Beruflich Dokumente
Kultur Dokumente
Graham and
Doddsville
Super Investor Analysis
Scott McConnell
Reference
Year
Chuck Akre
Bill Nygren
Ian Cumming
Mario Gabelli
Prem Watsa
Russell 2000
SI Index
Willshire
2012
16.3%
21.0%
9.6%
16.0%
16.5%
22.5%
6.5%
19.7%
15.4%
16.4%
16.0%
13.7%
2011
11.5%
1.8%
-11.5%
-0.4%
-2.9%
5.6%
0.0%
2.2%
2.1%
-4.2%
0.8%
-1.3%
2010
18.5%
12.2%
59.1%
23.1%
17.9%
14.5%
5.0%
27.5%
15.1%
26.9%
22.2%
15.6%
2009
37.5%
44.8%
59.8%
30.5%
53.6%
60.8%
35.0%
31.3%
26.5%
27.2%
44.2%
27.2%
2008
-42.9%
-32.6%
-55.2%
-37.2%
-50.6%
-38.1%
21.0%
-38.1%
-37.0%
-33.8%
-34.2%
-38.7%
5-Year
Cumulative
20.6%
34.8%
10.5%
16.5%
1.3%
47.5%
82.7%
26.8%
8.0%
19.1%
35.6%
1.2%
2007
6.5%
-3.6%
39.1%
11.8%
-0.4%
15.0%
48.7%
-8.5%
5.6%
-1.6%
13.6%
3.9%
2006
25.4%
18.3%
6.2%
21.8%
21.6%
-2.8%
9.2%
22.5%
15.8%
18.4%
15.3%
13.9%
2005
5.1%
-1.3%
61.4%
4.4%
3.6%
5.8%
-18.0%
-2.4%
4.9%
4.6%
7.3%
4.6%
2004
46.0%
11.7%
4.5%
16.5%
7.1%
9.6%
-4.1%
15.0%
12.0%
18.3%
13.3%
10.9%
2003
40.3%
25.3%
17.1%
30.6%
34.8%
42.3%
29.1%
25.4%
28.7%
47.3%
30.6%
29.4%
10-Year
Cumulative
246.8%
112.2%
222.4%
152.2%
83.4%
172.2%
201.1%
100.0%
99.7%
152.9%
181.8%
79.7%
2002
-3.5%
-14.4%
19.0%
-14.3%
-8.3%
-20.4%
11.2%
-17.0%
-22.1%
-20.5%
-6.0%
-22.1%
2001
2.4%
18.3%
-0.7%
0.2%
10.3%
-7.7%
-12.2%
-0.9%
-11.9%
2.5%
1.2%
-12.1%
2000
5.6%
11.8%
10.2%
-2.4%
20.6%
-10.3%
5.0%
21.1%
-9.1%
-3.0%
7.7%
-11.9%
1999
2.4%
-10.5%
-33.9%
28.5%
2.2%
57.0%
38.0%
22.0%
21.0%
21.3%
13.2%
22.1%
1998
27.1%
3.7%
2.5%
15.9%
14.3%
49.6%
30.0%
29.1%
28.6%
-2.6%
21.5%
21.7%
15-Year
Cumulative
370.9%
123.1%
184.5%
215.0%
161.4%
321.1%
453.8%
214.0%
93.8%
136.2%
297.5%
61.3%
1997
30.1%
32.6%
57.7%
38.1%
28.3%
21.1%
36.0%
40.6%
33.4%
22.4%
35.6%
29.2%
1996
19.7%
16.2%
0.2%
13.4%
21.0%
23.6%
63.0%
19.0%
23.0%
16.5%
22.0%
18.8%
1995
52.5%
34.4%
17.6%
24.9%
27.5%
42.6%
25.0%
38.7%
37.6%
28.5%
32.9%
33.4%
1994
2.9%
3.3%
-3.5%
-0.2%
9.0%
3.8%
18.0%
-9.0%
1.3%
-1.8%
3.1%
-2.5%
1993
6.3%
30.5%
47.2%
21.8%
22.2%
-6.2%
42.0%
23.0%
10.1%
18.9%
23.4%
8.6%
20-Year
Cumulative
1123%
523%
651%
649%
589%
775%
2471%
716%
388%
405%
1011%
250%
Average Returns
60%
50%
40%
30%
20%
S&P500 (%)
10%
Russell 2000
SI Index
0%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-10%
-20%
-30%
-40%
-50%
Willshire
Arithmetic Averages
S&P500
20 Year
15 Year
10 Year
Russell 2000
10.1%
12%
11%
0.19
Willshire
9.9%
11%
8%
0.19
SI Index
