Are the "Superinvestors of Graham and Doddsville" still beating the S&P 500 --???>
A reader writes:
> In one of your articles I read the following comments about The
> Superinvestors of Graham and Doddsville: "A partial list of
> Index-beating, Value-oriented superinvestors would include Irving Kahn,
> John Neff, Walter Schloss, Tweedy, Browne Inc., Sequoia Fund,
> Perlmeter Investments, FMC Pension Fund, Michael Price, and William Miller."
> Of these high performers, I know of Tweedy Browne, and the Sequoia Fund.
> Are the others that are referenced still active? If so are they still
> successful?
That list was compiled by Warren Buffett in a 1984 speech he gave to the Society of Securities Analysts to mark the 50th anniversary of Graham and Dodd's monumental work, Security Analysis. Buffett entitled his speech, "The Superinvestors of Graham and Doddsville", an edited version of which appears in the Appendix to the last edition of The Intelligent Investor. (This is the derivation of both the title to the GADR thread and the GADR newsletter.) Buffett offered these examples of Index-beating followers of Graham to show that Graham's methods were subsequently replicable by others -- not merely luck, or anomalies of Graham's era.
Thus, you are asking a very pertinent question: 14 years later, are they still beating the S&P 500?
Irving Kahn, Graham's teaching assistant at Columbia for some 30 years, is still active, and, last I checked, 92 years of age. I don't know how his track record has held up over the years.
John Neff, who headed Windsor Fund for the Vanguard Group, retired a couple of years ago. Vanguard founder John Bogle, Sr., champions the cause of Indexing. But, not long before Neff's retirement, I noticed that Windsor was one of the top 4 mutual funds in Lipper's rankings, going back 20 years (so was Sequoia, at that time).
Schloss Associates is still in business. I don't know if Walter Schloss himself is active.
I am unfamiliar with the subsequent histories of Perlmeter Investments, FMC Pension Fund, and William Miller.
Michael Price of Franklin funds retired in the past year, with a reputation as one of the all-time greats. Though I am not familiar with the details, I am told that his performance in recent years was not as sparkling as in years past.
Needless to say, during a span of 16 years of chasing growth-at-any-price, Mr. Market has not favored the asset plays that Graham's name is most often associated with.
And in the past few years, the surge of popularity in Indexing, and "shadow Indexing", has created a self-fulfilling prophecy, causing the Index to pull ahead of the long-term track records of all but a handful of active fund managers, regardless of strategy. Rest assured, though, that as a buy-high, sell-low strategy (i.e., the higher its price, the bigger the portion of the Index a stock represents), this is one investment fad all but guaranteed to cool off in the next few years.
Thus, Index-beating Value-based managers will be coming forth in greater numbers over the coming decades. But, all of the foregoing notwithstanding, I still think very few investors will actually outperform an all-Index, all-the-time strategy, primarily because of cost-inefficient diversification, as well as the vagaries of investor psychology.
Does anyone else have information to add about how these Superinvestors now stack up? |
