Timeless Secrets Of Warren Buffett’s Mentor

Warren Buffett's Mentor's Secrets Revealed

As the “father of value investing,” Benjamin Graham made his reputation on the back of consistent outperformance.

From 1936 to 1956, Graham’s investment firm posted annualized returns of about 20%. That significantly outperformed the 12% return of the broader market.

There’s no question that the system works. Graham was Warren Buffett’s mentor, after all.

But you don’t have to be a financial genius to understand this philosophy. In fact, the basics of the “Benjamin Method” are easy enough for a five-year-old to master…

Graham simply invested in undervalued companies with sound business plans and sound financials. And this is still the most successful long-term method for creating wealth in the stock market.

The Challenge in Valuing a Stock

Now, admittedly, the most difficult task for any value investor is finding “undervalued” stocks in which to invest – especially in today’s zero-interest-rate environment and central-bank-fueled financial markets.

But undervalued stocks still abound…

Just look at TravelCenters of America (TA). Its shares have risen more than 18.2% in the two-day trading session beginning on Friday.

TA shares closed higher again on Monday, ending the day at $17.71, an increase of 6.6%.

Now, you might be inclined to believe that this unglamorous stock would no longer be undervalued after such a run-up in a very short time.

But you’d be making a mistake.

TravelCenters of America is a company with a solid business plan and impeccable financials. And shares remain significantly undervalued, according to a major shareholder, RDG Capital Fund Management.

RDG recently announced that it delivered a letter to TA’s Board of Directors indicating that the fair market value of TravelCenters of America is between $24 and $27 per share. In other words, the company has a potential upside of 53% to 72% compared to Monday’s closing price.

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Floatmoater 6 years ago Member's comment

Amazes me how many people misunderstand the Buffett strategy. You pick a stock and it goes up 5% – but if he invests in the same stock and it goes up 5%, he gets 10-20% return on that. How? It’s a deep value liability funding strategy inasmuch as it is a value investing strategy. Best explanation I've read on this is from these guys: www.scmessina.com/.../if-warren-buffett-had-to-start-today-could-he-still-reach-his-current-level-of-wealth/