VALUE INVESTING

"If you don't believe in value investing, what do you believe in?" Warren Buffett

“All intelligent investing is value investing — acquiring more that you are paying for. You must value the business in order to value the stock.” Charlie Munger

"There's only one intelligent form of investing: figuring out what something's worth and see if you can buy it at or below that price. It's all about value." Howard Marks

“Value investing, as Bruce Greenwald says, is a big tent. Everyone under the tent, including us, ascribes a range of values to something and wants to buy it as some level of discount to that.” Adam Weiss

"Fundamental value investing will always be relevant. To succeed, always buy for less than what it is worth, and be smarter than the market. It will never go out of style." Charlie Munger

“‘Value’ never dies. Never. Price is what you pay, value is what you get.” David Rolfe

"We don’t discern companies between growth and value. Our definition of value investing is to figure out what a business is worth and pay a lot less. It’s not low-price to book or low-price to sales." Joel Greenblatt

"Buy values, not fancy names." Philip L Carrett

"We know from experience that eventually the market catches up with value. It realises it in one way or another." Benjamin Graham 1955

"We take what we call a value approach to securities." Roy Neuberger

"The real secret to investing is that there is no secret to investing. Every important aspect of value investing has been made available to the public many times over, beginning with the first edition of Security Analysis." Seth Klarman

“First, we are value investors.” David Einhorn

"I’ve spent most of my professional life as a long-term bottom-up value investor." Frank Martin

"Since I started managing money, I used a ‘value’ approach." Francois Rochon

"Value investing remains the best course." Julian Robertson

"We're value-orientated." David Tepper

“We consider ourselves contrarian, value based investors.” Nicholas Sleep

"I have always been a value investor." Joel Greenblatt

“Value investing is our only business.” Richard Pzena

"Our quest for a margin of safety makes us a value investor." Ed Wachenheim

“Value isn’t a factor. It’s a philosophy.” Richard Pzena

“We have a value based philosophy, we’re not momentum guys, we’re not macro guys. We invest in things where there is a fundamental analytical framework we can understand and pretty much explain using 3rd or 4th grade math with a set of dynamics we also understand.” Dan Loeb

"Value investing is an approach to stocks that is as close as it gets to a golden rule." Leon Levy

"Value investing is the camp I belong in. That says you are looking to try to buy a business with a margin of safety that comes about because the price paid is at a discount to the value given." Thomas Russo

“In general, the upside potential for being right about growth is more dramatic, and the upside potential for being right about value is more consistent. Value is my approach. In my book, consistency trumps drama.” Howard Marks

“When we study the best compounding records, the vast majority of successful records were produced by a single manager or a small team where process, skill, intelligence and control were coupled with a value philosophy. I believe one of the key insights into having an edge is through building this type of insight into a business plan.” Christopher M Begg

“Value investing is one of the best ways to step apart from the crowd and to protect oneself from the unpredictable behaviour of the securities markets.” Irving Kahn

“Fairholme's strategies are rooted in a school of thought called value investing. This longstanding investment paradigm is built upon ideas set forth by Benjamin Graham and David Dodd in their seminal 1934 text Security Analysis, and popularised by Warren Buffett.” Bruce Berkowitz

“I believe that over time value investors will outperform the market and that choosing to match it is both lazy and shortsighted.” Seth Klarman

“Buy value, not market trends or the economic outlook.” Sir John Templeton

"Our philosophy is, we're a value shop in stocks and bonds." Arnold Van Den Berg

“We will not stray from our rigid value investment discipline.” Seth Klarman

"Investing on the basis of value, not price momentum, is our religion." Barton Biggs

“In our head we are value managers for sure, we are not against growth ever, but we are sensible about what we pay.” Chuck Royce

"I look at myself as a value investor. I'm trying to find mis-priced investments and add value in a situation." Marc Lasry

“Markets behave in ways, sometimes for a long stretch, that are not linked to value. Value, sooner or later, counts.” Frank Martin

“We have observed that the money managers who have achieved long term market beating results in this business, Walter Schloss, Warren Buffett, Bill Ruane and Rick Cunniff, Mario Gabelli and John Neff, all have an investment philosophy based on their definition of value. Our booklet, ‘What has worked in investing’, shows that both in the US and internationally, basic fundamental value criteria produce better than market returns over long periods of time.” Christopher Browne

"There's clearly a bias towards success by following value investing." Mario Gabelli

"How naïve all of my previous investing suddenly seemed compared with the simple but incontrovertible logic of value investing. Indeed, once you adopt a value-investment strategy, any other investment behaviour starts to seem like gambling." Seth Klarman