8.2%
10%
9%
0.19
14.2%
16%
16%
0.17
Cumulative Returns
Year
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
S&P500 (%)
Russell 2000
10.0%
11.1%
53.3%
88.6%
150.8%
223.5%
291.5%
256.3%
213.5%
144.5%
215.5%
253.3%
271.0%
330.3%
356.1%
187.4%
262.1%
316.4%
324.7%
388.4%
SI Index
19.0%
16.6%
49.3%
73.2%
111.3%
104.9%
147.9%
140.5%
145.3%
96.3%
188.5%
240.4%
257.4%
321.8%
313.3%
172.8%
246.5%
340.0%
322.4%
390.0%
Willshire
23.0%
26.7%
68.5%
105.6%
179.6%
241.1%
285.4%
316.3%
320.4%
295.2%
417.7%
485.0%
525.9%
619.8%
720.6%
441.6%
679.9%
851.5%
861.0%
1014.8%
8.6%
5.8%
41.2%
67.8%
116.7%
163.8%
222.0%
183.8%
149.6%
94.5%
151.8%
179.1%
191.8%
232.4%
245.5%
111.8%
169.5%
211.4%
207.5%
249.6%
Cumulative Returns
1200.0%
1000.0%
Returns
800.0%
S&P500 (%)
600.0%
Russell 2000
SI Index
Willshire
400.0%
200.0%
0.0%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
18.00%
Percent Return
16.00%
14.00%
12.00%
10.00%
S&P500
8.00%
Russell 2000
6.00%
SI Index
4.00%
2.00%
0.00%
S&P500
Russell 2000
SI Index
VS S&P500
VS Russell
1993-2002
11.20%
8.00%
15.50%
4.30%
7.50%
1994-2003
13.10%
10.80%
16.30%
3.20%
5.50%
1995-2004
14.20%
12.80%
17.30%
3.10%
4.50%
1996-2005
10.90%
10.50%
14.70%
3.80%
4.20%
1997-2006
10.20%
10.70%
14.00%
3.80%
3.30%
1998-2007
7.50%
8.30%
11.80%
4.30%
3.50%
1999-2008
0.90%
5.20%
6.20%
5.30%
1.00%
2000-2009
1.40%
5.80%
9.30%
7.90%
3.50%
2001-2010
3.80%
8.80%
10.70%
6.90%
1.90%
2002-2011
5.20%
8.20%
10.70%
5.50%
2.50%
2003-2012
8.90%
11.80%
12.90%
4.00%
1.10%
Average
7.94%
9.17%
12.67%
4.74%
3.50%
S&P500
Rolling 10 years
Rolling 10 year volatility
Rolling 5 Years
Rolling 5 year Volatility
0.04565
4.57%
0.0953
9.53%
Russell 2000
0.02391
2.39%
0.0558
5.58%
SI Index
0.03321
3.32%
0.0651
6.51%
30.00%
25.00%
Returns
20.00%
S&P500
15.00%
Russell 2000
SI Index
10.00%
5.00%
0.00%
-5.00%
The volatility for the Superinvestor index was lower than the S&P500 for both 5 year and 10 year
rolling returns. The SI index had higher volatility than the Russell 200 for 5 and 10 year rolling
returns. This means the risk of the SI index is less than the S&P500 and more than the Russell 2000
for short and long-term returns. Yet the SI index still beats the Russell index and the S&P500
because its excess returns over the Russell 2000 is 3.5%-4.51% for 5 and 10 years. This beats the
increased risk of around 1% for the SI Index over the Russell 2000.
