Bruce C. N. Greenwald | Judd Kahn | Paul D. Sonkin | Michael van Biema
1 Highly recommended
At last, theory and practice meet!
Warren Buffett teaches that the value of a business equals the cash that can be taken out of the business during its life, discounted back to present value. This book will show you how to practically estimate those cash flows and calculate their present value.
Another Warren Buffett technique - identifying a superior business that possesses a strong franchise - is also covered in detail and then practically illustrated with a fascinating case study.
Asset based approaches, e.g. using the estimated reproduction cost of assets as a valuation yardstick, are also discussed. The final part of the book provides valuable insights into the different approaches used by eight famous value investors.
Throughout, explanations of key principles are crisp and easy to follow and are illustrated with interesting examples. This book is a delight to read and a "must have" for value investors.
2 Good for beginners
I think some expect this to be "the Intelligent Investor" which is decidedly is not. But for a lighter modern intro to what kind of thinking is behind value investing this book succeeds quite well. Enough examples to get the idea across. And written so it reads easily. If you find yourself wanting more, then just order "the Intelligent Investor" for your next read.
But this book succeeds quite well in the areas it aims to make clear.
3 There are much better titles available
Half of the book is a history of several value investors. But this section is quite superficial in how these individuals screened/found the opportunities they did. Little is told of how they valued the companies and how a wanna-be investor should procede in doing this themselves. The first half of the book is ok, but again could use more help in terms of how to find prospective value companies. Chapter 6 is about the only good chapter. It analyses WD-40 (the company). I recommend instead "The Intelligent Investor" (2003 ed.) by the late Ben Graham and Jason Zweig. It lives up to Buffett's praise of "...by far the best book about investing ever written."
4 Packed With Knowledge!
This is a very lucid, practical introduction to the principles of value investing. It is detached, relatively objective considering the authors' bias in favor of the subject, doesn't hype or hard-sell and, on the whole, would be a valuable addition to any investor's bookshelf. If you're a relative beginner, your shelf will also need to include a dictionary of financial terms - the authors assume you already know the vocabulary. And who is the Graham cited in the title? He is Benjamin Graham, who all but invented security analysis. With coauthor David Dodd, he produced the book Security Analysis in 1934. Later, Graham wrote The Intelligent Investor. Both books are investment classics and have been revised and re-issued. This one may endure, as well, based on its thorough exposition on how to value a company and its instructive profiles of value investing heavyweights. Our recommendation: strong buy, long term hold.
5 Turkey and Where is the Beef?
There is simply not enough value in this book to justify using it. I'm sorry but words like Alta Vista and Cisco just should not appear anywhere in a value investing book. Period and discussion over. At least not up to the present. Maybe in the future but I doubt it. Also there is way too much verbage to describe much of nothing. The modern budding value investor would be better served by other book including Security Analysis by Graham. A lot of detail is missing here and much of the analysis leaves one wondering if the authors know what value investing really is.
6 Good book about value investing
The values are out there, it is just a matter of finding them and knowing what to look for. This book has many ideas about how to find the values.
I was somewhat disappointed in some of the math since I found some errors, for example on pg 139 of my edition, the formula for PV contains an error.
The Earnings Power Value seems to be useful for some situations, but not in all cases --- I think that point is covered in the book, yet so much time is devoted to EPV.
Even with some rough spots, this book will indeed help me in my investing walk.
7 Packed with Knowledge!
This is a very lucid, practical introduction to the principles of value investing. It is detached, relatively objective considering the authors' bias in favor of the subject, doesn't hype or hard-sell and, on the whole, would be a valuable addition to any investor's bookshelf. If you're a relative beginner, your shelf will also need to include a dictionary of financial terms - the authors assume you already know the vocabulary. And who is the Graham cited in the title? He is Benjamin Graham, who all but invented security analysis. With coauthor David Dodd, he produced the book Security Analysis in 1934. Later, Graham wrote The Intelligent Investor. Both books are investment classics and have been revised and re-issued. This one may endure, as well, based on its thorough exposition on how to value a company and its instructive profiles of value investing heavyweights. Our recommendation: strong buy, long term hold.
