Tweedy, Browne: “What Has Worked in Investing”
by Wayne A. Thorp, CFA
Many individual investors embody value investing—Benjamin Graham and Warren Buffett immediately come to mind. Among investment management firms, perhaps none is as devoted a follower of the principles of value investing as Tweedy, Browne Company.
In his book “Smarter Stock Picking” (FT Press, 2010), David Stevenson wrote: “Graham may be the patron saint of most value-based investors, but it’s Tweedy, Browne who are the Jesuits—the brains behind the scene who bother to work it all out and put it into practice.”
In this article
- The “What Has Worked” Criteria
- Assets Bought Cheap
- Earnings Bought Cheap
- Other Characteristics
- Investing With the Inner Circle
- Stocks Price Declines
- Small-Cap Stocks
- Building a Stock Screen
- Profile of Passing Companies
- Stocks on the List
- Conclusion
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In 1992, Tweedy, Browne published “What Has Worked in Investing: Studies of Investment Approaches and Characteristics Associated With Exceptional Returns,” a paper outlining many of the key characteristics of their own long-term investment portfolios. This article, which was revised in 2009, is available for free from the Tweedy, Browne website: www.tweedy.com/resources/library_docs/papers/WhatHasWorkedInInvesting.pdf.
In this article we discuss the characteristics Tweedy, Browne looks for in its investments and build a stock screen based on these elements.
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Discussion
A problem I struggle with is sorting out different analysis approaches. For instance, one author will say to look for high dividend yields while another will say that high dividends suggest underlying problems. It seems I can always find a reason to not buy a stock (sometimes referred to as analysis paralysis). It is possible I have read too many books and articles. It would be greatly helpful to me to see an AAII article on the general subject of how to sort through the clutter and arrive at a personal strategy for analyzing stocks.
posted over 2 years ago by Marvin from Ohio
I have the same question as James from Georgia - when will this screen be available in Stock Investor Pro
posted over 2 years ago by Larry from New York
I wish that you would put the shorts back on your SIP, It is too easy to get slaughter with small caps without that information.
posted over 2 years ago by Donald from Florida
