Benjamin Graham a Value Investing Market Wizard is profiled at StreetStories
Market Wizards Index: +21%
Compound annual over 20 years
Fund or affiliation
Graham-Newman Corporation with Jerome Newman
Invested using an entirely quantitative method that anybody can apply using readily available published information.
Focused on buying "Bargain Issues", companies selling for less than their net current asset value.
Research Techniques Employed
Quantitative screening of securities without regard for things such as social trends, a companies future prospects, products, or quality of management.
Trading Techniques Employed
Diversification. We all make mistakes: the only way to be safe is to spread your bets around widely enough to let the law of averages operate.
Everyday Mr. Market, depending on... dreams or fears that possess him... sets a price at which he will either buy out our interest or sell... Most of the time we need pay no attention. Only if our sober study of facts... convinces us that his price is absurdly high or low need we take notice of his offer.
Graham-Newmans 6 techniques since 1936:
Buy stocks at 2/3 or less of their net current asset - usually over 100 issues at a time.
Buying companies in liquidation.
Convertible bond or preferred arbitrage.
Buying control of a company to force realization.
Long and short (hedged) stocks trading. (discontinued in 1939)
Philosophy and beliefs
"Investment" must be based upon thorough analysis, and must promise safety of principal and a satisfactory return. The lacking of either analysis, safety or return it would be a mere "speculation".
Disapproves intrinsically new stock issues of previously private companies and exotic securites like convertibles and warrants.
History and other facts
Formed a pool, the Benjamin Graham Joint Account, in 1926 which grew to $2.5M in 3 years, which he managed for a share of the profits.
In 1934, with Professor David L. Dodd, he published the monumental "Security Analysis".
In 1948 Graham-Newman put 1/4 of thier assets into buying GEICO.
21% over 20 years: "if one invested $10,000 in 1936, one received an average of $2,100 a year for the next twenty years, and recoverd ones original $10,000 at the end."