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Superinvestor Walter Schloss And Picking Stocks

Forbes recently had an excellent interview with 91 year old Walter Schloss. Schloss is a former money manager and was dubbed by Warren Buffett as a "superinvestor". The reason why? Because he is.

What is Schloss' method to picking stocks?

"Most people say, 'What is it going to earn next year?' I focus on assets. If you don't have a lot of debt, it's worth something."

As the interviewer states "Schloss screens for companies ideally trading at discounts to book value, with no or low debt, and managements that own enough company stock to make them want to do the right thing by shareholders. If he likes what he sees, he buys a little and calls the company for financial statements and proxies. He reads these documents, paying special attention to footnotes. One question he tries to answer from the numbers: Is management honest (meaning not overly greedy)? That matters to him more than smarts."

That's it. No talking to management. Schloss lets the financials talk for themselves. And financials are available to everyone, you, me, the regular joe.

He also isn't tech savvy, doing his investing the old fashioned way, using the hard copies of Value Line, a stock information service.

Posted by Kimber on February 7, 2008 6:00 AM |

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