Five famous investors and their strategies
When we talk about famous investors, the first name that comes to mind is probably Warren Buffet. Known as the sage of Omaha, Buffet is one of the richest men in the world, but what has been key to his success?
We take a closer look at his – and four other well-known investors’ - investment philosophy:
Ben Graham: value and Margin of Safety
Ben Graham is probably the most famous value investor of all time. He wrote 'The Intelligent Investor', co-wrote 'Security Analysis' and is known as the father of value investing. His idea of an intelligent investor had nothing to do with IQ - it was about being patient, disciplined and willing to learn. His strategy revolved around buying unloved businesses with little downside, which he believed shielded investors from major mistakes, even when things go wrong. He was particularly famous for 'cigar butt investing' - if the total shares of a company were trading at less than the net value of assets on a company's balance sheet, there was a good chance it would be a good investment.
Funds with similar styles today:
- ES R&M UK Recovery
- Ninety One UK Special Situations
- Schroder Global Recovery
Thomas Rowe Price: long term and fundamental research
At the opposite end of the investment style gauge, Thomas Rowe Price Jr. is considered to be the father of growth investing. During the Great Depression, he learned that the best strategy was not to stay out of stocks but to embrace them. He took to investing in good companies for the long term - which was virtually unheard of at the time – and discipline, process, consistency, and fundamental research became the basis for his investing career.
Funds with similar styles today:
- T. Rowe Price Global Focused Growth Equity
- LF Blue Whale Growth
- Rathbone Global Opportunities
Warren Buffett: flexibility and adaptability
Warren Buffett was a student of the Benjamin Graham school of deep value investing. However, he has constantly adapted throughout his career. For example, he is probably most famous for buying large stakes in quality compounder growth businesses like Coca-Cola. For a long time, Buffett shunned tech stocks, but one of his most successful holdings recently has been Apple. The key lesson from Buffett is not to fall in love with an investment ideology: you need to remain flexible and adapt to different times.
Funds with similar styles today:
- LF Lindsell Train UK Equity
- Fundsmith Equity
- Guinness Global Equity Income
Joel Greenblatt: high return on capital and cheap valuations
Joel wrote 'The little book that beats the market'. He believes most professional investors and academics can't help you to beat the market - you need to figure it out for yourself. Joel's strategy is simple yet very effective: high return on capital businesses are much better than low return on capital businesses. If you are disciplined and only buy these businesses on cheap valuations, you will beat the market. And 'Mr Market' is subject to wild mood swings - he gets overly excited or depressed - so you often get opportunities to buy great businesses.
Funds with similar styles today:
- Threadneedle Global Extended Alpha
- Liontrust UK Micro Cap
- JOHCM Global Opportunities
Jim Slater: growth at reasonable price
Jim wrote the book 'the Zulu principle'. He is famous for extolling the benefits of small cap growth shares (elephants don't gallop) and in his book he highlights the characteristics he looks for. He is well known for using the PEG ratio. This values companies based on their price-to-earnings ratio and growth rate. His general investment strategy is to buy dividend paying stocks on reasonable valuations with fast growth rates. He also encourages investors to find a market niche under-exploited by professionals.
Funds with similar styles today:
- Barings Europe Select
- Slater Growth
- MI Chelverton UK Equity Growth
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and do not constitute financial advice.