Seth Klarman’s Margin of Safety Has Been Amazoned (In more Than One Way)Rupert Hargreaves
Is there anything Amazon can’t disrupt? Seth Klarman’s Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor, which has awarded him cult status in the annals of American business schools, used to be one of the rarest and most sought-after texts on value investing around. Or is it?
Klarman 2017 letter on
- the danger of Chinese leverage
- Discipline while value investing in bubby times
- Value investing is not dead
- Radicalization of politics
- Dangerous FAANG valuations
“A margin of safety is necessary because valuation is an imprecise art, the future is unpredictable, and investors are human and do make mistakes.” — Seth Klarman
Written in 1991, Klarman’s Margin of Safety was initially sold for $25 and is now out of print. Value investors were so eager to get their hands on a copy, at one point Margin of Safety was changing hands for up to $2,500 on eBay, with one entrepreneur even renting out a copy for $75 a week.
Now Amazon has arrived to disrupt the party.
A free kindle copy of Margin of Safety is now FREE on Amazon for Kindle subscribers. For non-subscribers, the price is just $9.99.
UPDATE as this post when to publication it looks like the kindle book was unauthorized and has been removed so back to $1000 for you! It looks like Amazon has put another “mom and pop publication out of business”.
This book is required reading for all value investors. Within its pages, Klarman details his investment strategy and the foundations of value investing — buying securities trading at a discount to intrinsic value with a wide margin of safety and a keen focus on risk. Here’s an extract from this invaluable value resource:
“The focus of most investors differs from that of value investors. Most investors are primarily oriented toward return, how much they can make, and pay little attention to risk, how much they can lose. Institutional investors, in particular, are usually evaluated—and therefore measure themselves—on the basis of relative performance compared to the market as a whole, to a relevant market sector, or to their peers.
Value investors, by contrast, have as a primary goal the preservation of their capital. It follows that value investors seek a margin of safety, allowing room for imprecision, bad luck, or analytical error in order to avoid sizable losses over time. A margin of safety is necessary because valuation is an imprecise art, the future is unpredictable, and investors are human and do make mistakes. It is adherence to the concept of a margin of safety that best distinguishes value investors from all others, who are not as concerned about loss.”
Unfortunately, while Klarman’s Margin of Safety is an investing classic, it does not offer up-to-date investment ideas and views on the current state of the market (regardless of price!), unlike the Hidden Value Stocks newsletter.
Published every quarter, each issue of Hidden Value Stocks contains two interviews with under the radar fund managers. In the interviews, these managers discuss their process for finding value and highlight two of their favorite stocks each.
As well as the four value stock ideas profiled in each issue, subscribers get access to the quarterly investment updates published by each fund for no extra cost. These updates could provide a virtually unlimited stream of value ideas.
As a taster of what Hidden Value Stocks has to offer, here’s a teaser copy of the Q2 2018 issue.