Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor

Here are a few quotes from Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor by Seth A. Klarman. 

Seth Klarman is a value investor and Portfolio Manager of the investment partnership The Baupost Group. Founded in 1982, The Baupost Group now manages US$5.4 bn, his Baupost partnerships have averaged returns of nearly 20% annually since their inception [bio from GuruFocus]. 

Value investing is the strategy of investing in securities trading at an appreciable discount from their underlying value. 

Value investors have as a primary goal, the preservation of capital. 

Once you adopt a value-investment strategy any other investment behaviour starts to look like gambling. 

Value investors continually compare potential new investments with their current holdings in order to ensure that they own only the most undervalued opportunities available. 

Value investing is simple to understand but difficult to implement. 

The number of securities that should be owned to reduce portfolio risk to an acceptable level is not that great; as few as ten to fifteen different holdings usually suffice. 

My view is that an investor is better off knowing a lot about a few investments that knowing a little about each of a great number of holdings. 

Buying a partial position leaves reserves that permit investors to “average down” lowering their average cost per share, if prices decline. 

Here are a few links to other posts and an article about the book: 

• Value Investing: 3 Lessons from Seth Klarman’s “Margin of Safety”.. and 1 Value Investment Recommendation from Investing Tips & Opportunities.
• Margin of Safety by Seth Klarman from Value Vixen.
• Probabilistic Thinking from QUANTUM INVESTING LIFE.
• And a set of notes to Margin Of Safety by Ronald R. Redfield on The Motley Fool.