Value Investing

for

Mere Mortals

Guy Spier Aquamarine Fund

Value Investing Congress

October 12 &13, 2010

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 $0.00

$50,000.00

$100,000.00

$150,000.00

$200,000.00

$250,000.00

$300,000.00

$350,000.00

$400,000.00

S&P 500

Aquamarine Fund Inc

Comparison of changes in $100,000 invested in

Aquamarine Fund Inc. vs S&P 500

10

13

• Before Investing, run a checklist

• Take buy and sell decisions when the market is closed

• Buy to hold for at least two years

• Reduce toxic relationships, increase productive ones

• Create a distance from the “madding crowd”

• Sequence information appropriately

• Maximise positive feedback loops

• Invoke useful circuit breakers

The Obesity “Epidemic”

Your Friends’ Friends Can Make You

Fat

Nicholas Christakis – Harvard

It’s better to hang out with people better

than you, … Pick out associates whose

behavior is better than yours and you’ll

drift in that direction.

- Warren Buffett

Thoughts on partnerships in investing

• Don’t interfere in each other’s work

• Accepting of failure and error

• Talk about ideas not about buy / sell decisions

• Respect each other’s confidentiality

• Don’t tell each other what to do

• Have found a financial deal that works and don’t need to

revisit / reopen

Act like a great partner

to find great partners

Company Name

Market Capitalizati

on (US$mm)

Enterprise Value

Dividend Yield

Net Cash US$ m

LTM Ebit Industry

Shingakukai 60 (22) 4% 82 7.5 Coaching Schools and Sports Clubs

Clip Corporation $38 (4) 4% 42 10.5 Coaching Schools

Nippon Road 186 (32) 4% 218 76 Construction and Engineering

Nihon Dengi 57 (1.5) 5% 58.5 17 Air conditioning systems

Daiichi Kensetsu Corp

125 (28) 3% 153 52 Construction and Real Estate

Hokkaido Bus Company

74 (12) 2% 88 13 Bus Routes

Otaki Gas 73 5 2% 68 23 Gas Distribution

Heian Ceremony Service Co.

67 8 4% 59 15.5 Wedding and Funeral Services

Q&A

(Merci vielmals

Auf wiederluege

En guete!)