Which of the Top Billionaires In The World Made Their Wealth Through Value Investing?
Value investing is one of the strategies used by some of the richest investors in the world to grow wealth. It is the kind of investment where investors pick stocks which they fell have been undervalued by the market. This means that the stocks are most likely trading well below their fundamental value, otherwise known as buying low and selling high.
Value investing can make anyone rich but it is not easy and it also requires a lot of patience. One of the best ways to understand it is to study the investment trends of some of the most successful value investors. Below are some of the top ranking value investors that have become some of the wealthiest people in the world.
He is arguably the father of modern-day investing and he is the one that invented the concept of purchasing stock with prices below their intrinsic value in order to limit the risk of prices going even further. Graham was born in 1894 and died in 1976 but his principles are still applied to this day. He wrote two books namely “The Intelligent Investor,” and “Security Analysis.” The latter was co-authored with David Dodd. Graham was a lecturer at Colombia University and also an investment manager.
We cannot mention stock picks and value investments without mentioning Warren Buffett who is currently one of the top ten richest people in the world according to Forbes. He owes part of his success to the principles that he learned from Benjamin Graham and was even a student of Graham in Columbia University before becoming one of his employees.
Buffett is one of the investors that have made big bucks from using the principle of value investing and has even invested in some of the major companies in the world including Coca-Cola.
This is yet another highly successful investor that has worked at Graham’s company just like Buffett especially in the early stages of his career. He launched his own investment firm in 1955 and has been an investment manager for about 50 years, during which his net returns average about 15 percent annually. His value investment strategies allowed him to own as much as 100 stocks at some point. He has also made a significant amount of cash by shorting some stocks and holding when the market was not favorable. One key aspect that makes Schloss unique is the fact that he never went to college and yet he is one of the top investors that have made a lot of money from smart investments in stocks.
He is the founder of an investment partnership firm called Baupost Group that has earned quite a strong reputation since it was founded since 1983. The firm has only lost money in three years while the rest have been characterized by gains. Klarman has managed to achieve this by picking high-value stocks based on the liquidation value of companies. He is also known for having a keen eye on stocks that other investors might overlook as part of his principle of doing things differently in order to perform better than other investors.
Klarman wrote in his Baupost Group letter in 2010 that success in trading over the long-term is the result of a flexible strategy that allows the investor to take opportunities over a variety of securities, markets and asset classes. He also stated that long-term capital plays a critical role towards achieving massive success through investing.
Khan was one of the investors whose success was influenced by the investing principles introduced by Graham which means he got his wealth through value investing. He was also a contributor to Graham’s book and also taught at Colombia as an assistant. Khan joined Wall Street on 1928 making him one of the founders of the New York Society of Securities Analysts in the 1930s. He was also one of the principled investors that practiced a lot of patience with their investing and was quite picky when it comes to the stocks that he invested in.
Unlike Buffett who focused mainly on large-cap companies. Khan’s investment stronghold was small and medium-sized firms. He also invested in the over-the-counter market and although he passed away in 2015, his company still manages an investment portfolio of more than $1 billion.
Christopher H. Browne
Yet another one of Graham’s disciples, Browne had quite a successful career courtesy of value investing that brought him a large amount of wealth. He started out working at an investment firm called the Tweedy, Browne Company which was founded by his father. He worked at the company for 40 years and during that time, the company adopted the investment principles taught by Graham.
Graham himself was one of the investors that traded through the Tweedy, Browne Company for about 30 years. Buffett was also one of the company’s investors. This is a testament to just how good the company’s investments have been. The firm initially started out as a brokerage but then, later on, it shifted towards investments and been the company behind some of the most successful mutual funds that are value-oriented. It started investing in value stocks on the international market in 1983. One of its main selling points was that its managers also invested in the same instruments that they were managing on behalf of its clients, thus giving customers confidence.
Can the same principles apply today?
Although the principles of value investing that were introduced by Graham are more than 5 decades old, they have been tried and tested considering that some of the greatest investors have used them to develop their trading strategies. However, it does not mean that they are now outdated. Investors today can actually still leverage the same principles to grow their wealth. However, it takes a lot of patience, a keen eye and a proper understanding of the stock market. One can even argue that it is easier given the computing and analysis tools that currently exist in the market. Investors can use these tools coupled by Graham’s principles to build a strong stock portfolio.