Irving Kahn is one more towering proponent of `value investing' who imbibed his investing principles from the legendary Benjamin Graham. Kahn worked as a second teaching assistant for Graham at his lectures at Columbia University that started in 1928.
Later, he also helped Graham with statistical material for Graham's celebrated book, Security Analysis, co-authored by David Dodd and published in 1934.
Though he is 101 years old, he still performs an active role as Chairman of Kahn Brothers & Co. Inc. — the firm that he founded with his sons, Thomas and Alan in 1978. Their investment philosophy is outlined in www.kahnbrothers.com.
He enjoys the distinction of being the founder of the Financial Analysts Journal, apart from being a distinguished member of the New York Society of Security Analysts.
"Kahn Brothers employs a bottom-up stock selection approach, and invests in undervalued equity securities that are usually out-of-favour in the market. We select securities one at a time based on assets, operating performance and long-term fundamental business prospects. Unlike many investment managers, our staff spend a considerable amount of effort evaluating the downside risk of every investment. We are long-term investors with a typical three-five- year, or longer, time horizon. If there are very few values to be found, we are comfortable holding cash."
"We study companies and try to find undervalued securities... We're absolute value investors focusing on asset values, book value discounts and low price to earnings ratios to normalised earnings. And we are not interested in the so-called relative values — you know, something selling at 20 times earnings in an industry group with a 35 multiple — Thomas Graham Kahn in Outstanding Investor Digest, spelling out his father's and the firm's philosophy in investing.
"The thing that makes our style different from the typical firm is that we read much more broadly outside Wall Street on subjects such as science and technology to locate trends that are not obvious. One reason that it is hard for many people to manage money is that they are influenced by what other people do. Buffett's not like that."
"Kahn Brothers views investing as a combination of art and science. Each investment decision has both quantitative and qualitative aspects. While the former can be readily duplicated by a novice, the qualitative component is acquired only from decades of analysing investment opportunities. A key element to outstanding investment performance is the discipline and patience to maintain principles that stand the test of time."