Value investing refers to an investment strategy that involves selecting stocks trading below their intrinsic value. This strategy was pioneered by Benjamin Graham and David Dodd and popularized by Warren Buffett. Value investing firms follow the principles of value investing to manage money for clients. Over the decades, many reputable value investing firms have emerged that have delivered market-beating returns. These firms employ various analysis techniques to identify undervalued stocks with the potential for price appreciation. Their portfolios are concentrated in a select few stocks where they have conviction. Some leading value investing firms include Tweedy Browne, Southeastern Asset Management, Davis Advisors, and Wedgewood Partners, among others. These firms run highly concentrated portfolios and have outperformed the market indices over long periods. They conduct rigorous research to estimate the intrinsic value of companies and invest only when there is a sufficient margin of safety. Value investing firms play an important role in promoting disciplined investing based on fundamentals.
Tweedy Browne is a pioneer in value investing with an excellent long-term track record
Tweedy, Browne is one of the oldest value investing firms, founded in 1920. It helped shape value investing concepts through the classic book ‘What Has Worked in Investing’. The firm manages over $13 billion in four value funds. Its investment strategy involves buying high-quality businesses at a significant discount to intrinsic value. Tweedy Browne has delivered exceptional returns over the decades, outperforming the market indices by wide margins. Some of its popular holdings over the years have been Coca-Cola, Nestle, Berkshire Hathaway and JP Morgan Chase. The concentrated portfolios and low turnover reflect its long-term investment approach of holding high-conviction stocks.
Southeastern Asset Management applies traditional value investing principles
Memphis-based Southeastern Asset Management was founded in 1975 by Mason Hawkins. It manages $15 billion in assets using a traditional long-term value investing approach. The firm’s flagship Longleaf Partners Fund has delivered a remarkable 14.5% annualized return since its inception. Southeastern’s portfolios have just 20-25 stocks where the firm has done in-depth research. Sector weightings simply reflect where it is finding bargains at that point. Southeastern has held on to some stocks like FedEx for over 20 years, reflecting its buy-and-hold approach.
Davis Advisors combines growth and value investing tenets
Davis Advisors is a California-based investment manager overseeing more than $23 billion in assets. It utilizes the Davis Investment Discipline that integrates aspects of growth and value investing. The firm believes growth is an important component in long-term wealth creation. Davis Advisors extensively researches companies to find durable, well-managed businesses selling at a discount. Its flagship Davis New York Venture Fund has delivered excellent long-term results. The fund holds just 20-30 stocks with low turnover. Davis Advisors has a culture of investing alongside clients and employees own over 20% of the firm’s funds.
Wedgewood Partners adopts a concentrated value investing strategy
Wedgewood Partners is a St. Louis-based investment firm managing $1.5 billion in assets. It utilizes a conservative, concentrated value investing approach. The firm’s portfolios hold just 15-20 high-quality stocks with an average holding period of over 5 years. Wedgewood focuses exclusively on large-cap stocks in the U.S. market. Its investment process involves rigorous qualitative and quantitative analysis. Wedgewood’s reputation stems from its Small Cap Fund generating outstanding returns over 18 years. The fund outperformed its benchmark Russell 2000 index by over 13% annualized.
Value investing firms like Tweedy Browne, Davis Advisors, and Wedgewood Partners have consistently beaten market benchmarks. They are shining examples of the success of disciplined value investing based on fundamental research. Their long-term track records underscores the efficacy of the value approach in different market conditions.