The 11 Greatest Value Investors of All Time
By: Jonathan Wolfgram,
The 11 greatest value investors of all time have made fortunes recognizing the worth of businesses and how to buy at a discount prices.
Value investing is the idea that investors can profit by buying equities worth more than their current trading value. Investors rely on balance sheets, margins of safety and other fundamental data points to assess whether or not the stock market has mispriced an equity that can be purchased before everyone else notices.
The 11 Greatest Value Investors of All Time Seek to Receive More Than They Pay
The challenge of value investing is a bit nuanced. Benjamin Graham — the father of modern value investing — says, “A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price.”
Benjamin Graham is not the only world famous investor to recognize this. Listed below are the 11 greatest value investors of all time.
The 11 Greatest Value Investors of All Time, #11:
The late John Neff became known as a contrarian, although he likely would have questioned the title. Neff described himself as a value investor and saw the most undervalued companies in areas overlooked by the market.
Neff ran the Vanguard Windsor fund for 31 years and averaged 13.7% growth per year, beating the S&P 500 by an average of 3%. He was considered the “professional’s professional.” Despite many of his more contrarian investments, many money managers trusted their personal portfolio to him, believing it would be safer with him than anyone else.
The 11 Greatest Value Investors of All Time, #10:
Peter Lynch was an adaptive investor who varied his investment style according to whatever worked at the time. Although he was often described as a chameleon, Lynch consistently allocated funds to companies he saw as undervalued from a technical standpoint.
Peter Lynch had an impressive winning streak: when managing the Fidelity Magellan Fund from 1977 to 1990, beating the S&P 500 index 11 of those 13 years. This grew the fund’s portfolio from $18 million to more than $14 billion, averaging a 29% annual return on his investments.
The 11 Greatest Value Investors of All Time, #9:
Dr. Marc Faber was a Swiss-born investor who received his PhD from the esteemed University of Zurich at the young age of 24. The man rallied against popular opinion to forecast Black Monday in 1987, the Japanese bubble in 1990, the gaming stock crash of 1993 and the Asia Pacific Crisis of 1997. Other predictions and lamentations of his can be found in his publication, The Gloom, Boom & Doom Report.
Faber’s is a value investor at heart with a contrarian investment philosophy. His motto is, “Follow the course opposite to custom and you will almost always be right.”
The 11 Greatest Value Investors of All Time, #8:
Bill Miller is a fund manager, philanthropist and served as the principal portfolio manager of Legg Mason Capital Management Value Trust. He heavily invested in Amazon (NASDAQ:AMZN), Valeant Pharmaceuticals and Bitcoin, among other things.
Miller took a long-term view about what value an equity provides. This led Miller to diversify his portfolio with several equities often overlooked by traditional value investors, saying, “Sometimes growth is cheap and value expensive. The question is not growth or value, but where is the best value.”
The 11 Greatest Value Investors of All Time, #7:
Jim Rogers is an American investor, financial commentator and cofounder of the Quantum Fund with George Soros. The fund had its most successful years shortly after its founding, from 1973 to 1980 — under Rogers’ and Soros’ management, the portfolio grew 4,200%. The S&P 500 grew just 47% during the same time period.
Rogers is a notorious bear. While he focuses much of his investments on undervalued stocks and equities, the investor concentrates a significant portion of his portfolio in commodities and “real goods,” which he believes is an undervalued industry as a whole. In line with this philosophy, Rogers has urged many young investors to leave Wall Street and focus their careers on mining, engineering, farming and other industries producing sustainable goods.
The 11 Greatest Value Investors of All Time, #6:
David Dreman is a notable value investor who authored several books on the topic and founded Dreman Value Management, an investment company. Dreman’s approach to value investing is largely psychological, seeking out securities that are undervalued mostly due to market misconception and misguided popular opinion. He is on the board of directors for the Institute of Behavioral Finance and publisher of the Journal of Behavioral Finance.
In addition to being a great value investor, Dreman is also a contrarian, describing the best undervalued assets as those operating against market opinion. Misinformation or fear surrounding a stock, Dreman said, was often an effective shroud covering a quality asset and creating a margin of safety.
The 11 Greatest Value Investors of All Time, #5:
Seth Klarman is a billionaire hedge fund manager and inductee to the Hedge Fund Manager Hall of Fame. He is the lead portfolio manager at the Budapest group, where he turned the fund’s inception capital of $27 million to $27 billion in assets managed today.
Known as the “Oracle of Boston,” many comparisons have been made between him and the Oracle of Omaha, Warren Buffett. Like Buffett, Klarman is a devotee to Benjamin Graham’s style of value investing where he seeks undervalued assets with a high margin of safety to profit from any rise in price.
The 11 Greatest Value Investors of All Time, #4:
Philip Carret created and ran the Pioneer Fund, one of the first mutual funds in the United States. His creation is the third oldest fund that still exists today.
Through the Pioneer Fund, Carret invested in common stocks and turned a $10,000 initial investment into $8 million by the time of his death in 1998. Warren Buffett said of the investor that “Carret had the best long-term investment record of anyone I know.” He was one of Buffett’s most influential role models.
The 11 Greatest Value Investors of All Time, #3:
Joel Greenblatt is renowned both for his current hedge fund management and his vast contributions to the value investing world. Greenblatt manages Gotham Funds, is a director for value investing group Pzena Investment Management, was former chairman of the board of Alliant Techsystems and founded the New York Securities Auction Corporation.
This investor’s greatest contribution to the financial world, however, is likely his magic formula. In his best selling book “The Little Book That Beats the Market.” Greenblatt described a magic formula to be used as a proprietary stock-screening tool for focusing on 20-30 high-quality stocks that are trading at a discount. It looks for discounted companies with a high earnings yield and high return on invested capital, in addition to other criteria, and has been shown to consistently beat the market over the long term.
The 11 Greatest Value Investors of All Time, #2:
Benjamin Graham was a British-born American investor who was famous for mentoring Warren Buffett. Graham is known in investing circles as the “father of value investing” and authored some of the most important investment books written to date: Security Analysis” with David Dodd and “The Intelligent Investor.”
There is a common theme among his doctrines of value investing and security analysis: any stock should be worth considerably more than you pay for it. This could mean a strong balance sheet, lack of debt, high profits or any other underlying financial strengths. But to purchase something at anything but a discount, Graham opined, meant losing money, and that is something an investor should never do.
The 11 Greatest Value Investors of All Time, #1:
Warren Buffett is widely considered the greatest investor of all time, and much of his investment strategy relies on the fundamental principles of value investing. Buffett often preaches, “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
The investor argues that the best time to invest in a stock is when the shortsightedness of the market has beaten down the price. This has led Berkshire Hathaway (NYSE: BRK.A) to make many of its most profitable investments during bear markets when quality companies are sold at a discount. Likewise, when markets are booming, Buffett holds cash — and a lot of it. Securing the best value, for Buffett, means pouncing on the undervalued stocks ignored by the market.
With this in mind, Buffett detests speculation. Rigorous technical analysis has guided many of Warren Buffett’s decisions, but it has been regulated by an overarching philosophy of buying only those companies that add tangible value to the world. For these reasons, we can confidently say that Warren Buffett is the greatest value investor of all time.
The 11 greatest value investors of all time sought to buy certain equities when others viewed the stocks less positively. Not only did the strategy succeed, it also led the 11 greatest investors of all time to prosper.
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