From 2008 to 2009, he invested a total of $25.2 billion dollars in six companies – candy maker $MARS and it’s Wrigley subsidiary, Goldman Sachs Group, Inc. (NYSE:BRK.A) tossed financial lifelines to a number of blue chip companies during the financial crisis. As the Wall Street journal reported in its story, “Buffet’s Crisis Lending Hall Reaches Ten Billion Dollars, Buffett and Berkshire Hathaway Inc. We recently learned how phenomenal returns can be when that advice is followed. “Be fearful when others are greedy and be greedy when others are fearful”, is the famous investment maxim of great investor Warren Buffett. It is the only museum devoted to the history of finance, the foundation of our capitalist system. We are delighted to be taping at the Museum of American Finance, a must visit destination in the heart of Wall Street. Hello and welcome to this edition of “ WealthTrack”. You may not agree with everything Whitman says, but there are some great lessons to be learned between the lines. “defaulting” on its debt is basically gibberish. At one point, he mentions that he will invest in low ROE companies at the right price and that talk about the U.S. What follows is the full transcription from the Wealth Track episode, where Whitman explains how old school thinking might not always be appropriate. Like the presentation that Professor Lo recently gave about behavior and investing that we highlighted in last month’s newsletter, this video was shot at the Museum of American Finance. Older episodes require additional access credentials.) Mack offers the most recent transcripts of her Wealth Track episodes for free viewing. In 2013, Consuelo Mack interviewed Marty Whitman as part of her “ Wealth Track” Series. After hearing of his passing, I immediately searched for videos of Marty Whitman that reminded me of why I respect his work. If you have ever had the chance to listen to Marty Whitman speak then you will quickly find out that he has no problem challenging the status quo when it comes to value investing. When he invested in distressed securities, he invested in the “ Fulcrum Security”, the most senior security that was going to participate in the reorganization. Whitman coined the acronym, GADCP, Growth at Dirt Cheap Prices, and when it came to investing in stocks, he was generally looking to buy companies trading at a 30% discount from readily ascertainable net asset value that could grow at an annual compounded growth rate of 10%. For example, investing in the debt of companies entering Chapter 11, or their stocks upon an exit from bankruptcy, can be incredibly rewarding.įurthermore, understanding the true earning power of a company and what its assets are worth, beyond what GAAP EPS numbers or the carrying value of assets on a balance sheet are telling you, is how you can find some diamonds in the rough. A stock that looks expensive today might be cheap tomorrow. The places that some ignore are where we can find opportunities. When it comes to investing, we are often told to follow set rules like “GAAP is more accurate than non-GAAP” or “avoid stocks with high P/Es, buy stock with low P/Es”, and that “a stock with a low book value per share is cheap”. Thinking outside the box is what makes value investing fun, especially if you are a microcap investor. Fiercely independent-minded, he was a brilliant intellectual a methodical, patient investor and a man of profound generosity and integrity. After that date he never obeyed an order from anyone. Whitman, often said that March 31, 1946, the day he was discharged from the Navy, was the happiest day of his life. As you may know, Marty Whitman passed away on April 16, 2018, but leaves behind a legacy that includes market beating returns and 4 books. Marty Whitman holds a special place in the hearts of many deep value investors. Introduction By Maj Soueidan, Co-Founder GeoInvesting
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