Ben Graham usually gets credit for being the inventor of value investing. Recently, we sat down with Jacob who says he perfected the art about 4,000 years before Mr. Graham came along:
LoS: Hi Jacob
Jacob: Shalom
LoS: How did you get into value investing?
Jacob: Well I have to say it started at birth. Actually that's wrong, it started at my twin brother Esau's birth. You see he was born first and by his birthright had claim to my father's estate. He was stronger than I was so I knew even in my mother's womb that he would probably push his way out before me. Right from the start I realized I wouldn't be handed anything in life and would have to make my own way. I saw value investing as the best way to do that. I think recognizing my value bias while still in the womb has been key to my success.
LoS: Tell us about your first deep value pick
Jacob: My early career was unique in that I really only monitored one asset: my brother's inheritence (NYSE: MBI). Having watched it my whole career I was well prepared when MBI fell out of favor with the street, at the time I thought the market in general was over-valued so I was holding a large portion of my assets in the "cash" of the day which was actually just soup. The largest holder of MBI, my brother Esau, always had a Food-At-a-Reasonable-Price bias (FARP). He was tired of waiting for the intrinsic value of MBI to be realized by the market, and he was hungry and wanted some soup. I saw an opportunity to buy MBI at 0.003% of intrinsic value so I sold my soup "and the rest is Old Testament" as they say.
LoS: That's impressive, what are your best ideas now?
Jacob: Sorry but I never discuss my current portfolio, you never know when someone might dress up in wool and trick you into bequeathing your fortune to him. Or dress his ugly daughter up to look like his hot daughter and have you end up marrying the wrong one. I do have some advice for young investors though: Don't live until you're 180. It's much easier to have lifetime 20% returns if you die at 75.
LoS: Great point Jacob - thanks for your time. Next week Noah tells us how one contrarian bet on weather futures changed his life forever.