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 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 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, 61 141 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 Michael consolidated 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 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 Deutsche corporations 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 & other Müller 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. The book is printed on GardaPat (170g) paper.

Book and jacket design by DJ Stout and Barrett Fry Pentagram, Austin, Texas 65 Mohnish Pabrai

111 THE GREAT MINDS OF INVESTING THE GREAT MINDS OF INVESTING 112 Georg von Wyss Photographed September 4, 2014 Frankfurt, Germany

OPINIONS FROM OUTSIDERS ARE NOT WELCOME. “WE LIKE TO DO EVERYTHING OURSELVES. WHILE OTHERS MAY BE SINGING A CHORUS OF HOSANNAS, WE PREFER TO PRAY ALONE.”

85 THE GREAT MINDS OF INVESTING THE GREAT MINDS OF INVESTING 86 Georg von Wyss Photographed September 4, 2014 Frankfurt, Germany Thomas Braun Photographed September 4, 2014 Frankfurt, Germany

BRAUN INVESTED ON MARGIN AND MADE A MILLION FRANCS—ONLY TO

OPINIONSLOSE FROM OUTSIDERS IT ARE NOT ALL WELCOME. “WEIN THE LIKE CRASH OF TO �987. “I DO HAD TO EVERYTHING SELL MY INVESTMENTS AT A DREADFUL PRICE OURSELVES.JUST TO PAY OFF MY LOANS.” BUT HE LEARNED WHILETWO OTHERS IMPORTANT MAY BE SINGING LESSONS: A CHORUS OF “I NEVER AGAIN TOOK OUT A LOAN. AND HOSANNAS,BECAUSE THE BLOW WAS SO WEPSYCHOLOGICALLY PREFER TO PRAY BRUTAL, I PERCEIVE EVERYTHING NOW AS RELATIVELY ALONE.HARMLESS” AND FIND IT EASY TO REMAIN CALM.”

109 THE GREAT MINDS OF INVESTING THE GREAT MINDS OF INVESTING 110

85 THE GREAT MINDS OF INVESTING THE GREAT MINDS OF INVESTING 86 Georg von Wyss

by Gisela Baur

Georg von Wyss owes his career as a value investor Thanks to this background, von Wyss is equally com- way,” he says, and “everyone has easy access to the work to chance. It was 1992, and he was working as a young fortable in both countries. So he quit his banking job of the others.” The database also includes a watch list of analyst at Bank Vontobel, writing a report about Switzer- in Switzerland and headed back to the U.S. to work for potential investments, with prices constantly updated. land and the European Union that was “probably not worth Michael Price, one of America’s most vaunted value investors. “We never have to work blind. That’s incredibly reassuring— the money the bank paid me for it.” A colleague asked While von Wyss could easily have settled in the States, his especially during a crash.” him to help out by attending a corporate presentation in- wife agreed to stay there only “for a couple of years on the Braun and von Wyss make the final decisions on which stead. So he borrowed his aunt’s car and drove to the event condition that we return right after.” stocks make it into the portfolio. “It may sound a bit in a suburb of Lausanne. In 1995, they flew home to Zurich, where von Wyss landed corny,” says von Wyss, “but we know that we can rely on The company in question was Nokia-Maillefer, a sub- a job at a Swiss bank, Rüd, Blass & Cie. It was there that each other.” They sit together in a big room, along with sidiary of the Nokia Group. Skimming through its finan- he met Thomas Braun, his future business partner. Braun Müller and their five employees. The goal is to promote cial statements, he noticed that the current assets were recalls: “I noticed Georg’s keenness to be an analyst right a healthy exchange of information. “It’s important that worth more than the company’s entire market value. away…. He knew exactly what he wanted, and he confronted we not only profit from each other but can also benefit He realized instantly that this was one of those rare me immediately with his deep-value approach.” from constructive criticism.” bargains he had read about in ’s book Two years later, they founded Braun, von Wyss & Müller On the other hand, opinions from outsiders are not : “I thought, wow, this is the net-net Value Investing with a business partner, Erich Müller. Since welcome. “We like to do everything ourselves,” says von situation Graham wrote about—probably one of the last in then, the firm has generated strong returns by importing Wyss. “While others may be singing a chorus of hosannas, Switzerland.” There was something thrilling to von Wyss the disciplined value approach that von Wyss had learned we prefer to pray alone.” Nothing gives him greater plea- about the idea that you could buy valuable assets for next in America. Their Classic Global Equity Fund, which cur- sure than when his team buys an out-of-favor stock and to nothing, if only you knew what you were doing. All of rently owns about 30 stocks from around the world, has is subsequently proven right because they were “smarter a sudden, the future seemed clear. “Value is my thing,” he averaged 10.4 percent a year since 1997, versus 3.2 percent or more aggressive or simply did the research a bit better” decided. “That’s what I want to do from now on.” a year for the MSCI World Index. than the competition. Switzerland was not exactly a hotbed of value investing. But According to von Wyss, one reason for this success is the Over the years, this small firm has earned an outsized von Wyss had the advantage of an international upbringing. elaborate database system their investment team uses reputation as one of Europe’s leading practitioners of value He had lived in Zurich until the age of seven and then to coordinate the research process. He takes great pride investing. But von Wyss, now 51, is not about to rest on his moved to Michigan, where his father worked in banking. in the database, which incorporates everything from stan- laurels. As he sees it, he and Braun are like cyclists in the As a result, von Wyss spent much of his youth in the U.S. dardized spreadsheets to checklists to corporate earnings Tour de France who are fighting their way up the moun- and went to Columbia University, earning an undergraduate estimates. “We are able to work in an extremely structured tain, not far from the front of the pack. “They know they degree in economics and a master’s in English and com- are among the best in the world,” he says. “But somewhere parative literature. After that, he received an MBA from up front, there are still a couple of other cyclists—and Dartmouth, then spent a couple of years as a financial they’ve got to catch up with them.” journalist before realizing that “I would really much rather be an analyst.”

