Who is Walter Schloss and why should I care?
From the Walter Schloss archive:
Born in August 1916, Walter Schloss was a legend of Wall Street and a notable proponent of the Benjamin Graham School of Value Investing. He did not attend college and was hired as a runner on Wall Street at the age of 18. He took investment courses taught by Benjamin Graham at the New York Stock Exchange Institute and eventually went to work for Mr. Graham in the Graham-Newman Partnership, where he met Warren Buffett.
In 1955, Walter Schloss started his own fund and, over the next four and a half decades, delivered his investors (which numbered 92 at their peak) annualized returns of 15.3% versus 10% for the S&P 500, an achievement matched by few other investors. In 1984, he was named by Warren Buffett as one of the Superinvestors of Graham-and-Doddsville in an article published in the 1984 issue of Hermes, Columbia Business School’s magazine, where Mr. Buffett sought to disprove the academic position that the market is efficient, and that beating the S&P 500 was “pure chance”.
The link above to the Walter Schloss archive will take you to site where you can learn about his investing style and his focus on “assets”. He described his philosophy as the following:
Basically, we try to buy value expressed in the differential between its price and what we think its worth.
This is a philosophy on investing and speculating that I have gravitated to in my career. My view, the same as is shared by many other successful investors, is that what you pay for a stock matters to your overall returns. I would even go so far to suggest that you make your money when you buy the stock.
Overpaying typically leads to lower returns.
I was recently reviewing the positions of the Actionable Intelligence Alert Newsletter and realized that a couple of the stocks were selling at tremendous discounts to their net asset value.
One of the positions is a company that is set up to take advantage of the dynamic growth and continued deregulation of the economy in the country of Georgia. The stock is currently selling at a 53% discount to net asset value!
Get this, the net asset value has grown by 22% this year as the country recovers from the pandemic.
Prior to the pandemic in 2020 the country of Georgia had grown consistently at 5% or better each year for over 10 years. I expect that will continue.
The company management realizes how cheap the shares are and has initiated a stock buyback which should help close the valuation gap.
These are the type of situations that I look to invest in for the longer term.
As I have said before look to sell overvaluation and buy undervaluation. That has historically led to market beating results.
Buying a $1.00 for less than $.50 cents. I will take that deal all day everyday.
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