Old School Value Nugget Fest (Feb 14th Edition)

This was originally published on 2/7/19 to our OSV VIP email newsletter subscribers. Sign up now to get these right away!

What We’re Reading

I intended to keep the list short and pithy this week, but when I went back to what I’d saved, there were just a lot of really good articles. The articles with the ** are my must-reads.

On Stock Analysis & Selection

• **This study suggests that Buffett’s exceptional performance is the result not of luck but rather of the consistent adherence to Graham and Dodd investing principles, an emphasis on value and quality exposures. [CFA Institute]
• The countries noted above as being deeply discounted relative to peers and history are also showing up as having favorable Earnings Growth relative to peers—Portugal, Greece, and Russia. [Factor Investor]
• Seth Klarman: Catalytic events shift the outcome of investments from a reliance on future market multiples and macroeconomic developments (which are not at all under your control) to a dependence on your assessment of the outcomes, probabilities, and implications of these events. [The Acquirer’s Multiple]
• Integrating ESG in Value investing decreased returns, but increased risk-return ratios [Factor Research]

On Diversification

• **The simplest way to think about the limit is this: If we can diversify away all of our risk, we should not expect to earn any reward. [Flirting With Models] 
• **Diversification is a protection against ignorance. [Buffett & Munger, 1996 Berkshire Hathaway Annual Meeting (YouTube)]

On Behavioral Investing

• **A lot of us are on the treadmill of consuming expiring information. Not Buffett. He filled his mental filing cabinet with information that had a long half-life. [Farnam Street]
• **There are probably fewer relevant pieces of information when making investment decisions than we think. [Behavioural Investment]
• So don’t get cute.  Even if you think you are better than average [at timing the market], you just aren’t going to get much out of it. [Albert Bridge Capital]
• Warren Buffett: “Really Successful People Say No To Almost Everything” [Accelerated Intelligence]

Misc

• Howard Marks: The Wisdom of a Value Superinvestor [MOI Global]
• Today’s drivers of value are largely intangible assets, such as data, intellectual property, branding, code, and business model. These are notoriously difficult to discern from traditional accounts. [Accounting Today]
• Reddit’s updated collection of Q4 2018 Letters and Reports