To be a successful investor, you need a solid search strategy. This strategy should be built on a clear investing process and philosophy. Without a clear direction, you’re likely to get lost along the way. Consistency is also key. It’s often better to have a simple, broad strategy that you follow consistently than an elaborate one that you struggle to stick to. As Buffett has noted, compelling opportunities are like fast-moving elephants—if you’re not paying attention, you can miss out on them.
With that in mind, here are some places to focus your search:
- New Lows: Check the new low list daily to spot potential opportunities.
- Value Line: Regularly review Value Line. If you’re behind, catch up by going through back issues and flagging good businesses within your circle of competence.
- 13Fs: Monitor the investment disclosures of top investors. Websites like gurufocus.com, marketfolly.com, and dataroma.com aggregate this information for easier tracking. Focus on investors with a concentrated portfolio and pay attention to how recent their purchases are. Even small positions can be significant if they represent a large stake in the investee company.
- Mutual Fund Letters: Similar to 13Fs, but with the added benefit that these letters often explain the rationale behind investments. Focus on top funds like Yacktman, Fairholme, Longleaf, First Pacific Advisors, Akre Capital Management, and Third Avenue Value.
- Hedge Fund Letters: Choose hedge fund managers whose processes align with your goals. These letters often provide detailed investment theses.
- Business Press: Read publications like The Wall Street Journal, The New York Times, and The Financial Times daily. Follow Michael Price’s advice to read with purpose, looking for changes that could signal an investment opportunity, such as new management, restructuring, acquisitions, or legal issues. Also, read Barron’s, Forbes, Fortune, BusinessWeek, and The Economist.
- Blogs: There are many high-quality blogs with research that rivals or surpasses that of Wall Street. Seek them out and stay informed. Check my “Useful Sites” sidebar for updates on recommended blogs and sites.
- Screens: Regularly run specific screens. For example, Mason Hawkins used screens like ROC > 12% and less than 8x earnings, < 10x free cash flow, below net asset value, and others. Follow stocks that meet Joel Greenblatt’s magic formula criteria at magicformulainvesting.com. Value Line also publishes screens for cheap stocks in each issue.
- Top Businesses: Create a list of the top 100 or 200 businesses globally and revalue them regularly.
- Trade Magazines/Sites: Follow trade publications in industries you understand.
- Social Investing Sites: Engage with platforms like Value Investors’ Club (information delayed 90 days for non-members), Seeking Alpha, BloggingStocks, and Motley Fool. The Corner of Berkshire & Fairfax Message Board is also known for its informed discussions.
- Subscription Services: Consider services like Outstanding Investor Digest, Value Investor Insight, and The Manual of Ideas.
- Early Buffett Approach: Emulate Buffett’s early partnership strategy by going through a comprehensive database and searching from A to Z for undervalued, under-the-radar opportunities.
By utilizing these resources, you should be able to identify a handful of promising investment ideas each year that can help you achieve your financial goals.
