Value Investing

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:

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