Business Adventures Book Summary

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I followed the herd and read Business Adventures (by the late John Brooks, originally published in 1969) over the summer like many others did after learning the book was Bill Gates’ favorite all-time business book (even better, it came recommended to him from none other than Warren Buffett). I previously posted some of my favorite quotes and notes from the excellent first chapter that covers the May 1962 crash, a flash crash of sorts of the time. Reading that post before or after my summary thoughts about Business Adventures that follow below is worth your time.

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Berkshire Beyond Buffett Notes

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The rent is too damn high and the weather is too damn cold. Can I interest you in an all-weather portfolio? All kidding aside, if not already in your possession, get Larry Cunningham’s Berkshire Beyond Buffett: The Enduring Value of Values and enjoy the latest of Larry’s deep dives into Berkshire Hathaway (BRK.A, BRK.B). To keep these posts short I’ll share some interesting Berkshire Beyond Buffett notes every few chapters or so.  Continue reading

Warren Buffett: 85% Fisher, 15% Graham

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In John Train’s The Midas Touch (Amazon; recent post), published in 1987, he describes Warren Buffett as 85% influenced by Benjamin Graham and 15% by Philip Fisher. After re-reading Fisher’s Common Stocks and Uncommon Profits and typing up 15+ pages of notes to substitute for a future re-read, I am convinced that Buffett is much closer to 85%-Fisher and 15%-Graham, and he was arguably already leaning more Fisher-like than Graham when Train began writing about him. Put Common Stocks on your reading list and consider a re-read if it’s already on your shelf. Continue reading

Business Adventures notes

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Like many others, I became aware of John Brooks’ Business Adventures after the recent WSJ essay by Bill Gates wherein Gates said the book was his favorite of the business genre and that it was Warren Buffett’s recommendation to him in 1991 when he asked Buffett for his best business read (the story goes that Buffett mailed Gates his personal copy and Gates has kept it to this day). I’m in the middle of chapter three (about the U.S. federal income tax) but wanted to share a few notes from the first chapter, “The Fluctuation: The Little Crash in ’62” [chapter two is a 50-page entry about the failed Ford Edsel, a rather quick, enjoyable and informative read]. Continue reading

Bernard Baruch: ‘speculator’ and statesman

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Bernard Baruch (1870 – 1965) published his memoirs, My Own Story, in 1957. I was pleasantly surprised by his account of his career on Wall Street, learning that he was not so much a speculator — which then, and now, carries a negative connotation — but clearly a very astute investor.  Amassing an ever larger fortune was not his game, he claimed, instead he found serving his country more satisfying (he served under presidents Wilson and Roosevelt). It appears that he thwarted profiteering as much as one man could by securing highly favorable rates for select commodities needed during war. It’s a disservice to Baruch’s legacy to say that he was merely a “speculator” or gambler. In his memoirs he explains that ‘speculator’ comes from the Latin word speculari, which actually means to spy out and observe; or in his words: to get the facts, form a judgement, and take action accordingly.

Baruch applied such a perceptive and properly defined speculator’s approach to investing as well as his government service. Baruch’s belief in the fundamental importance of supply and demand, and his ability to recognize and take advantage of market imbalances, resembles the commonsensical approach of the likes of Jim Rogers and Marc Faber in today’s world (and what we have all read of Benjamin Graham’s approach until his late days, as well as Warren Buffett’s astuteness vis-à-vis the Berkshire Hathaway – Burlington Northern Sante Fe investment, for instance). Continue reading

Martin Whitman: unwavering value investor

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Just over a month ago I reviewed Martin Whitman’s, “Value Investing: A Balanced Approach” (my review), which was published in 1999. I found that his approach to value investing sounds exactly the same today as it did then. In fact, it sounds nearly identical to, The Aggressive Conservative Investor, which he coauthored with professor Martin Shubik in 1979. While Whitman’s name may not be invoked like Graham’s and his name doesn’t command headlines like Buffett’s, he belongs alongside them at the top of the batting order. Whitman — unlike Graham who maintained a broad portfolio of securities and was increasingly formulaic, to the point that very late in his career he even suggested most (analysts and individuals alike) would be best off indexing — is an intensely focused investor (resembling much more the young Graham) with a solid understanding and appreciation of capital structure and the numerous ways to realize gains beside hoping for a higher stock price (many of which by what he calls resource-conversion, or asset-conversion, activities). Continue reading

Benjamin Graham’s memoirs

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Benjamin Graham: The Memoirs of the Dean of Wall Street, is a refreshingly candid story of the man (1894 – 1976) most investors associate with his value investing classic, Security Analysis. His memoirs are not to be read for takeaways to improve one’s investing methods. Rather, his memoirs serve as the story behind the composition of a truly brilliant, multi-talented man, who with fortuitous timing uncovered an opportunity in mis-priced securities that led to a highly successful career in investing. Graham was very serious about his work, but did not take himself too seriously (he was not full of conceit despite his superior knowledge; and he never sought to attract attention). Continue reading

Corporate Valuation for Portfolio Investment

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Corporate Valuation for Portfolio Investment: Analyzing Assets, Earnings, Cash Flow, Stock Price, Governance, and Special Situations (2010, Bloomberg Press), is an ambitious effort by coauthors Robert A.G. Monks, a renowned shareholder rights activist, and Alexandra Reed Lajoux, an M&A expert. They cover a lot of ground in around 540 pages, and state at the end of Chapter 1 that the book is intended primarily for institutional investors, adding that they would be honored if professors recommend their book along side other classics such as Security Analysis (review).

The book favors breadth over depth in many instances, but is rich in footnotes for further research. Students of finance and practitioners will find Corporate Valuation for Portfolio Investment a great book to read reference, while individual investors with no formal background in finance will in fact have much to gain from the chapters on financial statements, valuation methods, and the coauthors’ “philosophical framework” for valuation. Continue reading

Martin Whitman’s approach to value investing

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I recently finished reading Martin Whitman’s, “Value Investing: A Balanced Approach” (1999). Don’t let the date of publication fool you into thinking his approach is dated. In his interviews over the past few years one hears the same terms and mindset as described in the book. Whitman’s firm, Third Avenue Management, is recognized for its track record in value and distress investing; the latter has led Whitman to be regarded as a “vulture” investor, which is apparently something he doesn’t mind, especially considering all of his success. Value Investing will probably not be a fun read for casual or passive investors (“OPMIs” according to Whitman; more on that later) and it certainly won’t be for traders who would have a hard time finding current assets on the balance sheet. However, for those devoted to value investing (thinking at times like control investors), this book is among the best. Continue reading