Advice From The Best Value Investors

Seth Klarman's Baupost is one of the most respected value investing firms in the world. In a recent report to investors, Klarman let a retiring staff member, Brian Spector, write a piece on the firm's investment process. ‘Most of the time’, Spector explains, ‘we are in periods of haystack investing’. Most of the time, markets are orderly, with most stocks trading somewhere near fair value. For every keen seller there is a keen buyer, keeping things in order. While you’re looking for needles in haystacks, you’ll come across a lot of businesses that are attractive but don’t offer compelling value. That watch list will come in handy for Spector’s other investment metaphor – ‘tide comes in and tide goes out’. Every now and then markets become disorderly. As Spector says, the tide turns and ‘we see distressed sellers, illiquid securities, huge redemptions, and an excess of paranoia and fear’. It happens in differing magnitude at least every few years. While you may have done nothing for months, you might now buy 5 stocks in one day. (VIEW LINK)

Steve Johnson
Founder & Chief Investment Officer

Steve began Forager Funds in 2009, and now manages approximately $350m across two funds. Offering a listed Australian Shares Fund (FOR) and an unlisted International Shares Fund, Steve focuses on long-term investing in undervalued companies.

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