Russell 2000
SI Index
VS S&P500
VS Russell
1993-1997
21.00%
16.60%
23.40%
2.40%
6.80%
1994-1998
24.80%
12.20%
23.20%
-1.60%
11.00%
1995-1999
28.80%
16.80%
25.20%
-3.60%
8.40%
1996-2000
19.40%
10.60%
20.20%
0.80%
9.60%
1997-2001
12.40%
7.80%
16.00%
3.60%
8.20%
1998-2002
1.40%
-0.60%
7.60%
6.20%
8.20%
1999-2003
1.40%
9.40%
9.40%
8.00%
0.00%
2000-2004
-0.40%
8.80%
9.40%
9.80%
0.60%
2001-2005
2.40%
10.40%
9.20%
6.80%
-1.20%
2002-2006
8.00%
13.60%
12.00%
4.00%
-1.60%
2003-2007
2004-2008
2005-2009
2006-2010
2007-2011
2008-2012
13.60%
0.40%
3.20%
5.20%
2.40%
4.20%
17.20%
1.00%
2.80%
7.20%
2.80%
6.40%
16.00%
3.00%
9.20%
12.20%
9.40%
9.80%
2.40%
2.60%
6.00%
7.00%
7.00%
5.60%
-1.20%
2.00%
6.40%
5.00%
6.60%
3.40%
Average
9.26%
8.94%
13.45%
4.19%
4.51%
The Superinvestors had better 10 year rolling returns in every period than the indexes. The
rolling returns give a better indication of the performance of the portfolios because they average out
best and worst years or outliers to give a larger picture of the performance of a portfolio that may not
be seen if looked at yearly. The higher rolling returns for the Superinvestors shows that they are
consistently beating the indexes over long-periods. Yet this is not fully the case for 5 year rolling
returns in which there are 2 periods against the S&P500 and 4 periods against the Russell in which
the SI index did not beat the market indexes in a 5 year rolling return. This suggests the
Superinvestors value investing is fully realized in long periods (10 years) and is not always the best
strategy for short-term investing.
Value investing is based on buying a stock for a discount to its true or intrinsic value. This is
based on the idea that the market is not efficient and the price does not always reflect the
value of the company. Valuing the company is done through numerous ways, mainly through
an analysis of tangible assets. Growth investing differs from value investing because it does
not look try to valuate the company but looks at the potential growth of the company. Growth
investors try to find a company that has high potential growth to invest in now and get longterm returns. It does not look for a mispricing of securities but analyzes the potential for
growth of the business.
Value Superinvestors show they consistently beat the EMH and MPT. The Superinvestors
show they do this by not only having higher returns than the indexes, but lower volatility or risk
than the indexes. The Superinvestors are not focusing on lowering risk through beta, asset
allocation, or diversification, but are instead focused on lowering risk by buying with a margin
of safety. In this way, they are able to beat the schedule of normal risk and return stated by
the MPT. The Modern Portfolio theory and the Efficient Market Hypothesis claim a strict risk
and return relationship for securities. From our market indexes, we get an idea of what this
relationship should be, the capital allocation line. From the three indexes, the line should be
y=1.2414x-.1395. Thus, for our SI index, with a risk of 17%, the expected return would be
y=1.2414(.17)-.1395 or 7.2%. Instead, the SI Index returns almost double that, 14.2%. The SI
index easily beats the MPT and EMH claim of an unbeatable risk and return relationship.
Superinvestors perform better than the index because they believe the market is inefficient
and securities can therefore be bought at a discount from their actual value. The biggest
secret of this is a high margin of safety as well, which means lower risk with higher return,
thereby truly beating the market.
Efficient Frontier
16.00%
14.00%
Expected Return
12.00%
10.00%
Efficient Frontier
8.00%
SI Index
6.00%
4.00%
2.00%
0.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
On an efficient frontier, the Superinvestor returns would be above the efficient frontier curve. This is because they
are beating the efficient frontier curves risk to return relationship. They are obtaining returns that are higher than the
expected level risk they are taking on. Given the efficient frontier produced by the relationship of the 20 year averages
of the S&P500 to the Barclays Aggregate Bond Fund, and the Capital Market Line from the average risk free rate of the
last 20 years, the SI index is able to beat the CML. Given the risk of the SI Index of 17%, the SI index should only have
a maximum return of 11.8% given the EMH and the CML. Yet the SI Index has abnormal returns above the CML and a
higher Sharpe ratio than the line has.
