The One Thing All Value Investors Can Do To Get You Halfway Home – Irving Kahn

One of our favorite value investors here at The Acquirer’s Multiple is Irving Kahn. Kahn was the Chairman at Kahn Brothers Group which he founded in 1978. He began his career in the value investing business shortly before the stock market crash of 1929, and, in the 1930s, he served as Benjamin Graham’s teaching assistant at Columbia Business School.

The Kahn Brothers’ investment philosophy evolved from Graham’s original “discount to net asset purchase” model into a contrarian value strategy focusing on margin of safety and capital appreciation over long periods of time.

One of the best interviews with the Kahn brothers was with the Ivey Value Investing Class in 2005 and there’s one part in particular that encapsulates the mindset required to be a successful value investor. Here’s an excerpt from that interview:

25.57 The only thing I can say is we maintain a really strict contrarian approach. So if something is very popular and everybody loves it and we’re buying it we have to say to ourselves what are we doing wrong here. Because I’d say half of the price of a common stock is ‘fashion’ basically so what we’re doing is we’re buying long skirts at the thrift shop when mini skirts are in favor. So we’re buying the long skirts for a dollar or two and then waiting till long skirts come back into Saks and if you can do that you’re halfway home you know you’re almost halfway home if you can just stick to being a contrarian.