How Tweedy Browne finds deep value: “Look for the ugliest spouse.”


How Tweedy Browne finds deep value: “Look for the ugliest spouse.”

By Greenbackd

Renowned deep value investment firm Tweedy Browne’s recipe for deep value is simple:

Here’s a round up of hedge funds’ May returns

InvestTyro Absolute Return Fund was down 1.5% for May. The fund's main contributors in May were Super Micro Computer, which gained 1.6%, Shyft Group, which was up 1%, and GCI Liberty, which gained 1%. Detractors in May include Recro Pharma, which fell 2.6%, index shorts and hedges, which declined 2%, and DXC Technology, which was Read More

The crux of the firm’s investing style comes down to buying a stock for less than its so-called intrinsic value — just plain ”value” to these veterans — a relatively simple concept introduced by Mr. Graham. As John D. Spears, 50, a third managing partner, described it, ”Value is what a business, its assets or its earning power would be worth if you or I own it and we were to sell it to a competitor down the street.”

Simple. But if figuring value is easy, why do so many value investors fall flat? ”To buy deep value takes a lot of courage, because it looks really ugly,” Christopher Browne said. ”The companies are cheap because there are a lot of bad stories out there.”

William Browne added, ”It’s like looking for the ugliest spouse because she will love you the most.”

And, real talk, am I odd for wanting to spend some time this library?:

THE bookshelves in the conference room of Tweedy, Browne & Company are lined with financial history. Dry securities references, some of them filigreed and bound in cracked brown leather, date back to 1939.

See Investing with Tweedy, Browne and Co.

h/t Fundamental Hedgie

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My name is Tobias Carlisle. I am the founder and managing member of Eyquem Investment Management LLC, and portfolio manager of Eyquem Fund LP. Eyquem Fund LP pursues a deep value, contrarian, Grahamite investment strategy based on the research featured in Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (hardcover, 288 pages, Wiley Finance, December 26, 2012), and discussed on Greenbackd. I have extensive experience in activist investment, company valuation, public company corporate governance, and mergers and acquisitions law. Prior to founding Eyquem, I was an analyst at an activist hedge fund, general counsel of a company listed on the Australian Stock Exchange, and a corporate advisory lawyer. As a lawyer specializing in mergers and acquisitions I have advised on transactions across a variety of industries in the United States, the United Kingdom, China, Australia, Singapore, Bermuda, Papua New Guinea, New Zealand, and Guam, ranging in value from $50 million to $2.5 billion. I am a graduate of the University of Queensland in Australia with degrees in law and business (management). Contact me I can be contacted at greenbackd [at] gmail [dot] com. I welcome all feedback. Connect on LinkedIn, where we’re Friends.