- Seth Klarman discusses his newly released edition of Benjamin Graham and David Dodd’s “Security Analysis,” noting that there were significant changes over the past 15 years, perpetuating this “everything bubble” that precipitated increases in asset classes popularity. Klarman emphasizes the importance of maintaining a longer-term perspective and having a mechanism for determining value. Klarman, a value investor, notes that the academic definition of value is to buy the stock that is cheapest by the numbers, yet Klarman stated that Graham and Dodd were talking about earnings power and growth possibilities in a business, even if hard to determine. Klarman believes all stocks may hold value, but all stocks could also potentially be overvalued.
- Investors need to take into account the longer-term prospects for a business. He notes that in today’s market, investors have become more sophisticated about thinking about what causes a business to be resilient to competitive threats. Additionally, Klarman talks about how investors need edge to be successful, and how his company has become more focused on private investments over time. Klarman emphasizes the importance of finding opportunities in around the edges of what other people are doing, as there may still be inefficiencies in certain private markets that can be exploited if one remains patient.
Klarman/Baupost Holdings