Kyle Caldwell: 2022 is a year that most investors will want to forget. Your fund, it was a tough year. It was down 23% in 2022. Was this primarily down to the macro rather than the micro? Also, loyalty bonuses received by overseas investors, companies and charities are not required to be paid with the deduction of tax. Therefore, if you are an overseas investor, or you represent a company or charity please let us know if you would like your loyalty bonuses paid without the deduction of an amount equivalent to the basic rate tax. Graham was an absolute pioneer in the field of value investing, and Warren Buffett soaked up all of his knowledge and started applying this strategy himself. At least, until Buffett's brilliant business partner Charlie Munger convinced him that it is more important to buy a good business than a cheap business. If you desire to have a real increase in your purchasing power, then it is necessary that the return on your wealth be at least equal to the effects of inflation and taxation." Buffettology Don't believe it? Ask people you know why they chose to invest in a particular mutual fund and they will more than likely tell you it was because the fund was ranked as a top performer. The nature of the mutual fund beast influences a lot of very smart people into playing a short-term game with enormous amounts of capital. No matter what fund managers' personal convictions may be, producing the best short-term results possible is the way to keep their job.

What you will find in this book is what I have found to be difficult to find elsewhere. This book essentially combines the qualitative investment philosophy that Warren talks about a great deal about publicly with the quantitive aspects he rarely talks about directly. And it does a pretty good job of combining these two worlds. Kyle Caldwell, collectives editor at interactive investor: Hello and welcome to our latest Insider Interview . Today in the studio I have with me Keith Ashworth-Lord, fund manager of the CFP SDL UK Buffettology fund. Keith, thanks for coming in today. I have to say, Ben Graham had a lot to learn as an investor. His ideas of how to value companies were all shaped by how the Great Crash and the Depression almost destroyed him, and he was always a little afraid of what the market can do. It left him with an aftermath of fear for the rest of his life, and all his methods were designed to keep that at bay. Keith Ashworth-Lord, fund manager of the CFP SDL UK Buffettology fund: Thanks for inviting me, Kyle.

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So what is the main characteristic of a wonderful business? The book says they are like toll bridges: you have to cross them and it costs you a fee each time. Some examples are credit card companies, Google AdWords, and brand name consumer products shops have to carry, like Coca-Cola. Tax rules can change and benefits depend on individual circumstances. Please remember loyalty bonuses received on funds held in the Vantage ISA or Vantage SIPP are exempt from tax. If loyalty bonuses are taxable then the value of our ongoing saving to you could be reduced, depending on the rate of tax you pay. The below table gives an indication of how this may affect you.

I had also read by then a couple of other books from Mary Buffett (The Oracle’s ex-daughter in law, his son’s Peter ex-wife). She wrote several. This one will remind you, that when buying great businesses, it’s all about having a durable competitive advantage, a long product life ahead, with little change, little disruption probability, little capex requirement, so in other words tons of free cash flow. If you can buy this business when the price is fair or even better, when it’s cheap, then you never need to sell. There are dozens of books written on the topic of value investing, and many even claim to reveal the secrets that made superinvestor Warren Buffett billions of dollars. David Clark and Mary Buffett's bestselling book Buffettology , as the name suggests, belongs to the latter category, but the reason it stands out is that it actually delivers on its promise.We keep a very wary eye on margin development because if you're growing you should be improving your margins. And just to give you the measure, I mean the average gross margin in Buffettology is 58%, and the average operating margin is 22%, so well above what the market averages are. The main author – Mary Buffett is the former spouse of one of Warren Buffett’s sons. Nothing like making a little bread off the ex-father-in-law’s name… Warren Buffett does not calculate the intrinsic value and then buys at half that price. Instead, he calculates the Expected Annual Compounding Rate of Return , compares it with other available investments, and buys the best one. Excellent businesses are often industry leaders and tend to have low debt levels, large cash flows, a strong brand name, low maintenance & running costs, high quality products & services, an increasing book value, strong earnings, shareholder-friendly management, and a consumer monopoly.

The discussion of Warren's qualitative approach is nothing new if you've heard any of Warren's talks or if you've read any of his shareholder letters. I think some of the phrases might have been lifted straight from the letters. Keith Ashworth-Lord: Very much so. What you were seeing there was a contraction of price-to-earnings (P/E) multiples on the investee companies that we own. And just to prove that point, 23 of our 27 companies in 2022 reported earnings or trading statements that were in line with expectations or even better than expectations. But of those 27 companies, 22 of them finished the year with their share prices down and in some cases down quite a lot. So, I can't stress really too much that the operating performance of the companies is absolutely up to scratch. And it's been purely a market phenomenon. This rotation, so-called rotation into value, which has affected the multiples that the market accords our companies. To be able to determine your rate of return, earnings and profitability should not only be above-average, but also predictable . Keith Ashworth-Lord: Very rarely. I mean, our portfolio turnover currently, if you exclude where we've had to sell things, say, for meeting redemptions or whatever, it's currently 7.5%, and that's high by historic standards. So no, we don't chop and change the fund. Like Buffett, our ideal holding period is forever. Any administrative or dealing enquiries about the Fund should be directed to the ACD’s appointed registrar on 0330 123 3739 (UK) or +44 (0)20 3975 1021 (international).

Keith Ashworth-Lord: Yes, it's a very disciplined process. We start off looking for businesses with an economic moat, which effectively means they've got barriers to entry and they've got pricing power. And the way we go about it is we analyse the growth potential of the companies in their markets, the growth potential of the markets themselves. In a Forbes article, which the book quotes, Charlie Munger summarized Berkshire Hathaway's strategy as follows: In some cases the ongoing savings are provided by our loyalty bonus. Loyalty bonuses are tax-free in an ISA or SIPP. However, they may be The intrinsic value of an investment is the projected annual compounding rate of the return the investment will produce.

We believe all loyalty bonuses are tax-free and we are challenging HMRC's interpretation. However, while we make this challenge we are paying loyalty bonuses within the Vantage Fund & Share Account net of an amount equivalent to the basic rate tax. If we are successful in our challenge we will return this money to clients. If we are unsuccessful we will use the money to pay over any amounts due to HMRC. If you are a beginner that’s a great book but if you have read quite a bit already on value investing like I did, then that’s the usual stuff that you already know. Nevertheless, this book had some impact on me. Since it was written in 1999, already 18 years ago, it made me realize that on the topic of value investing, everything has already been written many times over and since many years already. Without some predictability of future earnings any calculation of future value is mere speculation.

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First determine what you want to own, then wait for a good price. The price you pay determines your rate of return. In addition, individuals involved in the production of investment articles are subject to a personal account dealing restriction, which prevents them from placing a transaction in the specified instrument(s) for a period before and for five working days after such publication. This is to avoid personal interests conflicting with the interests of the recipients of those investment articles. With the help of Munger, Buffett seriously improved upon Graham. The key realization was that if you only focus on getting something for the cheapest possible price, you will end up with crappy companies in your portfolio which never realize their value, or even worse, see their value decline over time, because many of these cheap companies are cheap for a good reason! Timeless investing strategies for any economy—in this step-by-step guide, you will learn the formula Warren Buffet used to succeed. In the world of investing, the name Warren Buffett is synonymous with success and prosperity—now you can learn how Warren Buffett did it and how you can, too.