Charles Brandes on Value

Invest like a legend: Charles Brandes

Brandes, 70, has been spreading the gospel of disciplined investing in sound but undervalued companies since 1974. Like Warren Buffett, the San Diego billionaire counts Ben Graham as his mentor. The author of the widely read Value Investing Today, first published in 1989, regards investing as a long-term proposition. Anything else is just speculating.

Invest like a legend: Charles Brandes

What’s the best investment you’ve made?

The most recent example, believe it or not, is Microsoft. As deep-value guys, we generally don’t buy these high-flying technology companies when they’re trading at very high price-to-earnings and price-to-book ratios. But over the last three or four years, some of the premier technology companies had gotten to a value price. The feeling about Microsoft was that the PC era was over. But enterprise-wise, everybody around the world had Windows on their PCs, and we didn’t think that was going to go away immediately. Thinking long-term and of the basic fundamentals of the company, it was a very good bargain.

What’s the worst?

We bought stock in a brokerage firm in Japan called Yamaichi Securities, in 1997. It was the third-largest in Japan at the time. The stock price looked to be pretty cheap, compared to their earnings or cash flow, their dividend and that sort of thing. This was one of the rare cases of outright fraud. Yamaichi’s reporting was fraudulent. It went to zero. So that result was not satisfactory.

Full article here theglobeandmail

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