Jean-Marie Eveillard is the legendary international value investor who managed the First Eagle Global fund from 1979 till 2009. He has a stellar track record, and avoided Japan in the late 1980s, TMT stocks in the late 1990s, and bank stocks prior to 2008. So I was excited when I found out that he’s sharing his thoughts in a new short book (available in English and in French here).
The book contains a mix of biographical episodes and investing wisdom, illustrated by concrete stock examples (e.g., Shimano, Sodexo, Richemont, Essilor, Buderus, Kohler, Kuhne & Nagel). The key points that the author wants to make are simple: value investing makes sense and it works over time.
After explaining some classic value stuff – both the Graham and Buffett approaches – the author writes an interesting (unfortunately too short) chapter on special situations:
- Preferred stock
- Holding companies (to benefit from the double discount)
- Closed-end funds (again, the double discount)
- High-yield bonds (when they offer equity type returns)
He also covers topics like Gold (in depth) and the Austrian School of economics.
A Frenchman who has been living in the U.S. for several decades, Eveillard’s style is direct (“nonsense”, “stupid”, “idiot”) but with a strong sense of humility. Indeed, he describes many mistakes he has made throughout his career (most of these “mistakes” like selling Richemont were still quite profitable…). His humility transpires especially when acknowledging the contributions of colleagues and other managers (e.g., Charles de Lardemelle, Omar Musa, the folks at Varenne Capital).
Some interesting quotes from the book:
- On Swissair: “In general, I have tended to avoid investing in businesses run – directly or indirectly – by former or current consultants.”
- On small, inexpensive in absolute terms, luxury goods: “How much Lindt chocolates or Champagne can one buy for the price of a BMW?”
- “It’s best to stay away from investing in a company with too much debt, especially in a cyclical business.”
At times the book feels like a transcript of interviews (don’t expect the prose of a Howard Marks or Warren Buffett), which would benefit from further editing. Nevertheless, I’m happy to have Jean-Marie Eveillard as a new companion on my bookshelf.