8 Serves as Both a Great Primer & Also a Great Idea Generator
Ben Graham may have done for investing what Euclid did for geometry, but the Graham student must take a long and winding road to collect and organize Grahamian "theorems." Greenwald modernizes and thoughtfully organizes the value framework originally expounded by Graham, and shows how investors might take -and in the final section of the book, how several master investors DO take- Graham's notion of buying dollar bills for fifty cents and apply this central idea in creative ways to some of the less frequented areas of the market.
Greenwald et.al. show a terrific aptitude for remaining informal and conversational while maintaining brevity and orderliness. Neophytes are unlikely to encounter a clearer, more concise explanation of `discounting future cash flows', and most students of value investing will be well-served by Greenwald's order of equity valuation: (1) Asset Value, (2) Earnings Power, (3) Growth, all of which are clearly explained. Additionally, Greenwald discusses a useful addition to common metrics such as `net asset value' and `liquidation value' with the concept of `replacement cost'. Greenwald also acknowledges and thoughtfully attempts to quantify the value investor's less traditionally acknowledged principle of `franchise value', which he judiciously attributes to Warren Buffett as the latter's singular contribution to investment analysis.
The book's admirable brevity is also its primary shortcoming. Whereas Graham included senior debt and convertible debt vehicles both in Security Analysis and in his investment practices, this text is for all practical purposes only an examination of equities. If the authors of "Value Investing" ever opt to write about a value approach to bonds and other instruments, I'll bet they'd have a captive audience.
9 Greenwald doesn't know much about investing.
The back cover of this book modestly proclaims that Mr. Greenwald is the "guru of Wall Street's gurus". I don't know what kind of gurus there are on Wall Street but if Mr. Greenwald is their mentor then I really feel sorry for them.
The very next day after I finished reading 'Value Investing' I attended a presentation, sponsored by NYSSA's Private Wealth Management Committee, where the author (editor?) presented the book. The presentation confirmed my first impressions: Not only is Mr. Greenwald confused about what Value Investing is but he doesn't seem to understand some fundamental concepts in Finance. For example, he claims that Compaq's major problem stems from the fact that the company put Alta Vista at market value on the balance sheet and then they had to write it off. Hasn't Mr. Greenwald heard about sunk costs? Investing in Alta Vista may have been a poor decision that destroyed shareholders' value but it is something that pertains to the past. It is not something that will continue to influence the firm's operating results in the future.
Greenwald claims that using asset valuation based on reproduction costs provides more accurate estimate of what the company might be worth then using NPV. According to him, NPV is too difficult to estimate and therefore is almost useless. I agree that NPV is difficult to estimate but if it was easy then everyone could be rich, right? In order to do better an individual investor must have a competitive advantage. Competitive advantage is something that one can do but the competition cannot. If balance sheet reading is easier than future cash flow forecasting then more investors should be able to do the former rather than the later. But if many people can do it then it does not give any competitive advantage. Those lucky few who have the exceptional ability to forecast future cash flows will have the competitive advantage and they will be the ones who will make billions of dollars. If Warren Buffet could not do something that is difficult for others then he wouldn't be so rich. The fact that NPV is difficult to estimate does not make it useless. On contrary, the difficulty makes it even more valuable because it gives competitive advantage to those who have the rare gift to see farther than the average individual.
The author claims that markets are not efficient but his idea of market inefficiency is very peculiar. According to him, for example, there cannot be any value in K-Mart because if there were any value in that stock then the horde of analyst, who follow the company, would have discovered it by now. I am not familiar with K-Mart but the statement he made sounds familiar to what the proponents of Efficient Market Hypothesis keep telling: markets are efficient because thousands of bright analysts are working day and night to uncover hidden value. If one can't find value because analysts have already dug out everything there is to know then what makes markets inefficient? Selling stocks to buy Christmas gifts? This can hardly be enough.
The authors do make some good points but overall the book is bad.
