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

How Tweedy Browne finds deep value: “Look for the ugliest spouse.”
Source: Made with Photoshop

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:

David Abrams Explains How To Value Stocks

VolatilityContinued from part one... Q1 hedge fund letters, conference, scoops etc Abrams and his team want to understand the fundamental economics of every opportunity because, "It is easy to tell what has been, and it is easy to tell what is today, but the biggest deal for the investor is to . . . SORRY! 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.

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