San Diego NEW PRODUCTS : Successful Investment Manager Updates ‘Bible’ of His Industry
Literally hundreds of “how to” investment books are published each year, many by dubiously qualified authors. But a new guide by Del Mar-based investment manager Charles Brandes could have a legitimate claim to investors’ attention.
Brandes, whose book entitled “Value Investing Today” was published in July by Dow Jones-Irwin, knows what he is writing about. Barron’s, the financial news weekly, recently rated Brandes Investment Management as the seventh best global equity management firm--based on a 26% increase in value of funds managed in 1988.
Brandes, whose funds under management now total $174 million, up from $130 million on Dec. 31, also placed 17th best in Barron’s five-year performance survey.
The 46-year-old Pittsburgh native decided to write the book as a sort of update of “Intelligent Investor,” one of the two books he describes as “bibles of the investment industry” that were co-written by Benjamin Graham. A former La Jolla resident who died in 1976, Graham and David Dodd co-authored Brandes’ other bible, “Security Analysis.”
After making Graham’s acquaintance in the early 1970s, Brandes adopted his “value investing philosophy completely.” Greatly simplified, that approach is to never pay more than “two thirds of the intrinsic value of any stock. That gives you a margin of safety if problems arise.”
Brandes said he learned from Graham always to “question conventional Wall Street thinking. He was always thinking through from a fundamental standpoint what was going on, what things were really worth, what you should pay for them,” Brandes said.
The most difficult part of “value investing” is the discipline not to overpay for stocks, according to the Graham formula, and the patience to wait to sell until the market recognizes the stocks’ value, Brandes said.
In 1974, at the tender age of 31, Brandes figured the time was right to quit the San Diego retail stock brokerage where he was employed because the stock market was then at a cyclical low and cheap stocks abounded. So, with only about $300,000 in funds committed, he hung out his shingle in Del Mar, where he has been ever since.
Finding cheap stocks is always difficult, particularly in the current bull stock market. Brandes and his staff of four investment managers scan data bases and corporate financial statements of stocks the world over to make buys. His firm charges 1% of funds managed as an annual fee and does not accept accounts of less than $400,000.
His book has sold about 4,000 copies so far, a respectable showing, Brandes said. He said he wrote the book mainly with the idea of better educating his 500 clients.
