This video was made in 2005, shortly before Kahn's 100th birthday. Irving Kahn is still alive today and incredibly, still goes to the office to invest capital at the age of 107. So between the Schloss video and this one with Kahn, we're getting about two centuries worth of combined investment/life experience to learn from. (Maybe there is something to value investing that promotes longevity?)
Irving Kahn, like Walter Schloss, is another disciple of Ben Graham (he was an employee at Graham's firm), so it is very useful to listen to his ideas. Kahn began in the investment field in 1928 (imagine being able to talk with someone who was 25 years old at the beginning of the Great Depression!). Kahn has built a remarkable investment career by following the teachings and principles of Graham. Here are some of the highlights I jotted down while listening to the video:
- They are value investors from the school of Graham and Dodd.
- Kahn worked for Ben Graham, who naturally had a significant impact on Kahn's prefernce for cheap stocks.
- Investing is an art, not a science. “All the kids that believe in equations and rules, will learn more as they get older.”
- He is very much focused on value, not growth
- Kahn mentioned Buffett, and how he was surprised how much he was influenced by Munger; namely how he became more interested in franchise, or growth businesses. Kahn said he never would have bought Coke or Gillette. He said he generally feels that growth stocks are typically priced for their bright futures. Since those prospects are already known by everyone, an investor is paying in full (or even a premium) for the company's future growth of earning power.
- The goal of investing is to compound money, not invest in the best companies, or focus on matching a specific style (value, growth, etc...)
- Kahn mentioned how each value investor is different. Buffett found what worked for him, and it’s different from how Kahn, Schloss, or Peter Cundhill invested. Each of those investors had their own unique style, but he made a point about how each was based on the principles of Graham.
- Kahn was similar to Buffett in that he liked to be relatively concentrated in his favorite ideas, and he also liked to know the management. This is different from Schloss and Graham, who never talked to management. Kahn was similar to Schloss and Graham (and different from Buffett) in that he didn't like to pay for growth. He preferred "cheap stocks".
How He Likes to Search For Ideas
- Kahn likes to look at the 52 week low list for ideas… he expresses how simple things often provide great ideas (an approach we love at BHI)
- He likes to read the Wall Street Journal and simply look for companies, or industries, that have problems. He then analyzes that company or group of companies to determine if there might be undervalued opportunities.
"I'm at the stage in life where I get a lot of pleasure out of finding a cheap stock."