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Value Investing appears simple at first glance - however, the devil is in the detail: Books on Value Investing have a circulation of several 100 thousand p.a. - but the number of successful value investors who beat their benchmark is probably less than 50. At FORUM, we as a team read about 20 - 30 books on the subject of investing, the following books we found most worth reading.
The book analyzes approximately 20 companies that the hedge fund AKO Capital had or has in its portfolio. Its founder, Nikolai Tangen, now heads the Norwegian Government Pension Fund. The company analyses provide an exceptional insight into the foundations of long-term profitability. AKO apparently has a wealth of concepts for capturing and describing the quality of businesses. The reports also show an extraordinary effort to identify the specific core of a business - which is a welcome departure from standard checklists such as SWOT analyses. A must-read.
I view the book as the entrepreneurial vision of a person whose agenda in life is that anything can be improved if you take an engineer´s perspective on it. Key aspects are a) Facts, facts, facts, root causes, and objectivity b) No tolerance for opinions, soft judgements or anything superficial. His credo is to get to the root cause of anything, then apply the consequences without any mercy for any humans around. c) Not allowing for any tolerance when something is not moving according to this view of the world. At the meta-level you can argue that any progress to mankind since the age of enlightenment around 1600 – aka the renaissance – has come from applying scientific principles to questions which were before viewed by opinions and no texposed to rigorous analysis. Other managers have preached similar credos a) Alfred Sloan at GM b) Warren Buffett at Berkshire c) And the new digital organizations appear to be run on these principles. Thus it fits into this sequence of evolution and other builders of organizations. What you can only sense between the lines is the absolute rigor with which Dalio has applied these principles in the organization: he moves like a robot, no emotions, no slackening – just a“social engineer with a mission”. This is what I take personally out of the book: a) Many of the points made appear generic – we know them b) He reminds us that we have to apply them with absolute consequence – cutting through any resistance if needed.
In the book, the founder of the Koch Group describes his central corporate principles. The Koch Group is the largest private group of companies in the USA, and it essentially only came into being with the current generation. Like many management books, the central principles are listed in many textbooks, but the special thing is always the consistency with which these principles are thought through to the end and implemented. Charles Koch is a very radical thinker, and his comments on leadership and accountability are particularly noteworthy. Negative: Charles Koch is so capitalist that in some aspects he has views that are not scientifically tenable, e.g. in the area of ecological sustainability. This aspect can be read in the book "Kochland" by Christopher Leonard.
In a brilliantly researched analysis, the author shows how an increasing number of sectors in the USA are becoming so concentrated that the remaining providers are able to use their market power to raise prices and achieve above-average returns on equity. Very good learning about the macroeconomic aspects of competition policy, but also the perspective of companies. In the second part of the book, Philippon shows why the political system in the USA makes it practically impossible for non-millionaires to obtain representation in either of the two chambers of the USA - the USA is increasingly becoming a plutocracy.
I have included this book in the reading section because it really stands out among the countless guides to efficient time management and work: it develops 7 principles of successful people and analyzes each one with a lot of facts and depth. The discussion is sophisticated and differentiated, and does not remain at the "how to" level of many American guidebooks. Probably the most important principle is "do less, then obsess" - behind this is the idea that you should fully focus on the tasks that create value - even if this means that other, more administrative tasks suffer. I found it refreshing to read such principles, the routine of admin tasks is so great that you need a "mental counterpoint" - and Hansen fulfills this role excellently.