"Value in an investment is similar to character in an individual – it stands up better in adversity." Peter Cundill

"Our view is that over time, value investing is more successful than investment strategies that ignore value." David Einhorn

"Value investing continues to be the best (and perhaps only) reliable North Star for those who are able to remain patient, long-term oriented, and risk averse." Seth Klarman

“I’ve observed a great many investors over the years, and I’ve never seen a consistently successful one whose strategy was not based on a value approach — paying less for something than it is worth, either today or in the future.” David Abrams

"[The single biggest mistake] is not being value investors." Jean-Marie Eveillard

"The key, in my opinion, to successful investing is to relate value to price today. Instead of present value many investment managers are relating future value to present prices. Since I can't do that, I will let others do it and stick with what has worked for us." Walter Schloss

"The bread and butter business where I spend the bulk of my time, is looking for under-valued stocks on the long side. I have a very value-orientated approach." Leon Cooperman

"The investment discipline that we adhere to is not so original. It’s a real value-oriented discipline." Chris Mittleman

"There are few people that switch in between or get it [value investing] gradually. They either get it right away or they don't get it at all. I never really tried anything else. The first time I heard it, it just made sense; and I heard it from the best." Li Lu

“Too many investors focus on ‘outlook’ and ‘trend’. Therefore, more profit is made by focussing on value.” Sir John Templeton

“My weapon of choice as a stock picker is research; it’s critical for me to understand a company’s value before laying down a dime. I really had no choice in this matter, for when I first happened upon the writings of Benjamin Graham, I felt as if I was born to play the role of value investor.” Michael Burry

"The fundamental principles of value investing, if they make sense to you, can allow you to survive and prosper when everyone else is rudderless." Seth Klarman

"I’m always amazed that someone would say they weren’t a value investor – I wouldn’t admit it even if I wasn’t. It just seems silly to think about investing any other way." Thomas Gayner

"In a rising market, everyone makes money and a value philosophy is unnecessary. But because there is no certain way to predict what the market will do, one must follow a value philosophy at all times." Seth Klarman

"We are value investors who seek margins of safety in value stocks." Ed Wachenheim

"The probabilities, the odds, the very laws of nature are tilted in favour of the value school. Some three dozen published academic studies have shown that, indeed, over long periods, value investors, culling from the bottom of the list, have tended to outperform growth investors." Ralph Wanger

“A disciplined value oriented approach to deploying capital yields not only higher expected returns but also comes with lower risk – risk defined not as volatility but as permanent loss of capital.” Christopher Bloomstran

"Most of the legends of money management business pursued a value strategy, and they enjoyed or continue to enjoy careers spanning more years than the average age of many of today's hot money managers. It has been my observation that value investing works long term, and that the strategy has never, to my knowledge, experienced any of the infamous blow-ups of racier, sexier investment styles." Chris Browne

"The best foundation for a successful investment - or a successful investment career - is value." Howard Marks

“I’ve never been a growth investor, I’ve always been a value investor.” Jim Tisch

"We consider ourselves first and foremost value investors, but we don’t start by looking for cheap stocks. We spend our time following outstanding businesses that we would want to own should they ever become cheap." C.T Fitzpatrick

“There is still a tendenecy to reduce the idea of value investing down to a couple of simple quantitative metrics – price to book, P/E. I think that is a very incomplete definition of what this process is about.” William Browne

"I agree that the [distinctions between growth and value are] terrible. The idea that a man buying a so-called growth stock is not going to think about value is insane. All investing is value investing by its very nature." Charlie Munger

“A value investor to us means buying something for less than it’s worth. We don’t view growth as the opposite of value. We view anti-value as the opposite of value.” David Einhorn

"We think the very term ‘value investing’ is redundant. What is ‘investing’ if it is not the act of seeking value at least sufficient to justify the amount paid? Consciously paying more for a stock than its calculated value - in the hope that it can soon be sold for a still-higher price - should be labelled speculation (which is neither illegal, immoral nor - in our view - financially fattening). Whether appropriate or not, the term ‘value investing’ is widely used. Typically, it connotes the purchase of stocks having attributes such as a low ratio of price to book value, a low price-earnings ratio, or a high dividend yield. Unfortunately, such characteristics, even if they appear in combination, are far from determinative as to whether an investor is indeed buying something for what it is worth and is therefore truly operating on the principle of obtaining value in his investments. Correspondingly, opposite characteristics - a high ratio of price to book value, a high price-earnings ratio, and a low dividend yield - are in no way inconsistent with a ‘value’ purchase." Warren Buffett

