John Neff on Investing

Book Title: John Neff on Investing
Author(s): John Neff, S. L. Mintz
Rating: $$$

Author’s Bio (from the book’s jacket or elsewhere):

During his thirty-one years as portfolio manager of Vanguard’s Windsor and Gemini Funds, John Neff beat the market twenty two times while posting a fifty-seven fold increase in an initial stake – making Windsor the largest mutual fund in the Unites States in the process.

Now, the “investor’s investor” is ready to share the strategies that earned him international recognition. He delineates, for the first time, the principles of his phenomenally successful low p/e approach to investing, and describes the strategies, techniques, and decisions that earned him a place alongside Warren Buffett and Peter Lynch in the pantheon of modern investment wizards. Packed with advice, guidance, and invaluable lessons in investing, John Neff on investing reveals for the first time the long-heralded investment strategies of a Wall Street genius.

JOHN NEFF, until his retirement in 1995, was Senior Vice President and Managing Partner of the Wellington Management Company, the Windsor Fund’s investment advisor. S. L. Mintz is New York Bureau Chief of CFO magazine, a publication of the Economist Group dedicated to the latest financial thinking and how it is being implemented in today’s markets. His other books include Beyond Wall Street (Wiley) and Five Eminent Contrarians.

Review:

“I attribute success not to genius or blinding insights, but to a frugal nature and lessons we learned. Therein rest my enduring principles, stamped indelibly with the merits of low p/e investing.”

These ending lines from the book very aptly summarizes the investment style and philosophy followed by the legendary investor and celebrated portfolio manager, John Neff. The book however comes as a big disappointment considering the experience and insights that the author commands and could have shared. The reader will find the book as a collection of short case studies, arranged chronologically to demonstrate the power of “low P/E investing” in beating the market. The book resembles to me as an empirical study keen on proving how “low p/e investing” outperforms the benchmark and shares very little insights on understanding company/businesses, industry dynamics, market psychology or the nuances of stock picking, etc. The book is long on examples but too short when it comes to explaining the rationale behind the investment decisions. The book however does mention a few guiding principles in stock selection, which, in my opinion would make a wonderful screen for bottom-up stock pickers.

The book is structured as an autobiography of John Neff, largely covering his professional life and his 31 years at Windsor. The book took me ages to read (or at least it seemed so) and would therefore strongly suggest that you avoid the book if you already believe in “low p/e investing” (also read “value” or “contrarian” investing)