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Table of Contents 1 Omaha, 1988 69 John Spears by Michael O’Brien 73 David Winters 3 Behind the Lens: The Art of Michael O’Brien 77 Howard Marks by William Green 81 Donald Yacktman 5 Glimpses of Greatness by Hendrik Leber 85 Georg von Wyss 9 Irving Kahn 89 François-Marie Wojcik Photographs copyright © 2015 by Michael O’Brien Text copyright © 2015 by ACATIS Investment GmbH 13 Marty Whitman 93 Vincent Strauss All rights reserved Printed in Germany First edition, 2015 17 Charles Brandes 97 Bill Nygren Requests for permission to reproduce material from this work should be sent to: Permissions FinanzBuch Verlag 21 Thomas Gayner 101 Mario Gabelli Nymphenburger Straße 86 80636 München Germany info@finanzbuchverlag.de 25 Bruce Greenwald 105 Klaus Kaldemorgen Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbib- liografie; detailed bibliographic information is available online at http://d-nb.de. 29 Paul Tudor Jones 109 Thomas Braun © 2015 by FinanzBuch Verlag An imprint of Münchner Verlagsgruppe GmbH Nymphenburger Straße 86 33 Bill Miller 113 Jean-Marie Eveillard 80636 München Germany Tel.: +4989 651285-0 Fax: +4989 652096 37 Arnold Van Den Berg 117 Joel Greenblatt All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without 41 Thomas Russo 121 Bill Ackman the prior permission in writing of the publisher, nor be otherwise circulated in any form of binding or cover other than that in which it is published and without a similar condition including this condition being imposed on the subsequent purchaser. 45 Francisco García Paramés 125 Mason Hawkins Editing: William Green Copy editing: Dana Frank 49 Translation: Shelley Steinhorst Pat Dorsey 129 Frank Lingohr Printing house: CPI books GmbH, Leck Printed in Germany Print: 978-3-89879-924-9 53 Wallace Weitz 133 Francis Chou eBook PDF: 978-3-86248-761-5 eBook ePub, mobi: 978-3-86248-762-2 Further information is available at www.finanzbuchverlag.de 57 Isabel Levy 137 Charlie Munger Please visit our other publishing houses at www.muenchner-verlagsgruppe.de The typeface is Hoefler Text and Hoefler Titling, designed by Jonathan Hoefler, 61 Warren Buffett 141 Acknowledgments of Hoefler & Co. The book is printed on GardaPat (170g) paper. Book and jacket design by DJ Stout and Barrett Fry Pentagram, Austin, Texas 65 Mohnish Pabrai Table of Contents 1 Omaha, 1988 69 John Spears by Michael O’Brien 73 David Winters Thomas Braun 3 Behind the Lens: The Art of Michael O’Brien 77 Howard Marks by Gisela Baur by William Green 81 Donald Yacktman For years, an investment analyst named Thomas Braun going to inherit millions.” After graduating, he became Braun had generally liked investing in undervalued stocks, But he continues to go to the office each day in the small 5 Glimpses of Greatness demanded that Swiss companies change their opaque an investment analyst at a Swiss savings bank. He then but he lacked the theoretical foundation to be a committed village of Wilen on Lake Zurich. What drives him? “We by Hendrik Leber 85 Georg von Wyss accounting practices. He and a colleague had the gall maneuvered himself into a three-month internship with value investor. The influence of von Wyss would push him still want to outshine everybody.” The stock market offers to confront Switzerland’s close-knit business establishment various banks in New York, threatening to quit his job to focus much more systematically on cheap stocks. When Braun an ideal arena to prove himself. “I’m a freedom- 9 Irving Kahn 89 François-Marie Wojcik at a time when most of the nation’s public companies in Switzerland if he wasn’t allowed to go. their bank was sold, the two men launched their own firm, loving person and never liked being judged by someone Photographs didn’tcopyright release© 2015 by Michaelconsolidated O’Brien figures—an omission that On his return to Switzerland, he plunged into the stock along with a third partner, Erich Müller. Braun, von Wyss else’s criteria,” he says. “Here, I can measure up to my own Text copyright © 2015 by ACATIS Investment GmbH 13 Marty Whitman 93 Vincent Strauss All rights reservedleft them huge leeway to manipulate their declared market, leveraging his meager assets by investing on mar- & Müller opened in 1997. standards of performance.” Printed in Germanyprofits. The challenge by Braun and his colleague dr e w gin. Within two years, he earned a million francs—only to Braun’s study of value investing intensified, and he soon First edition, 2015 17 Charles Brandes 97 Bill Nygren a furious response. “We were horribly criticized, even lose it all in the crash of 1987. “I had to sell my investments became a devout convert. One formative experience in- Requests for permission to reproduce material from this work should be sent to: Permissions threatened,” he