“Value investing doesn’t have to be about low valuation metrics. Value can be found in many forms. The fact that a company grows rapidly, relies on intangibles such as technology for its success and/or has a high p/e ratio shouldn’t mean it can’t be invested in on the basis of intrinsic value.” Howard Marks

“It should never be forgotten that, in its most basic form, investing is always and everywhere about price and value. Price is what you pay says the Sage of Omaha, and value is what you get. By this definition, every serious investor must be a value investor. This is not to say that investors should restrict themselves to buying companies with low valuation multiples. The business of investment is ultimately about buying stocks at a discount to intrinsic value.” Marathon Asset Management

“The ‘value/growth dichotomy’ is false - at least, to a true value investor, whose aim is not to buy stocks which are ‘cheap’ on accounting measures (P/E, price to book etc) and to avoid those which are expensive on the same basis, but rather to look for investments trading at low prices relative to the investor’s estimate of their intrinsic value.” Marathon Asset Management

“You read a lot in the press about the growth style of investing or the value style of investing. Basically that strikes me as nonsense, but it’s not going to be stomped out. People continue to use those terms in a way that makes very little sense to us.” Warren Buffett 1992

“There’s a saying that ‘to the man with a hammer, everything looks like a nail.’ The widely discussed distinction between value and growth made some people believe they only had hammers, when in fact they potentially had access to a whole toolbox. Now we live in a complex world where a range of tools is required for success.” Howard Marks

"We believe the immutable investing dictum that growth and value are never mutually exclusive is the cornerstone of our investment philosophy.” David Rolfe

".. Essentially, value is all any commitment for an economic return is about. The only reason to lay out money is because you expect to get something in return that is worth at least as much, and hopefully more, than you pay." Warren Buffett 1992

"When I started in the business and for a long time, my concept of value was absolute value in terms of a price-earnings ratio. But I would say my concept of value has changed to a more relative sense of valuation, based on the expected growth rate applied against the price of the stock. Something at 30x earnings growing at 25% per year where I have confidence it will grow at that rate for some time can be much cheaper than something at 7x earnings growing at 3%." Julian Robertson

"I learned that, while a stock could be attractive when it had a low price earnings ratio, a low price earnings ratio by itself guaranteed nothing and was apt to be a warning indicator of a degree of weakness in the company." Phil Fisher

"I must remind you that value investing is not designed to outperform in a bull market. In a bull market, anyone, with any investment strategy or none at all, can do well, often better than value investors. It is only in a bear market that the value investing discipline becomes especially important because value investing, virtually alone among strategies, gives you exposure to the upside with limited downside risk. In a stormy market, the value investing discipline becomes crucial, because it helps you find your bearings when reassuring landmarks are no longer visible. In a market downturn, momentum investors cannot find momentum, growth investors worry about a slowdown, a technical analysts don’t like their charts. But the value investing discipline tells you exactly what to analyze, price versus value, and then what to do, buy at a considerable discount and sell near full value. And, because you cannot tell what the market is going to do, a value investment discipline is important because it is the only approach that produces consistently good investment results over a complete market cycle." Seth Klarman

"While value investing is a demonstrated strategy for long-term investment success, it isn't like being handed a treasure map. Rather, the value approach teaches you how to make your own map. And even then, the map doesn't tell you precisely where to dig for treasure; it just points you in the proper direction." Seth Klarman

“I am what is called a value investor, and that means you look at the situation, you don’t look at the atmospherics, you don’t look at the aesthetics, you look at the hard value – the company’s assets and the cash flow that its business produces – and you value those things, and you come to something called the intrinsic value, and then you see if you can buy it for less. If you pay full intrinsic value, you’ll probably get a fair return; if you pay more, you’ll probably have an unsuccessful experience, but if you can buy it for less than the intrinsic value, you should have an above-average return. That’s value investing, and I think it is the intellectually soundest form of investing.” Howard Marks

"In the last few decades, as far as I know, there has been every kind of investment style. And as far as I can observe and speak to with statistics, there has only been one style which has reliably and safely brought investors exceptional long term returns: value investing. Every era has value investors who can produce good, long term results. Today, Buffett has a 57-year track record. Others have twenty or thirty year records. Without exception, these people are all value investors." Li Lu

“Over time I developed my theory. Initially, I thought of myself value investing in the conventional sense of value investing which is more about discovering value. What is the value? Maybe that discovery of value started from the cigarette-butt, deep value investing. Over time I changed. I am now more about not only discovering value but also about adding value. I now consider investing in value not as a static concept, but a dynamic growth concept. So that's my twist, if you will, on value investing.” Lei Zhang