10 Best Investing Course in Print
I have read numerous books on the topic of investing, including Security Analysis, The Intelligent Investor, Common Stocks and Uncommon Profits, One Up on Wall Street, Beat the Street, The Warren Buffett Way, and more. But this book is the most detailed and usefully instructive that I have found - at least since The Intelligent Investor. If you have an interest in accurately modeling the investment philosophies of the most successful investors, you will find this book to be invaluable.
11 Value Investing in the 21st Century
I am a professional investor (CFA charter holder and portfolio manager) and would suggest this book for anyone interested in the value style of investing. I would not recommend the book for a novice investor since some terminology is not explained. (Perhaps read this book after reading and understanding Benjamin Graham's The Intelligent Investor.) However, the book is an excellent read for someone with an understanding of investing. The book is divided into two main parts: The authors' views of different ways to value a company and profiles of successful value investors.
I think the authors' Earnings Power Value (EPV) approach to valuing a company is cutting edge. (Basically EPV is a rehash of Enterprise Value.) Most investors tend to value stocks based on P/E ratios - only looking at equity in a company. However, the proper way to value a company is to look at its whole capital structure - Debt, Equity & Cash. EPV is a much better tool than the P/E ratio for calculating whether a company is undervalued.
The second part of the book that profiles a half dozen or so successful value investors is interesting. It illustrates there are many different ways to execute a value oriented approach. The profiles do not give any hard cut rules that each investor follows, but it does give you a general idea. (I have been successful at applying some of the ideas in managing my own account.) The only flaw of the profiles is the lack of any type of track record. It would have been helpful to list the year-by-year returns for each investor compared to an index. (i.e. S&P 500 Index)
Overall, it's a great book and it deserves a spot behind Ben Graham's Security Analysis and Intelligent Investor.
12 Worthwhile, Quick Read
This book was a worthwhile and quick read. The author did a better job than other authors in relating the value approach to the theory of the firm, probability analysis, and behavioral finance -- and he did it in a non-technical way. I would agree with others that some of the chapters on specific money managers dd not provide much insight into their individual approaches.
13 Successful, Long-Term Paths to Outperforming the Averages!
Value investing is so unpopular now, that many do not know about this highly successful form of investing as practiced by its greatest masters. Value Investing helps to overcome that ignorance among the newest generation of investors. That is good and timely, because we seem to be entering a time when value investors often make their greatest coups.
If you believe that the stock market is totally efficient (current prices accurately discount everything that is or could be known about the company to accurately price a company’s securities), you will think this book is irrelevant. If you think that stock prices normally over or under value a company’s worth, you will find this book fascinating.
If you want to have a decent chance of learning how to outperform indexed mutual funds, this book is one of a handful that can help you. The methods and investors outlined in this book have successfully beaten the market averages for decades. So whether you try to do apply the concepts for yourself, or have your money invested by one of these top value investment managers, value investing is a discipline that can help you achieve superior investing results.
In some of the many back tests run in recent years to test for market efficiency concerning stock prices, simply buying stocks with low price/earnings and price/book ratios proved to outperform the market averages. More thoughtful stock-picking can do even better.
But the ideas in this book are far more important than that. Value Investing shows the many ways that situations where securities are underpriced can be found and exploited. The masters of this approach do a lot of fundamental homework, and look carefully from several different perspectives.
Many people identify value investing with Benjamin Graham and the early Warren Buffett. This book expands that perspective by also profiling Mario Gabelli, Glenn Greenberg, Robert Heilbrunn, Seth Klarman, Michael Price, Water and Edwin Schloss, and Paul Sonkin. You will find out about how they were educated, the value disciplines they have used, their long-term track records, and how they differ from one another.
You should realize that value investing is above-all an intellectual and cross-checking exercise (a bit like chess), far removed from emotion of day-trading and the thrills of following trading momentum. You need to be patient. Years can pass without any good opportunities arising. You will often sell stocks far before their ultimate peak. So you will have to think about how well the psychology of the careful hunter with one bullet in your rifle matches the way you like to do things. One of the hardest things to accommodate is that your results will look worst when everyone else is picking up easy money, mindlessly, by running with the herd of rampaging bulls.