87 THE GREAT MINDS OF INVESTING THE GREAT MINDS OF INVESTING 88 Georg von Wyss by Gisela Baur

Georg von Wyss owes his career as a value investor Thanks to this background, von Wyss is equally com- way,” he says, and “everyone has easy access to the work to chance. It was 1992, and he was working as a young fortable in both countries. So he quit his banking job of the others.” The database also includes a watch list of analyst at Bank Vontobel, writing a report about Switzer- in Switzerland and headed back to the U.S. to work for potential investments, with prices constantly updated. land and the European Union that was “probably not worth Michael Price, one of America’s most vaunted value investors. “We never have to work blind. That’s incredibly reassuring— the money the bank paid me for it.” A colleague asked While von Wyss could easily have settled in the States, his especially during a crash.” him to help out by attending a corporate presentation in- wife agreed to stay there only “for a couple of years on the Braun and von Wyss make the final decisions on which stead. So he borrowed his aunt’s car and drove to the event condition that we return right after.” stocks make it into the portfolio. “It may sound a bit in a suburb of Lausanne. In 1995, they flew home to Zurich, where von Wyss landed corny,” says von Wyss, “but we know that we can rely on The company in question was Nokia-Maillefer, a sub- a job at a Swiss bank, Rüd, Blass & Cie. It was there that each other.” They sit together in a big room, along with sidiary of the Nokia Group. Skimming through its finan- he met Thomas Braun, his future business partner. Braun Müller and their five employees. The goal is to promote cial statements, he noticed that the current assets were recalls: “I noticed Georg’s keenness to be an analyst right a healthy exchange of information. “It’s important that worth more than the company’s entire market value. away…. He knew exactly what he wanted, and he confronted we not only profit from each other but can also benefit He realized instantly that this was one of those rare me immediately with his deep-value approach.” from constructive criticism.” bargains he had read about in Benjamin Graham’s book Two years later, they founded Braun, von Wyss & Müller On the other hand, opinions from outsiders are not The Intelligent Investor: “I thought, wow, this is the net-net Value Investing with a business partner, Erich Müller. Since welcome. “We like to do everything ourselves,” says von situation Graham wrote about—probably one of the last in then, the firm has generated strong returns by importing Wyss. “While others may be singing a chorus of hosannas, Switzerland.” There was something thrilling to von Wyss the disciplined value approach that von Wyss had learned we prefer to pray alone.” Nothing gives him greater plea- about the idea that you could buy valuable assets for next in America. Their Classic Global Equity Fund, which cur- sure than when his team buys an out-of-favor stock and to nothing, if only you knew what you were doing. All of rently owns about 30 stocks from around the world, has is subsequently proven right because they were “smarter a sudden, the future seemed clear. “Value is my thing,” he averaged 10.4 percent a year since 1997, versus 3.2 percent or more aggressive or simply did the research a bit better” decided. “That’s what I want to do from now on.” a year for the MSCI World Index. than the competition. Switzerland was not exactly a hotbed of value investing. But According to von Wyss, one reason for this success is the Over the years, this small firm has earned an outsized von Wyss had the advantage of an international upbringing. elaborate database system their investment team uses reputation as one of Europe’s leading practitioners of value He had lived in Zurich until the age of seven and then to coordinate the research process. He takes great pride investing. But von Wyss, now 51, is not about to rest on his moved to Michigan, where his father worked in banking. in the database, which incorporates everything from stan- laurels. As he sees it, he and Braun are like cyclists in the As a result, von Wyss spent much of his youth in the U.S. dardized spreadsheets to checklists to corporate earnings Tour de France who are fighting their way up the moun- and went to Columbia University, earning an undergraduate estimates. “We are able to work in an extremely structured tain, not far from the front of the pack. “They know they degree in economics and a master’s in English and com- are among the best in the world,” he says. “But somewhere parative literature. After that, he received an MBA from up front, there are still a couple of other cyclists—and Dartmouth, then spent a couple of years as a financial they’ve got to catch up with them.” journalist before realizing that “I would really much rather be an analyst.”

