Today I am reviewing The Value Investors: Lessons from the World's Top Fund Managers. While there is no shortage of value investing books in the market, very few of them have been written by actual practitioners. As a result I was quite excited to read The Value Investors by Ronald Chan, who is the founder of the Hong Kong-based value fund Chartwell Capital Ltd.
Moreover, Bruce Greenwald, author of the great Value Investing: From Graham to Buffett and Beyond, endorsed the book with a glowing forward, which gave me even more confidence that this book would be a worthwhile read.
Chan describes the point of the book as follows:
If I could hear the life stories, and understand the investment mindsets, of the world's most highly regarded value investors -- and learn the details of their upbringing and career history -- then perhaps I could see what value means in their eyes. …
Unlike other investment books, this book does not focus on a particular investment ratio or valuation methodology. Instead, it focuses on how life encounters and experiences directly and indirectly affect a person's investment mind-set and strategy.
With this in mind, Chan traveled the world interviewing value-focused investment managers, including the legendary Walter Schloss, Kahn brothers, and William Browne. Each manager receives a chapter of approximately 15-20 pages that gives a brief snapshot of the individual's background and some details to establish their bona fides as a value investor. Chan attempts to draw some lessons from their experiences to illustrate well-known concepts.
There were a few interesting things of note. Nearly all of the investors manage highly diversified portfolios, with the minimum number of holdings being approximately 30 and many (most?) with more than 100 positions. I didn't expect this, as I think many of the value investors I follow have much more concentrated portfolios.
One thing that shocked me is that Jean-Marie Eveillard is a gold bug. Here's an example:
Eveillard argued that gold has no intrinsic value… 'Gold is a substitute currency. … We Europeans learned long ago that paper money doesn't work! … With the excessive amount of money printed since the financial crisis in 2008, paper money is fraying at the edges!'
… Eveillard knows that value stocks and gold will make good companions in the years to come.
I wouldn't expect this from a value investor, but there you have it.
Here is a list of the investors that Chan profiles:
- Walter Schloss, Watler & Edwin Schloss Associates
- Irving Kahn, Kahn Brothers Group
- Thomas Kahn, Kahn Brothers Group
- William Browne, Tweedy, Brown Company
- Jean-Marie Eveillard, First Eagle Funds
- Francisco García Paramés, Bestinver Asset Management
- Anthony Nutt, Jupiter Asset Management
- Mark Mobius, Templeton Emerging Markets Group
- Teng Ngiek Lian, Target Asset Management
- Shuhei Abe, SPARX Group
- V-Nee Yeh, Value Partners Group
- Cheah Cheng Hye, Value Partners Group
I think The Value Investors would have been a much more valuable book if Chan had focused on a smaller number of investors, but covered each in more depth. I was disappointed in that many of the profiles lacked practical insights that would help the reader become a better investor. I think that if Chan had probed more with his questioning (like Maneet Ahuja did in The Alpha Masters), the end result would have been a more useful book. One thing I did like was that Chan covered a number of non-U.S. value investors that Western audiences would be less familiar with.
Disclosure: This book was provided by the publisher for review.