As helpful as this book is, Value Investing has a number of weaknesses. First, new investors will probably get a little lost in the discussions. The authors usually begin at a level of understanding that people who have attended business school have. Second, you will find it hard to run down more details on concepts you don’t quite get. Third, you will get a flavor of what each investor has done . . . but not the full detail. So, think of this as a wine tasting. If you find some styles you like, plan to do more reading and studying. Fourth, if you were only taught the investing creed according to efficient markets, you will probably wonder what all the fuss is about. The book could have used more references to the new research that challenges the assumptions built into CAPM (the Capital Asset Pricing Model).
In your personal life, do you ever find it rewarding to get a great bargain on something of value that you care about? If so, value investing may be for you. The sense of satisfaction is similar, and the financial rewards can be greater.
Be cautious as you apply any investing method to outperform the market averages. Limit the size of your potential losses until you have fully developed your skill.
Look carefully, think . . . and be skeptical! There are many people trying to make the future seem rosier than it will be.
14 Good Try
Not a bad stab at the basics, but the debt owed to others is immense. One third of the book consists of excerpts from Warren Buffett's Essays, disorganized, and better read in the collection THE ESSAYS OF WARREN BUFFETT: LESSONS FOR CORPORATE AMERICA (a full compilation by topic, well organized and rave reviewed). The hats off to some other top investors too, whose profiles are shallow and would be better to read them directly too. The rest is a skeleton outline, better delivered in several other books on the masters like Buffett and teacher Ben Graham (neither of whom, incidentally, even believe there is such a thing as the title of this book suggests there is--value investing is a redundancy they say, though the authors of this book don't grasp that basic point).
15 Value Investing: From Graham to Buffett and Beyond
This is a required read for any practicing or prospective value investor. I have read most of the books on value investing and found this one to be both insightful as well as practical compared to the others. It offers a great mix of both philosophy and practice. A great starting point for the aspiring value investor. This book also introduces a lot of new content. The principles of sound investment will never and have never changed, but the application of those principles is constantly changing. This book brings us to the future by showing us the different ways in which value investing can be applied. There are various examples from Glenn Greenberg at Chieftain Capital Managment, who applies a concentrated value approach, to Walter Schloss who applies a diversified value approach. There are plenty of methods for the aspiring value investor to choose from. There is also a great profile on one of the future's great value investors-Paul Sonkin. Rarely do we hear about the next generation of value investors.
16 An Excellent Addition
A highly readable addition to the value-investing greats that manages to impart a great deal of the "details" while still remaining an easy-to-follow, literate book. Only drawback is that the investor profiles are not consistent -- they were evidently written by different authors and their quality is sporadic.
17 cheaper than getting a columbia mba
able presentation of popular value investing course taught by best teacher at columbia b'school. clear & down-to-earth, by a very smart guy.
18 All Value Investors Will Want To Read
"Value Investing" is a book most value investors will want to read. As I progressed through the early Chapters of the book I was starting to form the impression that this book was the best of its type I have read - and I have read more than a few!! In the end I backed off giving the book "superstar" status but would still without reservation place it in the 5 stars must read category - especially for those about to read their first book on "value investing".
Chapter 3 discussing the "Three Slices of Value" is the highlight of the book. The book is very readable - and unlike many similar texts has a good blend of the conceptual with quantitative examples. For those that have already read extensively in this area the second part of the book on famous value investors will be going over old ground.
From time to time the book raises concepts such as "Enterprise Value" and "Dividend Discount Model" with little or no explanation which could leave the novice reader frustrated. The book also leaves few clues about further resources that the reader might tap to dig even deeper into the topic.
Despite these negatives a great addition to my library which I have already gone back to for reference purposes.
19 Educational and full of insight
Value Investing begins with a very readable and well thought out discussion of the value investing approach and then moves on to provide insight from some of the industry's most admired and accomplished practitioners. A very practical discussion that I consider one of the best books on the subject. I highly recommend it to anyone interested in learning how some great investors continue to generate consistent returns year after year, and also to professionals who will find a great discourse that they will want to have in their library.