87 THE GREAT MINDS OF INVESTING THE GREAT MINDS OF INVESTING 88 Thomas Braun Photographed September 4, 2014 Frankfurt, Germany

BRAUN INVESTED ON MARGIN AND MADE A MILLION FRANCS—ONLY TO LOSE IT ALL IN THE CRASH OF �987. “I HAD TO SELL MY INVESTMENTS AT

A DREADFUL PRICE JUST TO PAY OFF MY LOANS.” BUT HE LEARNED TWO IMPORTANT LESSONS: “I NEVER AGAIN TOOK OUT A LOAN. AND BECAUSE THE BLOW WAS SO PSYCHOLOGICALLY BRUTAL, I PERCEIVE EVERYTHING NOW AS RELATIVELY HARMLESS AND FIND IT EASY TO REMAIN CALM.”

109 THE GREAT MINDS OF INVESTING THE GREAT MINDS OF INVESTING 110 Thomas Braun Photographed September 4, 2014 Frankfurt, Germany Georg von Wyss Photographed September 4, 2014 Frankfurt, Germany BRAUN INVESTED ON MARGIN AND MADE A MILLION FRANCS—ONLY TO LOSE IT ALL IN THEOPINIONS CRASH OF FROM �987. OUTSIDERS“I HAD TO SELL ARE MY NOT INVESTMENTS WELCOME. AT “WE LIKE TO DO EVERYTHING A DREADFUL PRICE JUST TO PAY OFF MY LOANS.” BUT HE LEARNED TWOOURSELVES. IMPORTANT LESSONS: WHILE OTHERS MAY BE SINGING A CHORUS OF “I NEVER AGAIN TOOK OUT A LOAN. AND BECAUSEHOSANNAS, THE BLOW WAS SO PSYCHOLOGICALLYWE PREFER TO PRAY BRUTAL, I PERCEIVE EVERYTHING NOW AS RELATIVELYALONE.” HARMLESS AND FIND IT EASY TO REMAIN CALM.”

85 THE GREAT MINDS OF INVESTING THE GREAT MINDS OF INVESTING 86

109 THE GREAT MINDS OF INVESTING THE GREAT MINDS OF INVESTING 110 Thomas Braun

by Gisela Baur

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 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 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- 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 didn’t release consolidated 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 left them huge leeway to manipulate their declared market, leveraging his meager assets by investing on mar- & Müller opened in 1997. standards of performance.” profits. 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 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- 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 digging the 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 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 were 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, CFOs of Switzerland’s largest corporations were waiting it easy to remain calm. That’s a great asset.” and he made a handsome profit—an early lesson in the 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. agreed to introduce new accounting standards, renouncing searched stocks for private clients. “We just selected the BWM’s disciplined investment approach has generated their 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 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 after all the years of hard work and having to stay strong Rüd, Blass & Cie, to head the research department. percent for the MSCI World Index. But it has not always against such opposition.” In 1995, his boss there asked him to consider bringing been smooth sailing. In 2007, the fund lost 25 percent. The Braun—now a partner and portfolio 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 von Wyss & Müller Value Investing (BWM)—has never and I was not enthusiastic,” says Braun. But his concerns of our portfolio favorites went bankrupt,” laments Braun. gone with the flow. He’s not a member of any clubs. He’s not evaporated within minutes of meeting Georg von Wyss: “That still shames me today and will haunt me to my grave.” even 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 For a contrarian stock picker like him, these antisocial ten- to show us some new things.” more stringent: Every stock must now pass a stress test, dencies are a virtue. and loan terms and conditions are painstakingly examined. The son of a railway man, Braun was born in 1956 in Meanwhile, investors who stuck around enjoyed a 76 per- Romanshorn, a town on Switzerland’s border with Germany. cent gain in 2009 and have long since recouped their losses. He was fascinated by history but chose the more practical Braun has done well enough that he could retire now path of studying economics at college, since he was “never and easily cover the cost of his relatively modest lifestyle.

111 THE GREAT MINDS OF INVESTING THE GREAT MINDS OF INVESTING 112 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 Michael consolidated 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 Deutsche corporations 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 & other Müller 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. The book is printed on GardaPat (170g) paper.

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111 THE GREAT MINDS OF INVESTING THE GREAT MINDS OF INVESTING 112 Asset Manager

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