Value Investor Charles Brandes Thinks Large Russian Companies Are Unbelievably Cheap

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Dec 04, 2014
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Charles Brandes (Trades, Portfolio) and Canada go a long way back. The famous money manager’s first client was a Canadian who wintered in California, near Brandes’ headquarters in San Diego.

Back then, Brandes was not a billionaire investor with his name on a fund company that runs $30 billion (U.S.) in assets, jetting into Toronto for meetings and to speak at a high-profile dinner.

He was just getting started in the business of running money, and his first client was a Vancouver lumberman who spent time south of the border.

Since then, Brandes has spent a lot of time in Canada. He has run mutual funds for Canadian clients under the AGF banner and now under his own at Brandes Investment Partners. He also has institutional clients in this country. He finds an affinity between the Canadian mindset and the patience required to be a value investor.

The lumberman may have established the ties to Canada, but it was another early client of Brandes that really set him up for success. Early on, he decided he would base his stock-picking style on the tenets of value investing fountainhead Ben Graham.

Back in 1971, Graham had an apartment in La Jolla, a seaside town near San Diego. The young Brandes was his broker. Graham made one trade in his account with Brandes. It was a purchase of National Presto Industries, one of the stocks that was a case study in Graham’s famous book The Intelligent Investor. The short-term profit for Brandes couldn’t have been much. But the long-term effect was huge. Brandes began visiting Graham’s apartment to learn from him.

Forty years later, most of the things that Brandes says over our lunch of halibut at the Chase, a trendy favorite of the financial crowd in downtown Toronto, come back to those same core principles that Graham stressed and which he wrote about in The Intelligent Investor. Buy cheap. Have a margin of safety. Ignore the herd.

Our lunch is not many days after the blockbuster initial public offering of Alibaba Group. Brandes is bemused.

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