I recently posted Third Avenue's Quarterly Shareholder Letter. I thought the letter contained valuable information on value investing, and the current economic crisis. Tweedy Browne is another Value Fund which I follow closely. Many people have stated that Tweedy Browne has the closest investment style to Benjamin Graham. They are classic value investors who place a heavy emphasis on quantitative factors. Tweedy Browne runs several value mutual funds. Tweedy Browne was started in 1920 in the days of Graham.
Unfortunately one of the great managing directors of the firm, Christopher Browne recently passed away. I wrote an obituary which can be foundhere if anyone wishes to read it. Even after the passing of Christopher Browne, the firm still has four excellent directors; William H. Browne, Thomas H. Shrager, John D. Spears and Robert Q. Wyckoff, Jr.
Below is the firm's annual report in PDF format. Normally reports contain a few pages of commentary by the directors, followed by performance data and some information which the SEC forces them to print. This letter contains commentary from the directors throughout the letter.
I will quote one paragraph from the report that I found to be particularly interesting.
While we love growth and would agree that the economic
prospects for a number of these lesser developed countries are
quite promising, we simply refuse to pay up for the hope of
growth. We will continue to search for value on a company by
company basis, and will only commit our shareholders’ capital
when we are being afforded a satisfactory “margin of safety,”
based on current fundamentals. From our point of view, the
prospects for attractive returns continue to be dependent in
large part on the price we pay. In a recent article in The Wall
Street Journal, Peter Tasker cited an academic study by Jay
Ritter of the University of Florida that analyzed 100 years of
data from 16 countries that showed that there was no positive
correlation between GDP growth and stock market returns – if
anything, the correlation was slightly negatived. Again, we
believe that faster growing countries simply do not offer
attractive long-term investment opportunities unless
valuations are compelling. Tasker goes on to explain that the
companies that end up winning the struggle for survival in the
emerging economies may not even exist yet, and cites the fact
that there were over 100 different motorcycle companies
during the Japanese miracle of the 1950s. “The market leader,
Tohatsu, was driven out of business by the cut-throat pricing of
a flaky upstart called Honda.”
Tweedy Browne Annual Report
Unfortunately one of the great managing directors of the firm, Christopher Browne recently passed away. I wrote an obituary which can be foundhere if anyone wishes to read it. Even after the passing of Christopher Browne, the firm still has four excellent directors; William H. Browne, Thomas H. Shrager, John D. Spears and Robert Q. Wyckoff, Jr.
Below is the firm's annual report in PDF format. Normally reports contain a few pages of commentary by the directors, followed by performance data and some information which the SEC forces them to print. This letter contains commentary from the directors throughout the letter.
I will quote one paragraph from the report that I found to be particularly interesting.
While we love growth and would agree that the economic
prospects for a number of these lesser developed countries are
quite promising, we simply refuse to pay up for the hope of
growth. We will continue to search for value on a company by
company basis, and will only commit our shareholders’ capital
when we are being afforded a satisfactory “margin of safety,”
based on current fundamentals. From our point of view, the
prospects for attractive returns continue to be dependent in
large part on the price we pay. In a recent article in The Wall
Street Journal, Peter Tasker cited an academic study by Jay
Ritter of the University of Florida that analyzed 100 years of
data from 16 countries that showed that there was no positive
correlation between GDP growth and stock market returns – if
anything, the correlation was slightly negatived. Again, we
believe that faster growing countries simply do not offer
attractive long-term investment opportunities unless
valuations are compelling. Tasker goes on to explain that the
companies that end up winning the struggle for survival in the
emerging economies may not even exist yet, and cites the fact
that there were over 100 different motorcycle companies
during the Japanese miracle of the 1950s. “The market leader,
Tohatsu, was driven out of business by the cut-throat pricing of
a flaky upstart called Honda.”
Tweedy Browne Annual Report
