money jungle

Mark Sellers Speech: So You Want To Be The Next Warren Buffett?

Posted in mark-sellers, value investing by moneyjungle on January 9, 2009

Most important, I believe you need to be a good writer. Look at Buffett; he’’s one of the best writers ever in the business world. It’s not a coincidence that he’’s also one of the best investors of all time. If you can’’t write clearly, it is my opinion that you don’’t think very clearly. And if you don’’t think clearly, you’’re in trouble. There are a lot of people who have genius IQs who can’’t think clearly, though they can figure out bond or option pricing in their heads.

Mark Sellers gave the following speech at Harvard Business School, in which he highlights seven behavioral traits that distinguish great investors. This is the best description I’ve seen of the psychological factors underlying value investing.

  • The ability to buy stocks while others are panicking and sell stocks while others are euphoric.
  • Being obsessive about playing the game and wanting to win
  • A willingness to learn from past mistakes
  • An inherent sense of risk based on common sense
  • Confidence in their own convictions and stick with them, even when facing criticism
  • Important to have both sides of your brain working, not just the left side
  • The ability to live through volatility without changing your investment thought process

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Mark Sellers Interview: “Figure Out What the Problem Is”

Posted in mark-sellers, value investing by moneyjungle on January 9, 2009

The first thing we do is figure out what the problem is. Ninety percent of making money in stocks is not losing money, which has to do with knowing what the problem is and how it can be solved. Every company we buy has a problem with it, otherwise it wouldn’t be cheap.

We read sell-side reports, SEC filings, and talk to management. Within one or two days, we decide if we’re comfortable that the company can solve the problem. Then we do another week or so of further research.

Until recently, Mark Sellers, a former morningstar analyst, ran a small value porfolio that returned 35%. This motley fool interview covers several aspects of his investing process, including evaluating management, thinking in terms of decision trees, when to sell, and portfolio concentration.

Seth Klarman Interview Video

Posted in seth-klarman, value investing by moneyjungle on January 4, 2009

Here’s a hour-long interview with legendary value investor Seth Klarman.

Since its founding in 1982, Klarman’s firm, the Boston-based Baupost Group, has grown from managing twenty-seven million dollars for three wealthy families to over six billion dollars for institutional clients. Today, the firm employs sixty people, including twenty investment analysts. Its focus on risk-averse value-oriented investment strategies have allowed the firm to earn an average 20% returns while holding a large amount of its portfolio in cash.

This interview, taped at a Harvard psychology lecture, focuses on Klarman’s leadership style, and the lessons he has learned in running an investment firm.