The 7 Superinvestors Featured in “Superinvestors of Graham & Doddsville” by Warren Buffet

This article first appeared in https://themosspiglets.com on 8 Dec 2022.

I will be discussing the individual superinvestors mentioned in the article “The Superinvestors of Graham-and-Doddsville,”. This article was published in 1984 by Warren Buffett in the Hermes Society Newsletter.

Here is a link to the article:

https://www8.gsb.columbia.edu/articles/columbia-business/superinvestors

Summary

“The Superinvestors of Graham-and-Doddsville” was written by Warren Buffett in 1984. In the article, Buffett discusses the value investing philosophy of Benjamin Graham and David Dodd. He also discusses a group of investors who were able to achieve exceptional returns by following this philosophy.

This group of investors were able to outperform the stock market by following the principles of value investing. Value investing was first outlined by Benjamin Graham and David Dodd in their book “Security Analysis.” These principles include looking for companies with strong fundamental characteristics, such as a solid balance sheet, consistent earnings, and a reasonable price relative to their intrinsic value.

According to Graham and Dodd, the key to successful investing is to buy stocks that are trading at a significant discount to their intrinsic value. This means looking for companies that are undervalued by the market. Buy their stocks at a price that is lower than the company’s true worth. This allows investors to potentially earn a high return on their investment when the market eventually realizes the true value of the company and the stock price rises.

Buffett argues that this approach is not only effective, but also relatively simple and accessible to anyone who is willing to put in the time and effort to learn about it. He also points out that many successful investors, including himself, have used this approach to achieve exceptional returns.

Buffett also provides some practical advice for those who are interested in following this approach. He advises investors to focus on the long-term potential of a company. Do not try to predict short-term fluctuations in the market. He also advises investors to be patient and not to be swayed by the hype or hype and price swings of the stock market.

The Superinvestors

To support his argument, Buffett discusses a group of investors known as the “Graham-and-Doddsville” investors. These investors, who included himself and several other successful investors, were able to achieve significantly higher returns than the overall market by following the principles of value investing.

For example, Buffett notes that the average return for the Graham-and-Doddsville investors was around 20% per year, compared to an average return of around 11% for the overall market. This means that the Graham-and-Doddsville investors were able to outperform the market by a significant margin.

The Superinvestors mentioned in the article include Warren Buffett, Walter Schloss, Charles Munger, Tom Knapp, and Bill Ruane. These individuals have each achieved remarkable success by following the principles of value investing and applying them to their own investment strategies.

1 — Warren Buffet

Warren Buffett is perhaps the most well-known of the superinvestors mentioned in the article. He is the chairman and CEO of Berkshire Hathaway, a conglomerate holding company that owns a diverse range of businesses, including insurance, utilities, and retail. Buffett is widely considered to be one of the greatest investors of all time, with a track record of consistently outperforming the stock market.

Buffett first learned about the principles of value investing from his mentor, Benjamin Graham, who taught him the importance of looking for companies with strong fundamental characteristics. He later applied these principles to his own investment strategy, which focuses on buying companies with a long history of profitability and holding onto them for the long term.

2 — Walter Schloss

Walter Schloss is another superinvestor mentioned in the article. Like Buffett, he was a student of Benjamin Graham and learned the principles of value investing from him. He went on to establish his own investment firm, Walter J. Schloss & Co., which focused on buying undervalued stocks and holding onto them until they reached their intrinsic value.

Schloss was known for his disciplined approach to investing, which involved thorough research and careful analysis of potential investments. He was able to achieve remarkable success with this strategy, outperforming the stock market by a wide margin over the course of his career.

3 — Charles Munger

Charles Munger is another well-known superinvestor mentioned in the article. He is the vice chairman of Berkshire Hathaway and has been a key advisor to Warren Buffett for many years. Munger is a firm believer in the principles of value investing and has applied them to his own investment strategy, which focuses on buying high-quality businesses at a reasonable price and holding onto them for the long term.

Munger is known for his focus on the “big picture” when it comes to investing, and for his ability to think deeply about the underlying principles of value investing. He is also known for his ability to identify businesses with strong competitive advantages and for his willingness to hold onto his investments for the long term.

4 — Tom Knapp

Tom Knapp is another superinvestor mentioned in the article. He is the founder and managing partner of Tweedy, Browne, a New York-based investment firm that focuses on value investing. Knapp is known for his thorough research and careful analysis of potential investments, as well as his willingness to take a contrarian approach when necessary.

Knapp’s investment strategy involves looking for companies with strong fundamental characteristics and holding onto them for the long term. He is also known for his ability to identify undervalued stocks and for his willingness to hold onto them until they reach their intrinsic value.

5 — Rick Guerin

It’s a little-known fact that Warren Buffett and Charlie Munger had another partner back in the 1970s named Rick Guerin. But his portfolio blew up when he overleveraged during the 70s downturn and had to sell his Berkshire Hathaway stake.

https://www.lutz.us/nobody-talks-about-rick-anymore/

Guerin began his career in the finance industry in the 1950s. He worked as a stockbroker for a number of different firms. In the 1960s, he co-founded Pacific Partners, an investment firm that focused on the principles of value investing. Over the years, Guerin and his partners at Pacific Partners were able to achieve significant success using this approach.

In his 1984 article, Buffett describes Guerin as a “truly outstanding investor” who was able to achieve exceptional returns by following the principles of value investing. According to Buffett, Guerin was able to outperform the overall market by a wide margin, achieving an average return of around 20% per year.

Guerin has made significant contributions to a number of charitable organizations. This includes the Guerin Family Foundation, which supports education and healthcare initiatives.

Overall, Rick Guerin is a well-known and highly respected figure in the world of finance and investing. His success as a value investor has earned him a reputation as a “superinvestor,”,

6- Stan Perlmeter

7 — Bill Ruane

Bill Ruane is the final superinvestor mentioned in the article. He is the founder and managing partner of Sequoia Fund.

Ruane is known for his disciplined approach to investing, which involves thorough research and careful analysis of potential investments. Like the other superinvestors mentioned in the article, Ruane is a firm believer in the principles of value investing and has applied them to his own investment strategy.

One of the key principles of value investing that Ruane follows is the idea of “margin of safety,” which means buying stocks at a significant discount to their intrinsic value. This allows him to reduce the risk of his investments and increase the potential for returns.

Ruane is also known for his willingness to hold onto his investments for the long term, even if they may not be performing well in the short term. This patience and discipline has allowed him to achieve remarkable success as an investor and outperform the stock market over the long term.

Conclusion

Overall, the individual superinvestors mentioned in the article “The Superinvestors of Graham-and-Doddsville” are all successful investors who have achieved remarkable results by following the principles of value investing. These individuals have each applied the principles of value investing in their own unique ways. They all share a common belief in the importance of looking for companies with strong fundamental characteristics and holding onto them for the long term.

In conclusion, the superinvestors mentioned in the article provide valuable insights into the world of finance and offer valuable lessons for investors of all levels. By following the principles of value investing and applying them to their own investment strategies, these individua