Yes I would invest in them based on their historic performance which not only shows their
ability as investors, but their methods ability to produce high returns and consistently beat the
market. Given my age, I will have a very long period of time to let my investments reach their
full value or true value. As shown, value-investing is most effective with a long-period of time
such as 10 years. This is a period of time I can easily afford at my age which would make
value investing an effective use of my money.
I would be confident investing others money in these Superinvestors because I know the
money of those investing would be in a model that has lower risk and higher return and that
has proven its effectiveness. Yet for my mom, it may not be a perfect approach. She will be
entering retirement in less than 10 years and will likely be taking most of her capital out of
investments. As such, her investments in a value investing approach may not be best for her
as she may need to take her money out before the full return is gained and before the security
reaches its correct price. Thus the security would still be sold at a discount to its full value of
the correct stock price, and it may even in some cases, as shown by the 5 year rolling returns,
be sold at a loss.
Prem Watsa
Fairfax
Performance of Fairfax
PROFILE
Investing Philosophy
Asset Allocation Not Found
TOP 5 HOLDINGS 3
Rank
Company
% weight as of 12.31.12
24.5%
2
3
16.6%
13.06%
Level 3 Communications
Inc
11.9%
8.2%
Year
Prem
Watsa
S&P500 (%)
2012
7%
15%
2011
0%
2%
2010
5%
15%
2009
35%
26%
2008
21%
-37%
5-Year
Cumulative
83%
8%
2007
49%
6%
2006
9%
16%
2005
-18%
5%
2004
-4%
12%
2003
29%
29%
10-Year
Cumulative
201%
100%
2002
11%
-22%
2001
-12%
-12%
2000
5%
-9%
1999
38%
21%
1998
30%
29%
15-Year
Cumulative
454%
94%
1997
36%
33%
1996
63%
23%
1995
25%
38%
1994
18%
1%
1993
42%
10%
20-Year
Cumulative
2471%
388%
1988
31
16.6
1987
48
5.1
1986
180
18.6
27-Year
Cumulative
Return 31206
Excess Gain
(%)
-8.9
-2.1
-10.1
8.5
58
43.1
-6.6
-22.9
-16.1
0.4
33.3
-0.3
14.1
17
1.4
2.6
40
-12.6
16.7
31.9
-6.6
-6.5
44.1
-4.7
14.4
42.9
161.4
1171
30035
Wallace R Weitz
Weitz Series Value Fund
Total Value: $400 million
PROFILE
Investing Philosophy
TOP 5 HOLDINGS 1
Ran
k
1
2
3
Company
Valeant
Pharmaceutical Intl
Inc
Aon Plc
% weight as of
12.31.12
5.52%
5.25%
Berkshire Hathaway
Inc Del
Redwood Trust Inc
5.1%
4.88%
4.23%
Year
Return (%)
2012
19.72
15.4
4.3
2011
2.19
2.08
0.1
2010
27.49
15.06
12.4
2009
31.3
26.46
4.8
2008
-38.06
-37
-1.1
2007
-8.54
5.61
-14.2
2006
22.53
15.79
6.7
2005
-2.42
4.91
-7.3
2004
14.99
12
3
2003
25.38
28.7
-3.3
2002
-16.99
-22.1
5.1
2001
-0.86
-11.9
11
2000
21.07
-9.1
30.2
1999
22.02
21
1
1998
29.13
28.6
0.5
1997
40.64
33.4
7.2
1996
19.04
23
-4
1995
38.66
37.6
1.1
1994
-8.97
1.3
-10.3
1993
23.03
10.1
12.9
1992
15.14
7.6
7.5
1991
28
30.5
-2.5
1990
-6.35
-3.1
-3.2
1989
20.25
31.7
-11.5
1988
14.93
16.6
-1.7
25-Year 1457
919.9
537.1
Cumulati (11.6%/y (9.7%/ye (1.9%/ye
ve
ear)
ar)
ar)