Independent value-driven investment research
with a solid track record of market outperformance Satisfaction guaranteed
Welcome to Deep Value Letter
With a multiyear track record of significant market outperformance, Deep Value Letter is an independent Graham-and-Dodd value investing newsletter providing high-quality, unbiased investment research directly to individual and institutional investors. Incorporating quantitative stock screening methods based on decades of empirical studies in academic finance, coupled with diligent fundamental research into targeted companies, this newsletter aims to achieve exceptional long-term returns for subscribers through careful identification of deeply undervalued and special-situation investment opportunities.
As a successful independent value investor for over fifteen years, I have achieved substantial long-term outperformance by systematically identifying and investing in mispriced securities, and now earn the majority of my income from investing. I'm happy to exchange ideas with other serious value investors, and publish research reports on some of my highest-conviction personal investments through this newsletter sent quarterly to subscribers. I have had the returns on my personal Roth IRA account verified by a Certified Public Accountant and have published the results below. Past performance does not guarantee future results.
Published quarterly, each issue includes from one to three concise, thorough research reports presenting microcap to mid-capitalization stocks carefully selected for extreme fundamental undervaluation and 50% or greater upside potential. Unlike conventional sell-side research, this content is fully independent from any of the investment banking or other relationships that compromise typical Wall Street research coverage, and unlike the majority of small-cap research providers, I will neither solicit nor accept fees or compensation of any kind from any of the covered companies. I am not motivated to generate commissions through frequent trading; and instead focus on carefully identifying a limited number of deeply mispriced securities with high expected long-term returns, using long holding periods to minimize tax liability and transaction costs. I do not hold myself out to the public as an investment adviser, and this newsletter represents my personal opinion and a discussion of my personal investments. I want to prominently disclose that unless otherwise noted I have invested for myself and my family in the securities mentioned, and will personally bear the consequences of every one of my investment decisions.
I will tell you how to become rich.- Warren Buffett
Be fearful when others are greedy.
Be greedy when others are fearful.
Investing in a market where people believe in efficiency is like playing bridge with someone who has been told it doesn't do any good to look at the cards.- Warren Buffett
What you're looking for is some way to get one good idea a year, and then ride it to its full potential. And that's very hard to do in an environment where people are shouting prices back and forth every five minutes.- Warren Buffett
The less the prudence with which others conduct their affairs,- Warren Buffett
the greater the prudence with which we should conduct our own.
Your life must focus on the maximization of objectivity.- Charlie Munger
A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind, loving diagnosis involving multiple variables. And then all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past.- Charlie Munger
Determine value apart from price- Charlie Munger
progress apart from activity
wealth apart from size.
Being prepared, on a few occasions in a lifetime, to act promptly in scale in doing some simple and logical thing, will often dramatically improve the financial results of that lifetime.- Charlie Munger
In the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand.- Benjamin Graham
Operations for profit should be based not on optimism but on arithmetic.- Benjamin Graham
A true margin of safety is one that can be demonstrated by figures, by persuasive reasoning, and by reference to a body of actual experience.- Benjamin Graham
Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgment is sound, act on it - even though others may hesitate or differ. You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.- Benjamin Graham
While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term investment results, limit risk, and resist crowd psychology.- Seth Klarman
Value investing combines the conservative analysis of underlying value with the requisite discipline and patience to buy only when a sufficient discount from that value is available.- Seth Klarman
It is worth noting that few institutional money managers invest their own money along with their clients’ funds. The failure to do so frees these managers to single-mindedly pursue their firms’, rather than their clients’, best interests.- Seth Klarman
Value investing is the discipline of buying securities at a significant discount from their current underlying values and holding them until more of their value is realized. The element of a bargain is the key to the process. In the language of value investors, this is referred to as buying a dollar for fifty cents.- Seth Klarman
All investing does involve risk, and small-cap or microcap stocks often exhibit greater short-term price volatility, which can scare away the majority of momentum-oriented traders and act as a source of opportunity for others. Behavioral finance and deep value investing operate on a fundamentally different definition of risk than the traditional concepts of beta and historical price action used by most conventional investors. Through careful independent research, the successful deep value investor aims to identify a limited set of investments that are extremely mispriced relative to their intrinsic value, combining a strong fundamental margin of safety with high expected return. The core of this philosophy is perhaps best summed up in the words of Warren Buffett and his mentor Benjamin Graham: "Price is what you pay. Value is what you get."
Deep value investing requires a degree of level-headedness, patience, and perseverance that few people truly possess. I recommend this newsletter only to investors with a long-term investment horizon, a significant degree of patience, perseverance and self-control, and with firm confidence in an evidence-based and fundamentally driven value investment philosophy. It is my hope that this independent research can be used together with your own due diligence to build a diversified portfolio that will strongly outperform the market.
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