“While my evolution as a value investor began with Graham and Dodd, my continuing education in the real world fostered a more nuanced understanding of value… I’ve come to appreciate that there is not a bright line that divides growth and value. Value can be found in rapidly growing businesses, and growth can be found in what appear to be more traditional value investments.” Steve Romick

"We don’t know how anybody would invest in a non-value investment. So we’ve always been puzzled by the term ‘value,’ and saying that contrasts with growth or anything. Value relates to getting a lot for the expectable flow of cash in the future, in terms of what you’re laying out today. So we — we’ve always — every time somebody characterises us as value investors, we always ask them, what other kind can there be?" Warren Buffett

“Nomad is a value investor in the sense we like to buy stocks at half price. But the largest holdings would be described by most of our peers as growth stocks. Watch out, this industry is full of the non-thought of received ideas, starting with the value, growth debate and valuation heuristics.” Nicholas Sleep

“For lack of a better nomenclature you’d put us into the value camp. Value is such a broad brush definition. We simply think of growth as part of the value equation. Growth is important.” Chris Bloomstran

“While it may come as a head-scratcher given the name of our firm (‘Arlington Value Capital’), we don’t much identify with the common style-box characterisations of ‘value’, ‘deep-value,’ (sounds much better than plain ‘value’) or ‘growth’. Nor do we identify to only ‘buy great companies at great prices’. Perhaps it’s being overly simplified, or a little academic, or perhaps dangerous.. As Warren Buffett has said. ‘growth and value are connected at the hip’. Nevertheless, in every investment we try to obtain enough value for our capital to support an adequate return without taking undue risk.” Allan Mecham

“I just cringe when I hear people talk about, ‘Now it’s time to move from growth stocks to value stocks,’ or something like that, because it just doesn’t make any sense.” Warren Buffett

"Anybody that tells you, ‘You ought to have your money in growth stocks or value stocks,’ really does not understand investing." Warren Buffett

“The debate over growth and value is perennial, and quite unnecessary. Warren Buffett got it right years ago:

‘Whether appropriate or not, the term "value investing" is widely used. Typically, it connotes the purchase of stocks having attributes such as a low ratio of price to book value, a low price- earnings ratio, or a high dividend yield. Unfortunately, such characteristics, even if they appear in combination, are far from determinative as to whether an investor is indeed buying something for what it is worth and is therefore truly operating on the principle of obtaining value in his investments. Correspondingly, opposite characteristics - a high ratio of price to book value, a high price-earnings ratio, and a low dividend yield - are in no way inconsistent with a "value" purchase.’ BRK 1992 Annual Report

We won’t end the debate here but, so that we can all understand, our definition is that a business is worth the free cash flow that it can be expected to generate between now and judgement day, discounted back at a reasonable rate. Period. Growth is therefore inherently part of the value judgement, not a separate discipline. If it is that simple, and it is (at least the definition is simple) then how has the industry got in such a muddle, and why do commentators continue to use price to book, price to earnings ratios or their modern equivalents such as EV to ebitda, as a proxy for value. We all know that is doesn’t mean a thing… When commentators suggest that ‘value’ has beaten ‘growth’, or ‘growth’ has beaten ‘value’, please note that little of real substance is being imparted.” Nicholas Sleep

“We all start with a preconceived notion of what constitutes value. For many of us, the framework flows from the timeframe in which we studied investing or started allocating capital. While we all stand on the shoulders of giants, a past is prologue approach is a hazy way to look at the future. For example, many value investors have missed out on digital companies as traditional accounting metrics penalize intangible investments (intangible investments make up 84% of the enterprise value of the S&P 500, up from 14% in 1975), which are expensed through the income statement, rather than capitalized as an asset on the balance sheet. The mismatch between an asset-based accounting system and the modern economy fails to capture the increasing returns to scale offered by digital platforms. Unlike physical assets which depreciate with use, the value of digital assets increases with use. This is an important example of how narrative often lies beyond the numbers. A holistic approach to research, informed by the past but not constrained by it, leaves one better equipped to spot opportunities in contemporaneous times.” Jake Rosser

"To us, ‘value stocks’ are always cheap because, by our definition, they are the stocks priced at the largest discounts to our estimates of business value, regardless of their P/Es and growth rates." Bill Nygren

“I adopted a value approach, but one that requires highly predictable earnings growth, with the goal of having a very concentrated portfolio with aggregate earnings that go up every year. That means that if you pay too much, it still gets cheaper next year. That’s our hedge.” Bill Stewart

Further Reading:
‘The Buffett Series - What is Value Investing?’ Investment Masters Class. 2017.