72 The Business of Value Investingnews analysis on the state of the world; don ’ t rely on it to instruct
you as to where to allocate your capital.Imitation Is the Sincerest Form of Flattery
Unlike most other professions, where copying someone ’ s work or
using another ’ s data could be illegal, in investing there are no pen-
alties for copying others ’ ideas. In fact, seeing what other investors
are buying is the greatest and most effective starting point for an
effective search strategy. With thousands of publicly traded secu-
rities in the United States alone, it is an intelligent move to take
that large pool of stocks and shrink it down to those owned by the
most experienced and talented investors in the world. As far as I
am concerned, there is no new secret formula waiting to be discov-
ered in value investing, only the discovery of bargain investment
opportunities.
Fortunately, our search is aided by the existence of many
highly regarded value investors who have produced the long - term
numbers to back up their reputations. Some names that stand
out include Seth Klarman (the Baupost Group), Mason Hawkins
(Longleaf Funds), Bruce Berkowitz (Fairholme Funds), Mohnish
Pabrai (Pabrai Investment Funds), Marty Whitman (Third Avenue
Funds), and of course Warren Buffett and his partner Charles
Munger. These investors have been tried and tested over years and
have demonstrated an ability to outperform the markets over mean-
ingful periods of time. So why not begin your search for companies
by leaning on the shoulders of great men?Copying the Great One
In 2007, two professors published a study that analyzed the invest-
ment moves made by Warren Buffett between 1976 and 2000. 4
What they found was remarkable, not for the returns that Buffett
has produced (which many of us are already familiar with), but forCH005.indd 72CH005.indd 72 9/2/09 11:08:04 AM9/2/09 11:08:04 AM