The 10th Annual New York Value Investing Congress takes place in New York on September 8th and September 9th 2014. ValueWalk will be providing coverage of the event- below is a summary of a presentation by Guy Spier on “The Education of a Value Investor
Guy Spier is a Zurich based investor. Since 1997 he has managed Aquamarine Fund, an investment partnership inspired by, and styled after the original 1950?s Buffett partnerships. Prior to starting Aquamarine Fund, Spier worked as an investment banker in New York, and as a management consultant in London and Paris. Mr. Spier completed his MBA at the Harvard Business School, class of 1993, and holds a First Class degree in PPE (Politics, Philosophy and Economics) from Oxford University. He is the author of The Education of a Value Investor, which will be released on September 9th.
Guy Spier: The Education of a Value Investor
Presentation coincides with the release of his book titled “The Education of a Value Investor.” Need to accept our flaws and understand our mistakes to become better investors.
Guy Spier’s Investment Idea – POSCO
Where to source ideas: came across POSCO (ADR) (NYSE:PKX) in Manual of Ideas. Then ran into a 13F filing from Charlie Munger (5% holding), then read a discussion on Corner of Berkshire & Fairfax, then read a write-up from SZ. The genesis of an idea.
Overcapacity in the steel industry has led to declining margins for producers. POSCO (ADR) (NYSE:PKX) is known as lowest cost producer. The play centers on margins reverting back to the mean over the long run. The company has been repurchasing shares. Simple rationale that can be easily explained on half a sheet of paper.
Other reasons it is attractive: India investment, new CEO (used to be a government controlled organization), divestment of non-core businesses which had been acquired over the years.
Admits he “did not buy enough” wanted a full 10% position. Stock is up 30% YTD.
Guy Spier’s tips on putting biases in check
Noted the biases of pitching an idea and being influenced when going to look at that idea. Need to recognize that bias and determine where to focus efforts when looking at an idea. Gave some tips on putting biases in check:
- Stop checking the stock prices
- Don’t buy something that someone is trying to sell you
- Don’t talk to management
- Gather investment research in the right order
- Discuss ideas only with people who have no axe to grind
- Don’t talk about your current investments
- Never buy or sell stocks when the market is open
- If a stock falls after bought, don’t sell for two years
These are some personal philosophies. Recognizes he is not Warren Buffett and not rational. Prefers to be slothful and inactive when looking at ideas.