Digest

In this edition we feature Nick Kirrage’s presentation video from the London Value Investor Conference 2016, a full issue of Value Investor Insight which includes interviews with some of the London Value Investor Conference speakers, a report by Michael Mauboussin; and an article on Precision Castparts CEO Mark Donegan. In addition, there is an article from Michael Burry on why it’s important not to copy other investors styles, a Howard Marks Memo on “Political Reality”; plus Charlie Munger’s comments on Ben Graham.

Asia Value Investor Conference 2016
The second Asia Value Investor Conference will take place at the Four Seasons Hotel in Hong Kong on 8th December 2016 – Edouard Mercier of Ascender Capital plus Samir Mehta and Cho-Yu Kooi of J O Hambro Capital Management have recently joined the speaker line-up. If you would like to receive updates and offers about this conference then you need to sign-up. There’s also an Overview Video of the inaugurual Asia Value Investor Conference which took place last year.


Nick Kirrage: Presentation Video from the London Value Investor Conference 2016
Nick Kirrage of Schroders Value Team was a speaker at the London Value Investor Conference on 26th May 2016 in Westminster. His presentation was titled “Successful Failure”. In this video of his presentation Nick talks about some of his biggest losses over the years and what he has learnt from them. Nick also provides some details on a current investment the fund has in RBS.

Value Investor Insight – Full Issue
We are very grateful to Value Investor Insight for allowing VID readers full access to an edition of this excellent publication. This issue includes interviews with London Value Investor Conference speakers Simon Denison-Smith and Jonathan Mills from Metropolis Capital. It also has details on 12 investment ideas: Bunge, C&G Group, Halfords, Hudson Techologies, Intevac, Linde, PRGX Global, Regus, Ryanair, Scripps Networks, Vivendi and XO Group.

Michael Mauboussin: 10 Attributes of Great Investors
Michael Mauboussin co-authored this Credit Suisse report which was released 30 years to the day after he started on Wall Street. He shares thoughts on the ten attributes of great fundamental investors. At the end of the report there is also some commentary on the substantial shift from active to passive management over this 30 year time period which the authors believe has profound implications for the investment industry “It is disadvantageous for you if the weak players flee the market (selling their stocks and buying index funds), or if the least capable professional investors lose assets to passive funds, because it means that only the smartest investors remain in the active game. The truth is that weak players, whom the strong players require to generate excess returns, are fleeing at a record pace.”

Buffett’s Bet on a ‘Relentless’ CEO
Precision Castparts Mark Donegan has been CEO since 2002. Buffett’s decision to acquire the business last year was Berkshire’s biggest ever acquisition and this Bloomberg article gives a profile of Donegan and analyses his management style, describing him as a “low-profile CEO with a great track record, relentless about staying ahead of the competition.” but also as having a “bruising approach to management that’s at odds with Buffett’s folksy image”

Michael Burry: Learn from Legendary Investors – But Don’t Copy Them
This article focuses on some comments by Michael Burry of Scion Capital on how it is always helpful to take wisdom from some of the legendary investors by listening, reading, and learning, however, this is very different from copying. “If you are going to be a great investor, you have to fit the style to who you are. At one point I recognized that Warren Buffett, though he had every advantage in learning from Ben Graham, did not copy Ben Graham, but rather set out on his own path, and ran money his way, by his own rules … I also immediately internalized the idea that no school could teach someone how to be a great investor. If it were true, it’d be the most popular school in the world, with an impossibly high tuition. So it must not be true.”

Howard Marks Memo – Political Reality
Howard Marks released a new memo recently where he built upon his previous memo called “Economic Reality”. In this one Howard writes that “I’ve always gotten a kick out of oxymorons – phrases that are internally contradictory – such as “jumbo shrimp” and “common sense.” I’ll add “political reality” to the list. The world of politics has its own, altered reality, in which economic reality often seems not to impinge. No choices need be made: candidates can promise it all. And there are no consequences.”

Charlie Munger on Ben Graham
This WSJ article covers some comments made by Charlie Munger on Ben Graham and the effect he had on Warren Buffett. In it Munger said “I don’t love Ben Graham and his ideas the way Warren does. You have to understand, to Warren — who discovered him at such a young age and then went to work for him — Ben Graham’s insights changed his whole life, and he spent much of his early years worshiping the master at close range. But I have to say, Ben Graham had a lot to learn as an investor. His ideas of how to value companies were all shaped by how the Great Crash and the Depression almost destroyed him, and he was always a little afraid of what the market can do. It left him with an aftermath of fear for the rest of his life, and all his methods were designed to keep that at bay. I think Ben Graham wasn’t nearly as good an investor as Warren Buffett is or even as good as I am. Buying those cheap, cigar-butt stocks was a snare and a delusion, and it would never work with the kinds of sums of money we have. You can’t do it with billions of dollars or even many millions of dollars. But he was a very good writer and a very good teacher and a brilliant man, one of the only intellectuals – probably the only intellectual — in the investing business at the time.”