Almost every investor knows about the life and times of famous investors like Warren Buffett (Trades, Portfolio), Seth Klarman (Trades, Portfolio), Charlie Munger (Trades, Portfolio) and John Malone. They are not the only investors that have made a name for themselves over the years, however.
Indeed, over the past several decades, many investors have made a name for themselves by investing in undervalued stocks and other instruments. One example is Henry Singleton, who has been praised by Buffett for his business acumen but is rarely mentioned in the media.
This article is devoted to quotes from these underappreciated investors, who have made a fortune from stocks but are generally overlooked despite their investing acumen.Â
Advice from the most underappreciated value investors
“After we acquired a number of businesses, we reflected on aspects of business. Our conclusion was that the key was cash flow.” -- Singleton, who built Teledyne Technologies (TDY, Financial) from a small struggling defense contractor into one of the largest businesses in the United States.
“There are styles in securities as there are in clothes. A security may be undervalued, but if it is also out of style it is of little interest to the speculator. He is, therefore, compelled to study the psychology of the stock market as well as the elements of real value.” -- Philip L. Carret
“Successful speculation requires capital, courage and judgment. The speculator himself must supply all three. Natural good judgment is not enough. The speculator’s judgment must be trained to understand the multitudinous facts of finance.” -- Carret
“History provides crucial insight regarding market crises: they are inevitable, painful and ultimately surmountable.” -- Shelby M.C. Davis
“You make most of your money in a bear market, you just don't realize it at the time.” -- Davis
“Our mandate is to find the 200 best companies in the world and invest in them, and find the 200 worst companies in the world and go short on them. If the 200 best don’t do better than the 200 worst, you should probably be in another business.” -- Julian Robertson (Trades, Portfolio), founder of the Tiger Management Group.
“We think the best indicator of whether a stock is a good value or has completely lost its luster (what one might call 'a value trap,' or fallen but still expensive relative to its intrinsic value) boils down to growth. If we don’t see any future growth potential, a company isn’t worth investing in; but if it’s inexpensive and earnings projections look good, then there can be a case to invest. Of course, when a particular stock market is rapidly rising, it can be harder to find individual values. If a stock approaches what we deem to be fair value, we may consider reducing a position.” -- Mark Mobius, chairman of Templeton Emerging Markets Group.
“Max Heine was great at not looking at what something was called, what its label was. He looked at what it actually was. For example, back in the late '70s, Mutual Shares was buying the bonds of bankrupt railroads, and I think a lot of people would have said, 'They’re bankrupt,' and 'Who needs railroads?' Max and one of his partners knew how many miles of track the railroad had, what the scrap steel on the track could have been sold for and which railroads might have wanted pieces of those networks. They also knew what the real estate rights above the terminals were worth.”-- Michael Price (Trades, Portfolio) speaking about Max Heine, founder of the Mutual Shares Corp., one of the first open-ended mutual funds in the world.
“For example, the Ryanair (RYAAY, Financial) model is similar to the Geico model in my view, which is to take a big fragmented business that is commoditized, where one company is so much lower cost that they are in a position to gain market share. So as the market grows, the company grows much faster. Their costs are so low that when other people are barely earning acceptable rates of return, they’re still earning very acceptable rates of return. When the industry is having good times, they’re having great times.” --  Glenn Greenberg (Trades, Portfolio)
“There are these really simple things that you don’t have to be a genius to figure out.” -- Greenberg
Disclosure: The author owns no stocks mentioned.