recalls. “We were told: ‘You guys are at a dreadful price just to pay off my loans,” he says. But volved a French-Swiss company, LEM Holding. He invested FinanzBuch Verlag 21 Thomas Gayner 101 Mario Gabelli Nymphenburgerdigging Straße 86the grave of the entire Swiss economy.’” he learned two important lessons: “I never again took out when it traded at less than a 30 percent discount to its 80636 München Germany Then, one day in the early 1990s, Braun and his colleague a loan. And because the blow was so psychologically brutal, intrinsic value, then watched the stock fall to a 40 percent 25 Bruce Greenwald 105 Klaus Kaldemorgen info@finanzbuchverlag.dewere summoned to Bern’s Bellevue Palace hotel, where the I perceive everything now as relatively harmless and find discount. Braun kept buying more as the stock dropped, Deutsche NationalbibliothekCFOs of Switzerland’s lists this publication largest in the Deutschecorporations Nationalbib- were waiting it easy to remain calm. That’s a great asset.” and he made a handsome profit—an early lesson in the liografie; detailed bibliographic information is available online at http://d-nb.de. 29 Paul Tudor Jones 109 for them. On that historic occasion, the companies finally In 1986, Braun joined Société Générale, where he re- benefits of requiring a big enough margin of safety. Thomas Braun © 2015 by FinanzBuch Verlag An imprint ofagreed Münchner to Verlagsgruppe introduce GmbH new accounting standards, renouncing searched stocks for private clients. “We just selected the BWM’s disciplined investment approach has generated Nymphenburger Straße 86 33 Bill Miller 113 Jean-Marie Eveillard 80636 Münchentheir obscure practices. “I’ve rarely experienced such an best bargains in the Swiss market and were very successful,” impressive results. The firm’s flagship Classic Global Germany incredible feeling in all my life,” says Braun, “particularly he recalls. Four years later, he moved to another bank, Equity Fund has returned 458 percent since 1997, versus 73 Tel.: +4989 651285-0 37 Fax: +4989 652096after all the years of hard work and having to stay strong Rüd, Blass & Cie, to head the research department. percentArnold for the MSCI Van World Den Index. Berg But it has not always 117 Joel Greenblatt All rights reserved.against No partsuch of thisopposition.” publication may be reproduced, stored In 1995, his boss there asked him to consider bringing been smooth sailing. In 2007, the fund lost 25 percent. The in a retrieval system, or transmitted, in any form or by any means, without 41 Thomas Russo 121 Bill Ackman the prior permission Braun—now in writing of thea partnerpublisher, nor and be otherwiseportfolio circulated manager at Braun, a friend’s nephew into his team. “It smelled of favoritism, following year, it fell a sickening 58 percent. “Three out of 30 in any form ofvon binding Wyss or cover & otherMüller than thatValue in which Investing it is published (BWM)—has and never and I was not enthusiastic,” says Braun. But his concerns of our portfolio favorites went bankrupt,” laments Braun. without a similar condition including this condition being imposed on the subsequent purchaser.gone with the flow. He’s not a member of any clubs. He’s not evaporated within minutes of meeting Georg von Wyss: 45“That Francisco still shames me today García and will Paraméshaunt me to my grave.” 125 Mason Hawkins Editing: Williameven Green comfortable hanging out with other value investors. “I recognized immediately that Georg would be able As a result, the firm’s investment process has become Copy editing: Dana Frank 49 Translation: ShelleyFor a Steinhorst contrarian stock picker like him, these antisocial ten- to show us some new things.” morePat stringent: Dorsey Every stock must now pass a stress test, 129 Frank Lingohr Printing house: CPI books GmbH, Leck Printed in Germanydencies are a virtue. and loan terms and conditions are painstakingly examined. Print: 978-3-89879-924-9 The son of a railway man, Braun was born in 1956 in 53Meanwhile, Wallace investors Weitz who stuck around enjoyed a 76 per- 133 Francis Chou eBook PDF: 978-3-86248-761-5 eBook ePub, Romanshorn,mobi: 978-3-86248-762-2 a town on Switzerland’s border with Germany. cent gain in 2009 and have long since recouped their losses. Further informationHe was is available fascinated at www.finanzbuchverlag.de by history but chose the more practical 57 Braun Isabel has done Levy well enough that he could retire now 137 Charlie Munger Please visit ourpath other of publishing studying houses economics at www.muenchner-verlagsgruppe.de at college, since he was “never and easily cover the cost of his relatively modest lifestyle. The typeface is Hoefler Text and Hoefler Titling, designed by Jonathan Hoefler, 61 Warren Buffett 141 Acknowledgments of Hoefler & Co.