Twister: re Sanborn and other mutual fund managers ala Graham.
Okay I will give you the point that there are no fund managers who strictly follow Graham's methods. I'm not sure we can even agree on exactly what those methods are -- he changed and adapted too, I believe. Even on this thread, we have trouble agreeing on stocks that would be 'suitable' Graham investments. Are there any fund managers who say they invest exactly like Warren Buffett AND who can duplicate his success? (excluding mimickers like Ruane, Cunniff)
I will also stand corrected on Sanborn. In reviewing some more articles, I see he uses cash flow as his "most important tool". One thing I have been wrestling with in the past few weeks (in addition to wrestling with you - LOL!) has been the stated methods that fund managers use versus their actual methods. For example with Sanborn - in that interview I quoted - he says he uses methods -- talking with suppliers, customers, on-going relationships with the top company officials - and the impression I got is that this is key to his success; similar in another article (I can't recall where it is now,-- the extreme care and effort he makes to track ALL takeovers, etc.) So the inference I got (and maybe because it was intentially implied by Sanborn) -- is something like "that's my method, that's why I'm successful, and as you can see this can only be done by someone like me who runs a fund and has money and access to do these things--that's what you are paying me for.) And if that's what he IS saying, I agree, because I don't see how anyone -- any average investor like me anyway, can duplicate what he does.
HOWEVER, when you actually look at stocks he says he is buying or has bought recently-- they are, from what I can tell, nothing Ben Graham might take objection to -- if I may be so presumptuous -- and many have been mentioned here as value investments. My list from a recent Barron's article on Sanborn: Nabisco, MO, BA, Nike, Mattel, Black & Decker, Washington Mutual. (Probably could find some others if I checked Morningstar). But aren't these awfully close to being Graham stocks anyway? Or Graham-Value stocks? So what's with his stated methods? Who needs access to top management here when these stock prices seem so compelling now --- to some of the people on this thread anyway.
Losing my logic here... forgot what I am arguing about -gg-- Because you seem to believe you need to go beyond Graham to be successful, and I am saying I see nothing in these stocks that is so un-Grahamlike? There's no buying these stocks because of hidden assets, high tech, sophisticated cash flow analyses, sophisticated knowledge of company managements? So it should be fairly easy for a reasonable person to do-- just as you are saying about what Buffett says about how his methods could be duplicated? Lost it here -- can't tell if I am agreeing with you or disagreeing with you. -gg- Paul Senior |
