Forbes Profiles Old School, Graham-Style Value Investor Walter Schloss

February 6, 2008 at 1:37 pm  ·  Category: Business and Investment Philosophy, Business Culture and Current Events

“I can’t say people will get rich on it, but I would rather be safe than sorry.”

Walter Schloss, on his recommendation of insurance company CNA Financial 

91 year old Walter Schloss may not be as famous as Warren Buffet but he shared on office with the Oracle of Omaha at Ben Graham’s investment firm, Graham-Newman, when they were both young men. 

While Buffett seems to have evolved the value investing philosophy to take into account growth and quality, Schloss appears to have remained old school.  That is, he is what I would call a deep value investor, looking for stocks trading at a discount to book value i.e. whose assets fair value is thought to be worth more than the market value.

Stocks he likes right now include wheelmaker Superior Industries International which gets 3/4 of its revenue from Ford and General Motors, has had 5 straight years of declining earnings and is down 67% over the last 6 years.  Trading at 80% of book value, with no debt and a 3% dividend, Schloss sees value here.

Other recommendations along the same lines are chair and table maker Bassett Furniture, hammered by the housing bust, which he recommends waiting for a dividend cut before buying, and insurer CNA Financial, trading at a 10% discount to book.

Schloss is a practitioner of the original form of value investing that has its roots in Graham’s pioneering Security Analysis.  In fact, one of Schloss’s prize posessions is an original edition (1934) copy of Security Analysis, whose binding is held together by three strips of tape.

You can read the entire Forbes profile here.

Posted by Greg Feirman  ·  Trackback URL  ·  Link
 

Leave a Comment

Name required
E-mail required, won't be published
Web site