Ben Graham

"We bought all of our [Washington Post (WPC)] holdings in mid-1973 at a price of not more than one-fourth of the then per-share business value of the enterprise. Calculating the price/value ratio required no unusual insights. Most security analysts, media brokers, and media executives would have estimated WPC’s intrinsic business value at $400 to $500 million just as we did. And its $100 million stock market valuation was published daily for all to see. Our advantage, rather, was attitude: we had learned from Ben Graham that the key to successful investing was the purchase of shares in good businesses when market prices were at a large discount from underlying business values. . . . Through 1973 and 1974, WPC continued to do fine as a business, and intrinsic value grew. Nevertheless, by year-end 1974 our WPC holding showed a loss of about 25%, with a market value of $8 million against our cost of $10.6 million. What we had bought ridiculously cheap a year earlier had become a good bit cheaper as the market, in its infinite wisdom, marked WPC stock down to well below 20 cents on the dollar of intrinsic value.3 —Warren Buffett"

"GEICO was a Texas brainstorm from the 1930s. Its creator, Leo Goodwin, added two brilliant features that distinguished this auto insurer from the white bread version. GEICO sold policies by mail, cutting out the expensive sales brigade. It only sold to government geeks. Goodwin once read a study that showed federal, state, and local bureaucrats caused fewer car wrecks than blue-collar or corporate types. A bureaucrat might be boring as a date, but he or she was a dreamy client for an insurance company.Lower expenses and fewer accident claims formed a winning combination for GEICO. Ben Graham figured this out and bought half-ownership in the company in 1947. GEICO soon went public, so anybody could buy the stock by 1951, the year Buffett got interested in it. One Saturday that year, Graham's star pupil hopped a train from New York to Washington to behold GEICO in person. Finding the place locked, Buffett banged the door and roused the janitor. The 23-year-old grad student talked his way around the janitor and into a four-hour interview with the CEO."

"What is a margin of safety? Ben Graham’s definition of a margin of safety is “a favorable difference between price on the one hand and indicated or appraised [intrinsic] value on the other.”8"

"If you could take the stock price and multiply it by the number of shares and get something that was one third or less of sellout value, [Ben Graham] would say that you’ve got a lot of edge going for you. Even with an elderly alcoholic running a stodgy business, this significant excess of real value per share working for you means that all kinds of good things can happen to you. You had a huge margin of safety—as he put it—by having this big excess value going for you. —CHARLIE MUNGER, UNIVERSITY OF SOUTHERN CALIFORNIA (USC) BUSINESS SCHOOL, 1994"

"Ben Graham [had] his concept of “Mr. Market.” Instead of thinking the market was efficient, he treated it as a manic-depressive who comes by every day. And some days he says, “I’ll sell you some of my interest for way less than you think it is worth.” And other days, “Mr. Market” comes by and says, “I’ll buy your interest at a price that’s way higher than you think its worth.” —CHARLIE MUNGER, USC BUSINESS SCHOOL, 1994"

"Ben Graham pointed out that markets are largely composed of such people as “[person] A [who is] trying to decide what B, C, and D are likely to think—with B, C, and D trying to do the same.”13"

"Ben Graham and David Dodd, Marty Whitman, John Mihaljevic, Seth Klarman, and Joel Greenblatt."